According to Huaxing Securities' research report, the replacement cycle for smart phones in Thailand, Malaysia, Indonesia, Vietnam, and the Philippines, the five Southeast Asian countries, is currently 35-64 months (compared to 30-36 months in china), indicating that as the economy grows, a shorter replacement cycle is expected to bring increased sales. Assuming that Xiaomi's (01810) market share in Southeast Asia expands from 15% in Q3 2024 (IDC data) to 18% in 2026, the firm forecasts that the smart phone shipments in the Southeast Asian market will rise to 17 million units in 2026, which is 4% higher than Xiaomi's total shipments in 2024.

The firm pointed out that the price premium of smart phones in china compared to the Southeast Asian market has narrowed in the past three years. However, the firm noted that the domestic price premium relative to Indonesia is as high as 150%, where the 5G penetration rate is only in the low single-digit percentage range. The firm expects the average price of mobile phones in the Southeast Asia region to increase, potentially expanding the market to 3 billion dollars by 2026.

The firm continued, stating that IoT has proven to be a key differentiating indicator for Xiaomi, driving its success in china. The firm believes that improving the accessibility of IoT and home appliance SKUs in Southeast Asia can further drive Xiaomi's growth in the region. The firm considers Xiaomi's unique customer experience to be key to its long-term success.

The firm maintains a 'buy' rating on the company with a target price of 34.00 HKD, based on a 28.5 times adjusted EPS for 2025.