尽管很多投资者将小米的投资逻辑建立在其电车爬坡和跨SKU 生态之上，诚然这也是我们的投资主旨，但我们要强调海外市场作为推动其IoT 业务增长的又一推手，因为小米已经克服了运营挑战（如2022 年印度的监管环境变化）并在2024 年重拾智能手机市场份额。Despite recent price competition and downward cycles, the smartphone market in emerging countries presents significant growth opportunities.
Through field visits, we have confirmed Xiaomi's advantages in increasing traffic and self-differentiation through IoT in the Southeast Asian market.
Maintain the “Buy” rating and target price of HK$34.00 unchanged.
Although many investors base Xiaomi's investment logic on its tram climbing and cross-SKU ecosystem, and certainly this is our investment theme, we should emphasize the overseas market as another driving force for the growth of its IoT business, as Xiaomi has overcome operational challenges (such as changes in India's regulatory environment in 2022) and regained smartphone market share in 2024.
We're seeing long-term growth opportunities for Xiaomi's smartphone, tablet, home appliance, and IoT segments in emerging markets around the world, such as Southeast Asia, Latin America, and Africa, where there is still room for penetration. In this report, based on our field visits to Xiaomi retail stores in Malaysia and Indonesia, we will explore Xiaomi's smartphone market opportunities in five Southeast Asian countries (Thailand, Malaysia, Indonesia, Vietnam, and the Philippines) to explore its prospects in emerging markets around the world. Southeast Asia accounted for 8% of Xiaomi and the overall global smartphone market shipments in 3Q24 (according to Canalys), and the young population base is growing rapidly. Our key findings are as follows:
Structural smartphone growth: According to our calculations (Chart 8), the current smartphone replacement cycle in the above five countries is 35-64 months (compared to 30-36 months in China), indicating that as the economy grows, shortening the replacement cycle is expected to bring room for sales growth. Assuming that Xiaomi's market share in Southeast Asia expands from 15% in 3Q24 (IDC data) to 18% in 2026, we expect smartphone shipments to increase to 17 million units in the Southeast Asian market in 2026, which is 4% higher than Xiaomi's total shipments in 2024.
The unit price should increase as 5G becomes more popular. In the past three years, the unit price premium for smartphones in China compared to the Southeast Asian market has narrowed. However, we have seen a domestic premium of up to 150% compared to Indonesia, where 5G penetration is only a low percentage of units. We expect the unit price of mobile phones to rise in Southeast Asia and expand the potential market to $3 billion in 2026.
The Xiaomi IoT device SKU significantly boosted the growth of offline traffic in Southeast Asia. This is what we observed during the field visit. IoT has proven to be a key differentiator for Xiaomi, driving Xiaomi's success in China. We believe increasing the accessibility of IoT and appliance SKUs in Southeast Asia will further drive Xiaomi's growth in the region. We believe that Xiaomi's unique customer experience is the key to its long-term success.
Maintain the purchase rating and target price of HK$34.00, based on an adjusted EPS of 28.5 times in 2025. Risk warning: Smartphone demand falls short of expectations, parts costs are higher than expected, tram growth is slowing, and tram investment exceeds expectations.
