Jinwu Financial News | SPDB International Development Research reports that the revenue of the Xiaomi Group (01810) is expected to increase 25% year on year in the first quarter, and the year-on-year growth rate will rise again from the fourth quarter of last year. The bank expects the gross margins of Xiaomi's three core business segments to be 14.5%, 20%, and 75%, respectively, to maintain a high position. As a result, the bank expects Xiaomi's adjusted net profit to be close to RMB 5.5 billion, an increase of nearly 70% over the previous year. Combined with the expenses of about 2.5 billion yuan for new businesses such as automobiles, Xiaomi's core business profit is expected to be close to RMB 8 billion after adjustment in the first quarter, and profit release is strong.
The bank mentioned that after the Xiaomi SU7 press conference and the Investor Day event, the bank clearly felt that the management was motivated by its own business prospects, and that they had actionable strategies for high-end mobile phone products and automotive business methodologies. As a result, the bank raised Xiaomi's 2024/2025 car delivery forecast to 100,000/208,000 units, and raised the 2024/2025 car revenue forecast to 23.7 billion yuan/50.8 billion yuan. At the same time, the bank slightly adjusted its core business growth momentum and corresponding investment in technology research and development.
Based on the steady release of profits from Xiaomi's core business, thereby encouraging Xiaomi to invest more calmly in building future technical barriers and opening up room for growth, the bank raised Xiaomi's target valuation and target price. The bank used the segmented plus total valuation method to value Xiaomi. The bank gave Xiaomi a target price-earnings ratio of 14.0x, 16.0x, and 14.0x for smartphone, IoT, and internet businesses in 2025, and 2.0x for smart electric vehicles, respectively. The bank reaffirmed Xiaomi's “buy” rating, and the target price was raised from HK$18.6 to HK$23.6, a potential increase of 22%.