小米集团-W(01810.HK):手机及AIOT需求承压 调整后净利望改善

Xiaomi Group-W (01810.HK): Net profit expectations improved after adjustment under pressure for mobile phones and AIOT demand

國盛證券 ·  05/08  · Researches

Mobile phones: Demand is still under pressure, and gross margin is expected to improve. According to the 2023Q1 global smartphone shipments recently announced by Canalys and IDC, Xiaomi's mobile phone shipments fell 22%/23.5% year-on-year.

We expect Xiaomi to ship about 30.2 million units in 2023Q1, a decrease of 22% over the previous year. Weakness on the demand side led to a decline in sales. On the ASP side, we expect a slight decline in ASP. We expect mobile phone demand for the full year of 2023 remains to be seen.

In terms of gross margin, as the cost side improves, we expect gross margin to increase in 2023Q1 and the whole year.

AIoT: Demand is recovering slowly, and gross margin is rising steadily. According to the National Bureau of Statistics, household appliances, audio-visual equipment, and communication equipment in Share-Zero fell 1.7%/5.1% year-on-year respectively in January-January. We expect the recovery in AIoT demand in Xiaomi to be relatively slow. In terms of overseas markets, we judge that there is still uncertainty about the recovery in demand. As a result, we expect Xiaomi AIoT revenue to continue to decline in 2023Q1.

In terms of gross margin, we expect Xiaomi AIoT gross margin to maintain a year-on-year upward trend in 2023Q1. The driving force comes from 1) the increase in smart TV gross margin due to lower display panel costs, 2) product structure optimization, and an increase in the share of high-margin products such as major appliances. We expect there is still room for improvement in the gross margin of Xiaomi's AIoT business in 2023.

Internet: Revenue and profits may be stable month-on-month. Although mobile phone shipments have declined, the increase in user switching cycles has also led to a decline in the churn rate. We expect 2023Q1 Internet revenue to be relatively stable month-on-month. In terms of gross margin, we expect 2023Q1 to remain stable month-on-month.

Car building: The 2024H1 mass production plan remains unchanged, and investment increased significantly in 2023. According to the 202Q4 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.

On the Xiaomi Investors Day in February 2023, Lei Jun said that the estimated cost investment for new businesses such as Xiaomi Motors will reach 75-8 billion yuan in 2023.

Maintain a “buy” rating. On the revenue side, considering the uncertainty in the mobile phone and AIoT markets, we lowered our revenue forecast for 2023. On the profit side, we expect that in 2023, with measures such as personnel adjustments and the streamlining of SKUs, cost improvements and optimization will be achieved, and net profit expectations will improve year-on-year after the adjustment in 2023.

We expect Xiaomi Group's revenue to be 58 billion yuan in 2023Q1, a year-on-year decrease of 21%, adjusted net profit of 2.9 billion yuan, and core adjusted net profit of 41 yuan after removing investment in vehicle construction, a recovery from the previous month. We expect the total revenue of Xiaomi Group to be 2675/2909/3144 billion in 2023-2025, and the net profit of non-GAAP is 95/118/151 billion yuan. Based on Xiaomi's core business (excluding car building) 15x 2023e P/E, combined with investment value, Xiaomi was given a target price of HK$15 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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