Futu: Downgraded Xiaomi Corporation-W target price to HKD 69.85, maintaining "Buy" rating
Credit Suisse has lowered the target price for Xiaomi Corporation-W to HKD 69.85, maintaining a "Buy" rating. Due to weak smartphone demand, the second-quarter performance is expected to fall short of expectations, with revenue forecasts revised down by about 5%. Despite a pessimistic outlook for the smartphone market, Xiaomi's electric vehicle deliveries are progressing smoothly, and the gross margin is expected to rise due to an improved product mix, with second-quarter delivery volume projected at 81,000 units and gross margin expected to increase to 23.9%
According to the Zhitong Finance APP, Jefferies has released a research report stating that due to weak smartphone demand, Xiaomi Corporation-W (01810) may underperform expectations in the second quarter, with the target price lowered from HKD 73 to HKD 69.85, maintaining a "Buy" rating.
The report indicates that third-party data and industry surveys show that global smartphone demand is weak in the second quarter of 2025, with only some advanced demand in the U.S. market. Inventory levels for Android devices are high, especially in emerging markets such as Southeast Asia and India. The forecast for Xiaomi's smartphone revenue in the second quarter of 2025 has been lowered by about 5%, and the gross margin forecast has been reduced by 0.5% to 11.8%. This is due to a more pessimistic view on global smartphone demand and competitive landscape, while the long-term gross margin forecast for smartphones has been slightly lowered to below 12%.
However, the firm mentioned that Xiaomi's electric vehicle delivery progress is smooth, with gross margins rising due to an improved product mix, maintaining a second-quarter delivery volume of 81,000 units, and gross margins are expected to rise to 23.9% quarter-on-quarter, mainly due to an increased delivery proportion of the SU7 Ultra model. Management recently stated that the second electric vehicle factory has not yet started commercial production, but once operational, it will quickly enhance capacity. Investor sentiment towards the Chinese automotive industry has become more cautious, as demand for new models launched by other local brands has fallen short of expectations. However, the waiting time for the SU7 and YU7 models remains long, which gives the firm confidence in its long-term bullish forecast
