20230807-招银国际-小米集团-W-01810.HK-2Q23E_preview__earnings_recovery_to_accelerate_Maintain_BUY_8页_1mb

Summary of Xiaomi (1810 HK) 2Q23E Preview Report

CMB International Global Markets published a report on Xiaomi (1810 HK) as of July 7, 2023, focusing on the company's 2Q23E financial outlook. The report maintains a BUY rating and raises the target price to HK$16.41, reflecting an 8-20% increase in projected earnings due to factors like improved gross profit margin (GPM) from lower bill of materials (BOM) costs, better product mix, and cost controls.

Key highlights:

• 2Q23E Estimates: Revenue is expected to decline 6% YoY to HK$66.155 billion, while adjusted net profit is projected to grow 92% YoY to HK$3.995 billion. This improvement is driven by higher GPM (11.9%) in the smartphone segment, despite a 16% YoY shipment decline in 2Q23.
• Future Outlook: Earnings recovery is expected to continue into H2 23E, with smartphone shipments rebounding by 7% YoY in 2024E. AIoT and internet segments are anticipated to grow 6% and 5% YoY, respectively, supported by events like the 618 festival and gaming revenue.
• Valuation: The stock is currently at HK$12.22, offering a 34% upside to the new target price. Catalysts include new EV launches and market share gains, with an increased P/E from 19.1x FY24E and positive risk-reward assessment.
• Ratings and Consensus: CMBIGM's estimates exceed market consensus, with adj. EPS 16-22% higher than 2Q23E expectations. The company maintains investment spending for smart EVs.

This report highlights Xiaomi's resilience in challenging market conditions and suggests accelerated earnings recovery as a key opportunity for investors.