On Wednesday, August 21st, the company will release its Q2 financial report for this year. $XIAOMI-W (01810.HK)$

Looking back from March to now, the trend of Xiaomi's stock price can be described as "twists and turns". First, due to positive factors such as impressive cellphone shipments and better-than-expected auto orders, the stock price saw a strong upward trend in March. Then, it experienced a sharp rise in April as the Hong Kong stock technology stocks staged a large counterattack, skyrocketing to the highest point of the year. However, it fluctuated and adjusted to August as the Hong Kong market sentiment fell as a whole. Recently, with the improvement of external economic expectations and the announcement of second-quarter financial results, the stock price has shown a slight rebound trend.

At this point, Xiaomi's Q2 financial report has received much attention. At present, the market generally predicts that Xiaomi's Q2 revenue is expected to reach RMB 87.036 billion, a YoY increase of 29.22%. EPS is expected to be RMB 0.16, an increase of 9.07% YoY. Currently, 15 analysts have made ratings on the stock, with 80% recommending it strongly. The current average target price is HKD 19.37.

Overall, the market expects strong performance for Xiaomi's Q2, with the smart phone segment potentially achieving strong recovery and the electric vehicle business progressing smoothly. Citibank has even positioned Xiaomi as its top pick in the industry, stating that the market generally underestimates the group's profit potential in the next few years.

Q2 global cell phone shipments revealed! Xiaomi ranks first among Chinese brands.

According to the latest data from Canalys, the global smart phone market has grown for three consecutive quarters, with shipments growing 12% YoY to 0.288 billion units in 2024 Q2. The smart phone industry is steadily recovering.

In Q2, Xiaomi ranked first in both market share and YoY growth rate among Chinese brands. Specifically, Samsung Electronics continued to maintain its leading position in the global smart phone market with an 18% market share by refocusing on its high-end market strategy. Apple followed closely behind with a 16% market share, remaining in second place. Xiaomi performed well, with a 15% market share and a 30% YoY growth rate, ranking first among the top five manufacturers in growth rate. Vivo and Transsion ranked fourth with a 9% market share.

In India, Xiaomi also returned to the top of the Q2 sales rankings after six quarters, with a shipment of 6.7 million units and an 18% market share.

In addition, Xiaomi's 618 sales were particularly impressive. During the 618 promotion period, Xiaomi's overall sales surpassed RMB 26.3 billion, breaking previous sales records. The payment amount in the Xiaomi official flagship store live broadcast room exceeded RMB 1 billion, setting a new record for the live broadcast shop on Taobao. The cumulative sales of online and offline real-time retail reached RMB 0.65 billion, with cell phone sales increasing by 56% YoY.

During 618, Xiaomi mobile phones fully led and won the double first in sales and sales volume of domestic mobile phones on JD/TMall/PDD/Douyin/Kuaishou.

In addition to digital products such as mobile phones and tablets, Xiaomi's AIoT performance is also outstanding, and categories such as smart locks, water purifiers, and sweeping robots have surpassed 200 million in sales; in addition, categories such as air purifiers, fans, range hoods, routers, and cameras have all surpassed 100 million in sales.

With impressive sales data, many major banks have released optimistic growth projections.

China Merchants International released a research report stating that Xiaomi's phone sales in overseas and domestic markets both showed significant growth, with strong sales performance during the domestic 618 shopping festival. Looking at the entire year, the bank believes that the trend of Xiaomi increasing its global market share will continue, with many new products set to be released in the second half of the year. The bank predicts that Xiaomi's phone shipments will increase by 16% YoY to 0.169 billion units for the full year.

CICC said that industry data showed that Xiaomi's global smart phone sales were strong, with expected shipments in Q2 increasing by 27% YoY to 42.3 million units. That rate exceeded the overall global market growth rate of 12% and is expected to increase its market share to 15%, ranking third. Based on shipment and product price data, CICC currently predicts that Xiaomi's Q2 mobile business revenue will reach RMB 46.53 billion, a YoY increase of 27.1%.

Huaxing Securities believes that recent smart phone channel surveys show that the cyclical recovery in the industry has continued, with a mid-single-digit YoY growth in deliveries driven by the 618 promotion. Unlike the previous upswing cycle driven by the COVID-19 pandemic and home office, it is expected that this time the trend of YoY growth upward will be more moderate. However, considering Xiaomi's high-end strategy (specification upgrades) and potential embedded AI applications, the duration of this upward cycle is expected to be longer.

