小米集团-W(01810.HK)年报点评报告:需求尚待修复 造车投入加大

Xiaomi Group-W (01810.HK) Annual Review Report: Demand has yet to be repaired and investment in vehicle construction has increased

國盛證券 ·  03/28  · Researches

2022Q4 revenue margins are under pressure. The 2022Q4 Xiaomi achieved revenue of 66 billion yuan, a year-on-year decrease of 23%. Among them, mobile phone, AIoT, and internet revenue was 367/214/7.2 billion yuan respectively, down 27%/14%/1% from the previous year. Non-GAAP net profit reached 1.5 billion yuan, down 67% from the previous year. After excluding innovative business expenses, the net interest rate for non-GAAP core business was 4%, a slight decline from Q3.

Revenue for the full year of 2022 was 280 billion yuan, down 15% year over year. Non-GAAP net profit was 8.5 billion yuan, a year-on-year decrease of 61%. Non-GAAP core business net profit excluding innovative business expenses was 11.6 billion yuan.

Mobile phones: Demand has yet to be repaired, and gross margins are expected to improve. The number of Xiaomi 22Q4 phones shipped was about 32.7 million units, down 26% from the previous year. Weakness on the demand side led to a decline in sales. Q4 ASP fell 2% year over year to 1121 yuan, mainly due to increased inventory clearance efforts in overseas markets. Domestic high-end technology progressed smoothly. In Q4, the share of domestic high-end aircraft shipments increased 6.8% over the same period last year, and domestic mobile phone ASP increased by more than 14%. We expect there will still be pressure to clear inventory for 2023Q1 phones, and demand for mobile phones throughout the year remains to be seen.

In terms of gross margin, 22Q4 mobile phone gross margin was 8.2%, down 2 pcts from the previous year. The extended warranty extension for some products in November 2022 resulted in a one-time cost of 700 million yuan. Excluding this impact, the gross margin was 10.1%.

Looking ahead to 2023, we think gross margin is expected to improve after mobile phone inventory is cleared.

AIoT: Q4 picked up month-on-month, and gross margin increased steadily. The 2022Q4 AIoT revenue was 21.4 billion yuan, recovering month-on-month, mainly driven by domestic smart TVs, tablets, and laptops.

In terms of gross margin, the gross margin of Xiaomi AIoT in 22Q4 was 14.3%, an increase of 1.2 pct over the previous year, mainly due to 1) the increase in smart TV gross margin due to lower panel costs, 2) product structure optimization, and an increase in the proportion of high-margin products such as smart appliances (empty ice washing) and tablets. Q4 Revenue from major smart appliances and tablets increased 40%/39% year-on-year, respectively. We expect there is still room for improvement in the gross margin of the AIoT business in 2023.

Internet: MIUI MAU continues to grow, and overseas contributions have reached a record high. Q4 Overseas Internet revenue reached 1.9 billion yuan, an increase of 19.4% over the previous year, and the proportion of Internet revenue increased to 26.1%, a record high.

Q4 The global net increase of MIUI MAU was 18.2 million. Q4 The gross margin of the Internet business was 71.5%, down 4.6 pct from the previous year, mainly due to the decline in gross margin of the advertising and fintech business.

Car building: The 2024H1 mass production plan remains unchanged, and investment increased significantly in 2023. According to the Q4 financial report, the smart car mass production plan for the first half of 2024 remains unchanged, and Xiaomi's R&D team already has more than 2,300 people. Innovative business expenses such as Xiaomi's smart electric vehicles will cost 3.1 billion yuan in 2022, and future personnel and capex expenses will continue to grow. Lei Jun said on Xiaomi Investors Day that the cost investment for new businesses such as Xiaomi Motors is expected to reach 75-8 billion yuan in 2023.

Maintain a “buy” rating. We expect the total revenue of Xiaomi Group to be 2834/3080/332.9 billion yuan in 2023-2025, and the net profit of non-GAAP is 79/110/143 billion. Based on Xiaomi's core business (excluding car building) 16x 2024e P/E, combined with investment value, Xiaomi was given a target price of HK$16 to maintain the “buy” rating.

Risk warning: Domestic smartphone competition intensifies, AIoT progress falls short of expectations, policy risks in overseas markets, and changes in the macro environment have exceeded expectations.

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