20181211-广发证券_香港_-小米集团-W-01810.HK-A_strong_platform_raises_its_sails_26页_1mb
报告摘要
Xiaomi Corp (1810 HK) Equity Research Summary
Core Content
Xiaomi Corp (1810 HK) is being initiated with a Buy rating and a target price of HK$16, based on a sum-of-the-parts (SOTP) and discounted cash flow (DCF) valuation model. The company is one of the fastest-growing smartphone and IoT brands globally, with a strong presence in China and expanding into emerging and developed markets.
Main Viewpoints
- Business Model: Xiaomi operates a unique "triathlon" business model, consisting of three pillars: hardware, new retail, and internet services. Smartphones are used for user acquisition, IoT and lifestyle products enrich the ecosystem, and internet services are the primary monetization source.
- Smartphone Growth: Xiaomi's smartphone strategy focuses on offering competitive specs at lower prices, supported by product innovation and an efficient omni-channel and social media marketing approach. It is expected to gain market share in key regions and improve ASP through product upgrades and expansion into Western Europe.
- IoT Ecosystem: Xiaomi is building a large-scale IoT platform and is already leading in several IoT product categories. Its IoT products are significantly cheaper than competitors, helping to capture market share in the smart home segment.
- Internet Services: Internet services are expected to deliver robust growth, driven by increasing MAU, rising ARPU, and monetization opportunities from smart TV integration and overseas expansion. MAU is projected to grow to 321m by 2020.
- Valuation: The target price of HK$16 is based on a SOTP approach, with segments valued at 9x for smartphones, 14x for IoT & lifestyle, and 27x for internet services. The DCF model also supports this valuation, implying a fair value of HK$16.1.
- Investment Risks: The smartphone industry is highly competitive, and Xiaomi faces risks including slower-than-expected expansion into higher price segments, acquisitions without synergy, and monetization challenges.
Key Information
Key Data
| Metric | Value |
|---|---|
| Dec 10 close (HK$) | 13.28 |
| Shares in issue | 15,882 |
| Major shareholder | Lei Jun (16.5%) |
| Market cap (HK$bn) | 299.8 |
| 3M avg vol. (m) | 34.5 |
| 52W high/low (HK$) | 22.2/11.4 |
Financial Forecast (2018-2020)
| Year | Revenue (Rmb m) | % Growth | Net Profit (Rmb m) | % Growth | EPS (Rmb) | % Growth | P/E (x) | P/B (x) | ROE (%) |
|---|---|---|---|---|---|---|---|---|---|
| 2018E | 182,973 | 60% | 10,964 | N.M. | 0.45 | N.M. | 26 | 5.7 | 22 |
| 2019E | 247,388 | 35% | 11,804 | 8% | 0.48 | 8% | 24 | 4.6 | 19 |
| 2020E | 322,738 | 30% | 17,638 | 49% | 0.72 | 49% | 16 | 3.6 | 22 |
Valuation Summary
- Target Price (HK$): 16.0
- SOTP Valuation (Rmb): 14.1
- DCF Valuation (HK$): 16.1
- PEG Ratio (2020): 0.6x
- Free Cash Flow (2020E): 40,996 Rmb m
Investment Catalysts
- High-quality smartphone growth with focus on both ASP and volume
- Strong IoT and lifestyle product growth amid the smart home trend
- Rising MAU and ARPU, along with expansion into new monetization areas
Conclusion
Xiaomi's growth is driven by its "triathlon" business model, which combines hardware, new retail, and internet services. The company is expected to see significant sales growth with a CAGR of 41% from 2018 to 2020, supported by product innovation, efficient operations, and expansion into new markets. The valuation suggests a fair price of HK$16, with a PEG ratio of 0.6x in 2020. However, the company faces several risks, including intense competition in the smartphone sector and challenges in monetizing its internet services.
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