Goldman Sachs: Downgrades Xiaomi Corporation-W target price to HKD 65, second quarter performance roughly in line with expectations

Zhitong
2025.08.20 05:36
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Goldman Sachs released a research report stating that Xiaomi Corporation-W's second-quarter performance basically met the bank's expectations. Revenue grew by 30% year-on-year, with strong performance in Artificial Intelligence of Things (AIoT), which increased by 45%, exceeding the bank's and market forecasts by 2% and 8%, respectively. Electric vehicle sales offset the weak smartphone sales, while adjusted net profit increased by 75% year-on-year, surpassing the bank's and market forecasts by 7% to 13%. The bank maintains its revenue forecast for Xiaomi from 2025 to 2027 largely unchanged, but due to increased R&D investment and income tax, it has lowered its adjusted net profit forecast by 1% to 4%. Consequently, the target price has been reduced from HKD 69 to HKD 65, with a rating of "Buy." Over the past three months, Xiaomi's stock price has performed in line with the index, and year-to-date, it has still risen by 54%. The bank believes this is due to the downward revision of smartphone revenue/gross margin estimates, as it has consistently forecasted Xiaomi below market expectations since early 2025; concerns about slowing AIoT sales growth in the second half of the year due to diminishing incremental benefits from China's national subsidy program; and relatively slow improvements in electric vehicle manufacturing capacity since July, despite a slight increase in delivery volumes in August; after two years of continuous outperformance and upward adjustments, the revisions to revenue/earnings per share forecasts have been moderate

According to the Zhitong Finance APP, Goldman Sachs released a research report stating that Xiaomi Corporation-W (01810) second-quarter performance basically met the bank's expectations. Revenue grew by 30% year-on-year, with strong performance in Artificial Intelligence of Things (AIoT), which increased by 45%, exceeding the bank's and market forecasts by 2% and 8%, respectively. Electric vehicle sales offset the weak smartphone sales, while adjusted net profit grew by 75% year-on-year, surpassing the bank's and market forecasts by 7% to 13%. The bank maintains its revenue forecast for Xiaomi from 2025 to 2027 largely unchanged, but due to increased R&D investment and income tax, it has lowered its adjusted net profit forecast by 1% to 4%. Therefore, the target price has been reduced from HKD 69 to HKD 65, with a rating of "Buy."

In the past three months, Xiaomi's stock price has performed in line with the index, and it has still risen by 54% year-to-date. The bank believes this is due to the downward revision of smartphone revenue/gross margin estimates, as it has consistently predicted Xiaomi below market expectations since early 2025; concerns about slowing AIoT sales growth in the second half of the year due to diminishing incremental benefits from China's national subsidy program; and relatively slow improvement in electric vehicle manufacturing capacity since July, despite a slight increase in delivery volumes in August; after two consecutive years of exceeding expectations and upward adjustments, the revisions to revenue/earnings per share forecasts have been moderate

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