In addition, Huaxing Securities predicts that global smart phone shipments (units) will increase by 6%/3% YoY in 2024/25. Pricing of new models launched in certain key emerging markets (such as India) higher than before will help boost Xiaomi's revenue growth.

Looking back at 2023, Xiaomi encountered pricing and sales pressures in emerging markets. Looking ahead to the second half of 2024, we believe that the company will further solidify its high-end strategy through the launch of the Xiaomi 15 Pro. This is the first model to be equipped with Qualcomm's new AI smart phone processor. We predict that its pricing will be closer to that of the iPhone, which is expected to raise Xiaomi's average selling price and provide a buffer for gross margin.

The car manufacturing business is progressing smoothly. Xiaomi SU7 is expected to complete its annual target of 0.1 million units ahead of schedule.

Xiaomi's other growth engine, Xiaomi Automobiles, has also recently received "good news".

On August 1st, many new energy car companies announced their delivery performance for July, including Xiaomi Auto, which also gave impressive delivery data - after June, the delivery volume of Xiaomi SU7 in July once again exceeded 10,000 units, and the delivery volume in August will continue to break through 10,000, with the expected goal of completing the annual delivery target of 0.1 million units in November.

In addition, on July 23, Lei Jun revealed for the first time in a live broadcast that the highly anticipated Ultra mass-produced car is expected to be released in the first half of next year.

Regarding the car-making business, CCB International predicted that the delivery volume of Xiaomi SU7 would be 0.112 million and 119,000 units for this year and next year respectively.

Morgan Stanley said that the gross profit of Xiaomi's electric car business in the second quarter should achieve positive growth. Despite strong shipment growth, operating expenses should be controlled. Given the strong momentum of electric vehicles, the potential for launching new models in the next two to three quarters, the healthy profit-making ability of electric vehicles and the tough gross margin of smart phones, the bank still maintains a positive outlook on Xiaomi.

Huaxing Securities stated that Xiaomi has proven the strong market fit of SU7, and Xiaomi is expected to achieve a monthly delivery capacity of 0.02 million units by the end of 2024. In addition, Xiaomi is expected to accelerate its expansion into the price range of 0.15-0.2 million yuan for new models, and it is predicted that the delivery volume of Xiaomi's electric vehicles will reach nearly 0.3 million units in 2026 and the gross profit margin will reach 11% by the end of 2026, laying the foundation for profitability. Huaxing Securities predicts that the operating profit of the electric vehicle sector in the second quarter will be approximately RMB 2.7 billion in red.

Multiple institutions are optimistic about the second quarter performance.

CICC issued a research report stating that taking into account the growth of IoT and major domestic appliances, as well as the prospects of car sales, it is predicted that the adjusted net profit of Xiaomi Group in the second quarter will reach RMB 5.432 billion, an increase of 5.7% year-on-year, and accordingly, the adjusted net profit for this year and next year is expected to be raised by 14.6% and 20.8% to RMB 18.917 billion and 21.14 billion respectively. It maintains an Outperform rating and a target price of HKD 23.

BOCI Research stated that it has reaffirmed the "buy" rating for Xiaomi and will announce its performance in mid-August. At present, it has raised its forecast for the second-quarter adjusted net profit from RMB 4.5 billion to RMB 5.2 billion, and believes that the market generally underestimates the group's profit potential over the next few years. The target price has been raised from HKD 25.72 to HKD 25.75, and it is listed as the preferred industry choice.

Considering the high-end intelligence of Xiaomi's smart phones and IoT products, the strong sales performance of the mid-year 618 promotion, the progress of overseas expansion, strong cost control measures, and the good sales of electric vehicles and other beneficial factors, it is still expected that Xiaomi's performance in the second quarter of this year will once again exceed market expectations.

JPMorgan believes that the IoT business and electric vehicle business of Xiaomi Group are driving strong revenue growth, and expects that the revenue of Xiaomi's next quarter will increase by 15% quarterly and 29% annually, and the core profit in the next quarter will increase by about 19% year-on-year. In addition, the bank maintains an "overweight" rating on Xiaomi with a target price of HKD 24. The bank raised its adjusted earnings per share forecast for Xiaomi from RMB 0.91 to RMB 0.93 for 2024, and also raised its 2025 forecast from RMB 0.9 to RMB 0.91.

Investors, do you think Xiaomi's second-quarter performance will be good?

Let's discuss it in the comments section!

Editor/Emily