Introduction to this report:
The Xiaomi Group's financial report for the second quarter of 2024 separately disclosed the automobile business. Profitability continued to increase, production capacity climbing and channel development continued to advance, and the annual delivery target was raised to 0.12 million vehicles, and the supply chain continued to benefit.
Key points of investment:
Investment advice: Maintain the industry's shareholding rating, Xiaomi car delivery continues to accelerate, production capacity bottlenecks gradually open up, and revenue and profitability continue to increase. As the scale of production and sales of Xiaomi cars grows, related supporting auto parts are expected to benefit. We recommend Wuxi Zhenhua, Shangsheng Electronics, Tuopu Group, Shuanghuan Transmission, and Silver Wheel Co., Ltd.
Brief description of the incident: On August 21, Xiaomi Group announced its financial report for the second quarter of 2024. 2Q24 achieved revenue of 88.9 billion yuan, a year-on-year increase of 32%, core operating profit of 5.8 billion yuan, and adjusted net profit of 6.2 billion yuan, an increase of 20% over the previous year. The current financial report separately disclosed the automobile business. 2Q24 automobile revenue was 6.2 billion yuan, and the gross profit margin was 15.4%.
Production capacity bottlenecks gradually opened up, and the annual delivery target was raised to 0.12 million vehicles. Xiaomi delivered 0.027 million new vehicles in the second quarter, and production capacity gradually climbed. Double production began in June 2024, production lines were optimized in July, and the delivery target of 0.1 million vehicles is expected to be completed ahead of schedule in November 2024, and the new delivery target of 0.12 million vehicles is expected to be achieved in 2024. Channel construction and expansion have been smooth. As of June 30, 2024, there were 87 automobile sales stores, covering 30 cities.
The profitability of the automotive business is constantly being optimized, and new models are worth looking forward to. The ASP for the Xiaomi auto business in the second quarter of 2024 was 0.229 million yuan per vehicle. In July, the Xiaomi SU sold 0.013 million units in July, making it the third-highest selling model for medium and large cars in China. 2Q24 The gross margin of Xiaomi's innovative business segments, such as smart electric vehicles, reached 15.4%, up 2.8 pcts from the first quarter. Under the effect of scale, the volume and quality of the automobile business has risen sharply, and profitability is expected to continue to be optimized. With the increase in SU7 deliveries and the launch of subsequent new models, the scale of production and sales of Xiaomi cars expanded, and related supporting suppliers continued to benefit, recommending Wuxi Zhenhua, Shangsheng Electronics, Tuopu Group, Shuanghuan Transmission, and Yinlun Co., Ltd.
Risk warning: New vehicle deliveries fall short of expectations, and demand in the NEV market is declining.