20220615-招银国际-小米集团-W-01810.HK-Corp_Day_Takeaways__Eyes_on_product_launches_and_recovery_in_2H22E_6页_1mb

Xiaomi (1810 HK) Company Update Summary

Core Content

This report provides an update on Xiaomi's performance and outlook, highlighting key areas of focus including smartphone demand, chip shortage, overseas market expansion, and the AloT (Internet of Things) strategy. The analysis suggests that Xiaomi's stock presents an attractive risk-reward opportunity, with a target price of HK$15.1 and a 31% upside from the current price of HK$11.54.

Main Points

• Product Launches and Recovery:

  • Xiaomi is expected to launch two flagship models in 2H22E, including a new-gen foldable phone and a Leica-branded high-end model.
  • The company is anticipating a recovery in revenue for 3Q/4Q22E, with an estimated YoY growth of 11% and 10%, respectively, following a 9% decline in 2Q22E.

• Chip Shortage and Inflation Impact:

  • The low-end 4G SoC shortage is expected to ease in 2H22E, which is positive for shipment in India.
  • Inflation and macroeconomic weakness are noted as potential challenges for Xiaomi's smartphone and IoT business in the near term.

• Overseas Market Strategy:

  • Xiaomi is shifting its focus to Latin America (LATAM) and Southeast Asia (SEA) due to the impact of the Russian-Ukraine conflict on the EU market.
  • The company leverages its experience in carrier network partnerships in Europe to expand in these regions.

• AloT Strategy:

  • Xiaomi is ramping up white goods in China and expanding TV sales into overseas markets like SEA, Western Europe, and LATAM.

• 618 Festival Performance:

  • Xiaomi recorded RMB10.2bn in GMV during the 618 Festival.
  • Smartphone and AloT sales grew by 29% and 90% YoY, respectively, as of 11 June.

Key Financial Highlights

Stock Performance

• Market Cap: HK$287,939 million
• Average 3-month turnover: HK$1,429.43 million
• 52-Week High/Low: HK$28.90 / HK$10.30
• Total Issued Shares: 20,338 million

Shareholding Structure

Share Performance (Bloomberg)

Valuation and Investment Recommendation

• Target Price: HK$15.1
• Upside: 31%
• Current Price: HK$11.54
• P/E (FY22E/FY23E): 15.3x / 11.0x
• P/E (1 SD below 3-year average): 15.9x
• Valuation View: Attractive risk-reward due to valuation being below historical average P/E.
• Investment Recommendation: Maintain BUY

Catalysts for Growth

• Product launches in 2H22E
• Stronger shipment volumes
• Share gain potential
• Internet revenue recovery
• Progress in smart EV development

Key Ratios

Analysts

• Alex Ng: (852) 3900 0881 | alexng@cmbi.com.hk
• Lily Yang, Ph.D.: (852) 3916 3716 | lilyyang@cmbi.com.hk
• Claudia Liu: claudialiu@cmbi.com.hk

CMBIGM Ratings

• BUY: Stock with potential return of over 15% over next 12 months
• HOLD: Stock with potential return of +15% to -10% over next 12 months
• SELL: Stock with potential loss of over 10% over next 12 months
• NOT RATED: Stock is not rated by CMBIGM

Disclaimer

• The report is not investment advice and is based on publicly available information.
• CMBIGM does not provide individually tailored investment advice.
• Investors should consult a financial advisor for their own decisions.
• The report is for informational purposes only and not to be construed as an offer or solicitation to buy or sell any security.