Macquarie Raises XIAOMI Target Price to $27.74 Amid Revenue Growth

XIAOMI's 4Q23 smartphone gross profit margin saw a slight quarter-over-quarter decline to 16.4%, remaining near its historical high of 16.6% in 3Q23, according to a research report by Macquarie.

The company's advertising revenue surged by 18.4%, driven primarily by a 10% year-over-year increase in monthly active users (MAUs), a rising proportion of high-end smartphone users, and enhanced advertising budgets for Chinese customers.

However, XIAOMI's TV and laptop revenues declined by 21.4% year-over-year due to weak demand. Despite this, the overall gross profit margin was slightly below Macquarie's estimates.

Maintaining an Outperform rating, Macquarie is optimistic about XIAOMI's revenue growth and the improved outlook for its core business. Consequently, Macquarie has raised its target price from $27.18 to $27.74.

While revenue forecasts remain largely unchanged, Macquarie has increased its non-IFRS adjusted net profit forecasts by 2% for 2024 and 2025.