Bank of China International: Maintains "Buy" rating on Xiaomi Corporation-W as industry favorite, target price lowered to HKD 74.4

Zhitong
2025.08.13 09:42
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Bank of China International maintains a "Buy" rating on Xiaomi Corporation-W, with a target price adjusted to HKD 74.4. It is expected that Xiaomi's smart electric vehicles and AI-related innovative businesses will reduce losses in the second quarter and are likely to turn profitable in the second half of the year. The revenue forecast for Xiaomi in the second quarter of 2025 has been revised down from RMB 123 billion to RMB 114 billion, and the net profit forecast has been adjusted from RMB 10.9 billion to RMB 10.4 billion. Although the electric vehicle business is expected to be profitable in the second half of 2025, the valuation method still uses the price-to-sales (P/S) multiple

According to the Zhitong Finance APP, BOC International has released a research report stating that after a 16% pullback from its recent high, Xiaomi Corporation-W (01810) currently presents a highly attractive valuation, and the outlook for the company's medium-term sustainable growth remains unchanged. The firm maintains its industry top pick "Buy" rating, with the target price slightly adjusted from HKD 75.25 to HKD 74.4 based on operational changes.

The bank has slightly lowered its revenue forecast for Xiaomi for the second quarter of 2025 from RMB 123 billion to RMB 114 billion, and its adjusted net profit forecast from RMB 10.9 billion to RMB 10.4 billion. This mainly reflects the following factors: Xiaomi's smartphone shipments of 42.5 million units showed a slight quarter-on-quarter increase, but the increase in low-end models combined with rising storage costs is expected to lead to a slight decline in gross margin; and some provinces and cities in China have suspended subsidies for smartphones and IoT in the second quarter.

BOC International expects that Xiaomi's smart electric vehicle and AI innovation business segments will further reduce losses in the second quarter and are expected to turn profitable in the second half of the year as planned. However, considering that the production start date of the second-phase factory is slightly later than previously expected, the bank has now slightly lowered its sales forecast for 2025 to 400,000 units; at the same time, the bank believes there is room for an upward adjustment of the 700,000 units forecast for 2026.

BOC International stated that although Xiaomi's smart electric vehicle business is expected to enter a profitable period starting in the second half of 2025, the valuation method for this business segment will continue to use the price-to-sales (P/S) multiple, as the bank believes that due to capacity constraints and investments in new businesses such as AI, the apparent net profit does not fully reflect the profitability and growth prospects of Xiaomi's electric vehicle business. Therefore, based on a P/S ratio of 4 times for 2026, BOC International maintains a valuation of HKD 30.4 per share for this segment

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