Goldman Sachs: Raises the target price for Xiaomi Corporation-W to HKD 69, consolidating its leadership position in the high-end automotive market in China through YU7

According to the Zhitong Finance APP, Goldman Sachs released a research report stating that Xiaomi Corporation-W (01810) officially launched the highly anticipated YU7, with order volume reaching 200,000 in the first 3 minutes after sales began (of which over 122,000 orders have been confirmed), and reaching 289,000 within the first hour. Although the deposit of 5,000 RMB (the same below) can be refunded within 7 days (consistent with the launch of the SU7), and a small portion of the orders are converted from unfulfilled SU7 orders, it is still believed that consumer demand for the Xiaomi YU7 far exceeds the expectations of the bank and the market, which should help consolidate Xiaomi's leadership position in China's high-end automotive market. The target price has been raised from HKD 65 to HKD 69, maintaining a "Buy" rating.

The retail prices for the YU7 standard version, Pro version, and Max version are 253,500, 279,900, and 329,900 RMB, respectively, which basically aligns with the bank's expectation of an average selling price of 285,000 RMB for the YU7, remaining highly competitive compared to its rivals. Since the Xiaomi SU7 is the best-selling high-end sedan model in China so far this year, the bank believes that the YU7, with its outstanding performance in size/interior space, driving performance/power system, and endurance, is strongly entering the Chinese high-end SUV market, where the current leaders include Tesla Model Y and Li Auto L6.

Goldman Sachs has raised its forecast for Xiaomi's electric vehicle deliveries and electric vehicle revenue for 2025 to 2027 by 1% to 6%, now expecting electric vehicle deliveries of 411,000, 800,000, and 1,174,000 units for 2025 to 2027, while the revenue forecast for Xiaomi excluding electric vehicles remains roughly unchanged. At the same time, the adjusted net profit forecast for Xiaomi for 2025 to 2027 has been raised by 1% to 4%, but due to the expectation that Xiaomi will maintain a high level of R&D intensity, the assumptions for R&D spending have been increased, partially offsetting the upward adjustment of the adjusted net profit forecast. The bank also predicts that Xiaomi's revenue and net profit compound annual growth rates from 2024 to 2027 will be 27% and 40%, respectively