Smartphone shipments continued to grow year on year. Adhering to the high-end strategy, the Xiaomi 15 series was released. According to Canalys latest data, global smartphone shipments in 24Q3 increased 5% year-on-year to about 0.31 billion units, the strongest third-quarter performance since 2021. Xiaomi's shipments this quarter were 42.8 million, up 3% year on year. It continued to grow for five consecutive quarters, ranking third in the world, accounting for 14% of the market share. On October 29, the Xiaomi Mi 15 series was officially released. The Xiaomi 15 is equipped with Qualcomm's newly released Snapdragon 8 Extreme flagship processor, equipped with a new-generation airfoil ring cooling system. The battery capacity has been raised to 5,400 mAh, equipped with a P3 fast charging chip + P1 battery management chip, and only ultrasonic fingerprint recognition.

The smart electric vehicle SU7 delivered more than 20,000 units in October, starting full promotion of the city's NOA. According to the official website of Xiaomi Auto, the monthly delivery volume of the Xiaomi SU7 surpassed 0.02 million units for the first time in October, and it is expected that the annual delivery target of 0.1 million units will be completed ahead of schedule in November. The Xiaomi SU7 OTA 1.4.0 has been launched, bringing updates such as City NOA and Surge Smart Cockpit upgrades. Xiaomi City NOA realizes NOA city that “can be driven all over the country” with NOA city navigation assistance. If the car navigation can be reached, the city NOA can be reached, and it can be driven if there is a road, and there are no regional restrictions. The Xiaomi Smart Driving Pioneer Edition, equipped with a large end-to-end model, will be launched at the end of December. Recently, Xiaomi also launched a mass-produced version of the Xiaomi SU7 Ultra. The maximum speed was over 350 km/h, and orders exceeded 3,680 vehicles within ten minutes of launch.

Xiaomi Pengpai OS 2 was released, a key step towards a “full AI ecosystem.” Xiaomi Pengpai OS 2 has been released, bringing three innovations: HyperCore (Surge System Core), HyperConnect (Surge Intelligent Link Architecture), and HyperAI. Pengpai OS 2 uses the cloud hybrid large model architecture and deploys the Xiaomi big model matrix on the end side and the cloud, covering everything from 0.3B to 30B. The end-side perception engine and memory architecture can achieve multi-modal perception, understanding, and recording, and enhance perception and memory capabilities. Based on the HyperAI system, Xiaomi has created an all-ecosystem AI smart assistant, Super Xiaoai, to help users solve small high-frequency problems using smart devices in their lives.

We forecast the company's earnings per share for 24-26 to be 0.79, 1.00, and 1.26 yuan (the original 24-26 forecast was 0.62, 0.77, and 0.93 yuan, which mainly adjusted the main business revenue and gross margin forecast). According to the comparable company's 25-year 27x PE valuation, the corresponding target price is HK$29.40 (using the RMB to HKD exchange rate of 1:1.092), maintaining the purchase rating.

Risk warning

Mobile phone sales fell short of expectations, the automotive business fell short of expectations, and AI implementation fell short of expectations.