Xiaomi delivered another beat with 3Q24 revenue/adj. net profit growth of 31%/ 4% YoY. Adj. net profit is 3%/6% ahead of our/consensus estimates, thanks to better EV/core business margins and investment related gains. Xiaomi's EV GPM came in strong at 17.1% (vs. 2Q24 15.4%), above market expectations. Mgmt. guided EV GPM to improve QoQ in 4Q24E and lifted annual delivery target to 130k units (vs. previous 100k). Looking ahead, we remain positive on Xiaomi's solid execution of "Human x Car x Home" strategy, backed by smartphone global share gains, AIoT growth in expanding SKUs (tablets/wearables/home appliance) and improving mix, and EV shipment momentum into FY25-26E. Reiterate BUY with new SOTP-based TP of HK$32.7, implying 24.3x FY25E P/E. Upcoming catalysts include SUV model launch, smartphone/AIoT share gains, overseas store expansion and EV order/delivery/profitability updates.
3Q24 beat on stronger smartphone and AIoT/Internet/EV margins. Xiaomi's 3Q24 global smartphone shipment grew 3.2% YoY and ASP improved 10.6% YoY due to market share gains and higher sales of premium models. By segment, smartphone/AIoT/internet revenue grew 14%/26%/9% YoY, boosted by stronger smartphone/large home appliance/wearables and global user base expansion. Smartphone GPM came in at 11.7% (vs. 12.1%/14.8% in 2Q/1Q24), largely in-line due to higher BOM costs, while AIoT GPM elevated to 20.8% (+2.9ppts YoY/+1.1ppts QoQ) thanks to higher mix of higher-margin home appliance and wearable products. 3Q24 EV GPM was impressive at 17.1% (vs. 2Q24 15.4%), with further upside in 4Q24E. 3Q24 beat on stronger SP sales and AIoT/Internet/EV margins.
FY25E outlook: EV & core business momentum to continue, new retail strategy to accelerate. Xiaomi EV reached 20k monthly delivery in October, and mgmt. lifted annual EV delivery target to 130k units (vs. previous 100k) backed by higher efficiency and faster production output. Xiaomi's new retail strategy execution was beyond mgmt. expectations, and new store opening target was lifted to 15k/20k stores by end of FY24/25E (vs. previous 13k/20k by end of FY24/26E). Looking ahead, mgmt. is confident that new retail channel expansion will further boost AIoT home appliance and EV sales, especially in lower-tier cities. Overall, we expect Xiaomi's adj. net profit to grow 28%/25% YoY in FY24/25E.
Accelerated growth in core business and EV; Reiterate BUY. We believe Xiaomi's "Human x Car x Home" ecosystem is poised to bear fruit from global market share gains and AI upgrade cycle in FY25/26E, and we expect further upside in EV business backed by new model launch and production capacity improvements. Reiterate BUY with new SOTP-based TP of HK$32.7, implying 24.3x FY25E P/E.Positive on core business outlook and EV upside.
