小米集团-W(01810.HK):主业规模与利润并重 关注造车等创新业务进展

Xiaomi Group-W (01810.HK): The scale and profit of the main business focus on the progress of innovative businesses such as car building

中金公司 ·  03/27  · Researches

4Q22 performance was higher than our previous expectations

The company announced 4Q22 results: operating revenue of 66.047 billion yuan, a year-on-year decrease of 22.8%, 1.7% higher than our previous expectations, mainly due to smartphone ASP and IoT revenue higher than our expectations; adjusted net profit of 1,461 billion yuan, 10.4% higher than our previous expectations, mainly due to revenue and smartphone gross margin slightly higher than our expectations. Corresponds to revenue of 288.044 billion yuan for the full year of 2022, down 14.7% year on year; adjusted net profit was 8.518 billion yuan, down 61.4% year on year.

Development trends

There has been a steady rise in smartphone ASP, and high-end technology is progressing steadily. In terms of shipment volume, Xiaomi's smartphone shipments reached 151 million units in 2022, continuing to maintain the third largest market share in the world; 4Q22 had 32.7 million units, mainly due to low market demand and the company's continued inventory clean-up (4Q22 inventory decreased by about 2.6 billion yuan from month to month). In terms of ASP, mobile ASP increased 1.2% year-on-year to 1,111 yuan in 2022, a record high. Furthermore, the company made steady progress in the field of high-end smartphones and released the Xiaomi 13 series, a next-generation digital flagship phone, which led to a 6.8% year-on-year increase in the proportion of high-end smartphone shipments in the Chinese market in 4Q22, and ASP in the Chinese market increased by more than 14% year on year. In terms of gross margin, the gross margin of 4Q22 smartphones fell 0.7 ppt to 8.2% month-on-month, mainly due to the company's adjustment of after-sales policies for some products, which had a one-time cost impact of about 700 million yuan. After exclusion, the gross margin of 4Q22 mobile phones was 10.1%.

The major IoT appliance category performed brilliantly, and the number of Internet users continued to expand. IoT business revenue in the fourth quarter fell 14.4% year-on-year to 21.477 billion yuan, mainly due to low demand for some categories of televisions. However, we are concerned about the impressive performance of the company's major appliance business. The revenue of major appliances (air ice washing) increased by more than 40% year-on-year in 2022, reflecting the company's achievements in developing key new products. In terms of the Internet business, 4Q22 revenue fell 1.4% year on year to 7.171 billion yuan and remained stable. Among them, advertising business declined, but gaming and other businesses continued to grow. In particular, revenue from overseas Internet businesses increased 35.2% year on year to 6.8 billion yuan, showing strong performance. As of December 2022, the number of MIUI monthly active users worldwide reached 582 million, an increase of 14.4% over the previous year.

Strengthen profitability and focus on the progress of innovative businesses such as car building. The company stated that it will place “equal emphasis on scale and profit” as its business strategy for 2023. We believe this reflects the company's active exploration in optimizing the management structure, improving operational efficiency, and developing innovative businesses. In terms of car building, the company invested 3.1 billion yuan in innovative business in 2022. Up to now, the automobile R&D team consists of about 2,300 people. We are optimistic about the company's future development potential in innovative businesses such as smart cars and robots.

Profit forecasting and valuation

We kept our adjusted net profit unchanged for 2023/2024. The current stock price corresponds to the price-earnings ratio of the adjusted net profit of the 2023/2024 core business (excluding automobile construction) of 16.0/12.9 times P/E. Maintaining an outperforming industry rating and a target price of HK$14.5 corresponds to the price-earnings ratio of the core business of 2023/2024 of 18.7/15.0 times P/E, with an upward margin of 16.6% compared to the current stock price.


The global pandemic and macroeconomics have affected demand for smartphones and IoT products, and progress in vehicle construction has fallen short of expectations.

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