Xiaomi (1810 HK) Summary
Core Content and Key Highlights
Xiaomi's 4Q25 results exceeded expectations, with revenue and adjusted net profit growth of +7% and -24% YoY, respectively, surpassing the Bloomberg consensus estimates by 1% and 10%. The performance was driven by a better smartphone mix, stronger smart EV operating income, and improved operating leverage.
Main Points
- Smartphones: Revenue declined by 14% YoY due to weaker shipments (-12%), but ASP increased by +7%. Gross margin dropped to 8.3% from 11.1% in 3Q25 due to higher memory costs.
- IoT and Lifestyle Products: Revenue fell 20% YoY as the subsidy impact in China faded, though overseas markets showed strength in tablets and TVs.
- Smart EV: Revenue surged by 122% YoY with 145k deliveries and a +6.6% ASP increase. Operating income reached RMB 1.1bn in 4Q25, up from RMB 0.7bn in 3Q25.
- Overall Performance: Despite challenges in the smartphone and auto industries, Xiaomi is well-positioned to strengthen its leadership through premiumization, IoT expansion, and AI development.
2026 Outlook
- Smartphone Premiumization: Xiaomi continues to focus on improving its premium product lineup.
- EV Model Launches: The company aims for 550k EV deliveries in 2026 and plans for overseas expansion in 2027.
- IoT Expansion: Xiaomi is targeting 1k overseas stores in 2026, up from 450 in FY25. The overseas TAM (excluding North America) is 3 times that of China.
- AI Investment: Xiaomi plans to invest RMB60bn in AI over 2026–2028, with a clear roadmap to enhance its ecosystem through AI, OS, and chip capabilities.
Valuation and Investment Recommendation
- Target Price: The new SOTP-based target price is HK$44.47, implying 29.5x and 23.9x P/E for FY26E and FY27E, respectively.
- Reiteration: The analyst reiterates a "BUY" recommendation, citing strong growth potential in key segments and the company's strategic positioning.
- Current Price: HK$32.68, with a 36.1% upside to the target price.
Financial Overview
Revenue Trends
| Year |
Revenue (RMB mn) |
YoY Growth (%) |
| FY23A |
365,903 |
35.0% |
| FY24A |
457,287 |
25.0% |
| FY25E |
522,288 |
14.2% |
| FY26E |
613,077 |
17.4% |
Adjusted Net Profit Trends
| Year |
Adjusted Net Profit (RMB mn) |
YoY Growth (%) |
| FY23A |
39,166.3 |
43.8% |
| FY24A |
35,582.9 |
-9.1% |
| FY25E |
43,987.8 |
23.6% |
EPS Trends
| Year |
Adjusted EPS (RMB) |
| FY23A |
1.53 |
| FY24A |
1.39 |
| FY25E |
1.71 |
P/E and P/B
| Year |
P/E (x) |
P/B (x) |
| FY23A |
26.3 |
3.8 |
| FY24A |
18.9 |
2.8 |
| FY25E |
20.8 |
2.4 |
| FY26E |
29.5 |
2.1 |
Key Figures and Insights
- Gross Margin: Improved slightly in 4Q25 to 20.8%, but declined in FY26E to 21.0%.
- Operating Margin: Fell to 5.3% in 4Q25, down from 13.4% in 3Q25.
- Adj. Net Margin: Dropped to 5.4% in 4Q25, down from 10.0% in 3Q25.
- Smart EV Revenue: Expected to reach RMB 161,141 mn in FY26E, with a P/S multiple of 2.0x.
Earnings Revisions
| Metric |
FY26E (RMB mn) |
FY27E (RMB mn) |
Change (%) |
| Revenue |
522,288 |
613,077 |
+1% / +0% |
| Gross Profit |
109,423 |
134,980 |
-4% / -1% |
| Operating Profit |
43,907 |
54,143 |
-12% / -7% |
| Adj. Net Profit |
35,583 |
43,988 |
-9% / -4% |
| Adj. EPS |
1.39 |
1.71 |
-8% / -3% |
Share Performance
- 12-Month Price Performance:
- Absolute: -42.6%
- Relative: -39.2%
- Market Cap: HK$690,920.6 mn
- Avg 3-Month Turnover: HK$5,895.3 mn
- 52-Week High/Low: HK$60.15 / HK$31.58
Shareholding Structure
- Lin Bin: 8.6%
- Smart Mobile Holdings Ltd: 8.6%
Valuation Methodology (SOTP)
| Business Segment |
FY26E Rev (RMB mn) |
% of FY26E Core NP |
FY26E Core NP (RMB mn) |
Valuation Method |
Target Multiple (x) |
Valuation (RMB mn) |
| Smartphones |
179,360 |
19% |
5,417 |
P/E |
18.0 |
97,507 |
| AIoT and Lifestyle Products |
136,523 |
42% |
11,861 |
P/E |
23.0 |
272,799 |
| Internet Services |
40,300 |
40% |
11,390 |
P/E |
25.0 |
284,750 |
| Smart EV (FY26E) |
161,141 |
-1% |
- |
P/S |
2.00 |
322,281 |
| Total |
- |
- |
- |
- |
- |
1,049,700 |
Conclusion
Despite weaker performance in the smartphone segment and a drop in gross margin, Xiaomi's 4Q25 results were better than feared, with strong growth in the Smart EV segment. The company is well-positioned for future growth with its premiumization strategy, IoT expansion, and AI initiatives. The updated SOTP-based target price of HK$44.47 reflects a 29.5x and 23.9x P/E for FY26E and FY27E, respectively, and the analyst reiterates a "BUY" recommendation. Key upcoming catalysts include new product launches and EV capacity expansion.
