$XIAOMI Group-W (01810.HK) $The results for the quarter ended June 30, 2022 will be announced on August 19, Beijing time.

According to Bloomberg consensus expectations, XIAOMI Q2 revenue of 69.864 billion yuan, adjusted net profit of 1.988 billion yuan, adjusted earnings per share of 0.079 yuan.

The agency believes that XIAOMI's performance is affected by the global macro environment and the epidemic, and expects to improve quarter by quarter.

Due to the multiple effects of the conflict between Russia and Ukraine, inflation in Europe and the United States, and the epidemic situation at home and abroad, the company's shipments of smart phones and IoT products are under pressure. at the same time, the weak demand for mobile phones also has a certain impact on the short-term elasticity of the Internet business.

Mobile phone: weak demand has yet to be recovered, and high-end technology continues to advance.

The weakness of the global mobile phone market in the second quarter was partly due to the continued impact of the conflict between Russia and Ukraine on the global economy and a decline in demand in Central and Eastern Europe. According to IDC,22Q2, global smartphone shipments were 290 million, down 8.7% from the same period last year, of which XIAOMI's share was 13.8%, down 3.1% from the same period last year.

On the other hand, shipments from China have declined. According to IDC, Chinese mainland shipped 67.2 million smartphones in the second quarter, down 14.7% from the same period last year, of which XIAOMI shipped about 10.5 million units, accounting for 15.6%, mainly affected by the new round of epidemic control in China.

However, in the long run, the recovery of XIAOMI's mobile phone business is still worth looking forward to, and the company's high-end strategic effect has been shown.Smartphone ASP (Average Selling Price, average selling price) rose 14.1% to 1189 yuan in the first quarter from a year earlier, but Q2 ASP is expected to decline slightly due to the 618 boost and the absence of Q2 high-end models. More high-end phones may be launched in the second half of the year, such as the XIAOMI 12s series in July, to promote the health of ASP.

At the same time, the official delivery of smartphones at XIAOMI's Vietnam factory also reflects XIAOMI's determination to continue to expand the Southeast Asian market and continue its global layout, and profitability is expected to be improved.

AIoT: short-term fluctuations abroad, TV drives gross profit margin to rise steadily

Although affected by the macroeconomic environment, COVID-19 epidemic situation and overseas logistics and other factors, but with the continuous expansion of the company's product matrix, IoT business is still very resilient.

Guosheng Securities expects Q2 XIAOMI's AIoT domestic business to maintain healthy growth under the promotion of 618, but the overseas market is under pressure due to the conflict between Russia and Ukraine and international logistics factors.

In terms of gross profit margin, panel prices have fallen since the beginning of this year, and TV gross profit margin is expected to pick up, promoting Q2 XIAOMI AIoT gross profit margin to be higher than the same period last year.

In terms of products, since the second quarter, XIAOMI has successively announced laser printers, intelligent door locks, glasses and cameras and other products, vertically expanding the depth of IoT products, which is conducive to further opening up incremental space.

Internet: there is pressure at home, but it continues to grow abroad

Internet business is affected by the demand for mobile phones in the short term, and the growth trend remains unchanged in the long run. Smartphone shipments at home and abroad fluctuated in the second quarter, which may affect the development of the company's Internet business in the short term.In the long run, the company's overseas Internet business is expected to continue to maintain strong growth.As of Q1, the number of MIUI monthly active users has exceeded 500 million, and shows a steady upward trend, laying a good foundation for the development of Internet business.

In terms of gross profit margin, it is expected that the gross profit margin of Q2 Internet business will remain around 70%.

Car building: investment increases step by step

Innovative businesses such as Q1 XIAOMI intelligent electric vehicles cost 425 million yuan, and the number of automobile teams exceeded 1200 in May. Guosheng Securities expects Q2-related investment to increase month-on-month.

Institutional profit forecast

Huatai believes that in view of the weak demand for smartphones, the XIAOMI 2022swap 2023 / 2024 non-GAAP calibre EPS forecast was lowered to 0.47 soybean 0.74 yuan 0.85 yuan (previous value: 0.61 pound 0.82 pound 0.88 yuan), giving the target price 16 Hong Kong dollars, corresponding to 29 times the 2022 forecast PE, maintaining the "buy" rating.

Oriental Securities forecasts that XIAOMI 2022Universe 2023max 2024 earnings per share will be 0.42max 0.68max 0.93 (the original forecast for 22-24 is 0.60exp 0.86 max 1.11, mainly reducing business income and smartphone business gross profit margin), according to the comparable company's 23-year 17 times PE valuation, the corresponding target price is HK $13.90, maintaining the "buy" rating.