Short-term worries are not to be feared, Xiaomi has "four major benefits" ahead
Despite recent pressure on Xiaomi's stock price due to a decline in order volume, Deutsche Bank believes this is only a temporary adjustment. Deutsche Bank notes that Xiaomi has a backlog of 210,000 electric vehicle orders, indicating strong demand, and the upcoming financial report, self-developed chips, investor day event, and the launch of new SUV models are four catalysts that could drive a rebound in the stock price within the next two months
Affected by a decrease in new orders, Xiaomi's stock price has fallen by about 9% since May.
According to news from the Chasing Wind Trading Desk, on May 13, Deutsche Bank analyst Bin Wang released a research report stating that the pullback in Xiaomi's stock price provides a good buying opportunity for investors.
The report believes that the decline in Xiaomi's orders is caused by short-term factors, such as negative events and potential car buyers' wait-and-see sentiment. It is expected that starting from the end of May, as Xiaomi increases more car advertisements and the upcoming release of the SUV model "YU7," the new order volume for Xiaomi will begin to increase.
The report pointed out that the weekly delivery volume decline is mainly affected by the Labor Day holiday, rather than demand issues. Considering the backlog of about 210,000 units, the recent decline in deliveries is more of a supply issue than a demand issue.
Deutsche Bank expects that there are four key catalysts in the next two months that may drive the stock price rebound, including the Q1 2025 financial report, the release of self-developed smartphone chips, the Investor Day event, and the launch of the new SUV model YU7.
Four Positive Catalysts to Support Stock Price Recovery
Deutsche Bank believes that Xiaomi will have four positive catalysts in the next two months:
First is the Q1 performance report. The report expects Xiaomi's Q1 2025 sales to grow by 9% year-on-year, reaching 75,869 units, with the gross margin of "smart electric vehicles and other new businesses" increasing to 22% quarter-on-quarter.
Therefore, Deutsche Bank expects the net loss of Xiaomi's electric vehicle business to decrease by 87% year-on-year and 57% quarter-on-quarter, approximately 300 million RMB; total revenue for Q1 is expected to remain flat at about 109 billion RMB, with a gross profit of 23 billion RMB (a quarter-on-quarter increase of 3%); adjusted net profit for Q1 is expected to be 10 billion RMB (a year-on-year increase of 54% and a quarter-on-quarter increase of 20%).
Second is the release of the "Xring" chip. According to a report from DigiTimes, Xiaomi is expected to launch its self-developed smartphone chipset (codenamed XRING) at the end of May.
Third is the Investor Day event. Public information shows that Xiaomi plans to hold the "2025 Investor Day" meeting on June 3, followed by a visit to the smart electric vehicle factory in Beijing from June 4 to 5.
Fourth is the release of the "YU7" SUV. Xiaomi's second model, the "YU7" electric SUV, will be released in June or July. The report predicts that the monthly sales of the "YU7" SUV will reach about 30,000 units per month.
