Xiaomi: A Unified Tech Leader Bridging Smartphone, EVs, And Home Electronics

seekingalpha11-21 00:03

The global smartphone market recovery continues. Strong 4Q24 China shipments will be supported by government purchase subsidies. Xiaomi 15 will boost market share.SU7 delivery will exceed 120k in 24E,...

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Xiaomi 15 will boost market share.SU7 delivery will exceed 120k in 24E,...</p>\n\n<a href=\"https://seekingalpha.com/article/4739028-xiaomi-a-unified-tech-leader-bridging-smartphone-evs-and-home-electronics\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Xiaomi: A Unified Tech Leader Bridging Smartphone, EVs, And Home Electronics</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nXiaomi: A Unified Tech Leader Bridging Smartphone, EVs, And Home Electronics\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-21 00:03 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739028-xiaomi-a-unified-tech-leader-bridging-smartphone-evs-and-home-electronics><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The global smartphone market recovery continues. Strong 4Q24 China shipments will be supported by government purchase subsidies. Xiaomi 15 will boost market share.SU7 delivery will exceed 120k in 24E,...</p>\n\n<a href=\"https://seekingalpha.com/article/4739028-xiaomi-a-unified-tech-leader-bridging-smartphone-evs-and-home-electronics\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4170","symbol_name":"电脑硬件、储存设备及电脑周边","start_time":0,"source_url":"https://seekingalpha.com/article/4739028-xiaomi-a-unified-tech-leader-bridging-smartphone-evs-and-home-electronics","article_id":"2485835141","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2135056556/image_2135056556.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485835141","pubTimestamp":1732118637,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"The global smartphone market recovery continues. Strong4Q24China shipments will be supported by government purchase subsidies. Xiaomi 15 will boost market share.SU7 delivery will exceed 120k in 24E, with a projection to hit 240k in 25E. Ultra  is expected to launch in 2Q25E.The news suggests Xiaomi and Goertek are developing AI glasses, targeting Ray-BanMetaSmart Glasses as a competitor, with a potential launch in 2Q25E.Xiaomi is an ideal fusion of smartphones, EVs, and home electronics, plus a highly integrated ecosystem. A very unique company in China gradually establishing a competitive moat.Editor's note: Seeking Alpha is proud to welcome Toby Shek as a new contributing analyst. You can become one too!","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4170":"电脑硬件、储存设备及电脑周边","XIACF":"Xiaomi Corp.","XIACY":"小米集团ADR"},"translate_title":"小米：连接智能手机、电动汽车和家用电子产品的统一技术领导者","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XIACF":0.9,"XIACY":0.9},"content_text":"The global smartphone market recovery continues. Strong 4Q24 China shipments will be supported by government purchase subsidies. Xiaomi 15 will boost market share.SU7 delivery will exceed 120k in 24E, with a projection to hit 240k in 25E. Ultra (luxury sport sedan) is expected to launch in 2Q25E.The news suggests Xiaomi and Goertek are developing AI glasses, targeting Ray-Ban Meta Smart Glasses as a competitor, with a potential launch in 2Q25E.Xiaomi is an ideal fusion of smartphones, EVs, and home electronics, plus a highly integrated ecosystem. A very unique company in China gradually establishing a competitive moat.Editor's note: Seeking Alpha is proud to welcome Toby Shek as a new contributing analyst. You can become one too! Share your best investment idea by submitting your article for review to our editors. Get published, earn money, and unlock exclusive SA Premium access. Click here to find out more » large Xiaomi electric car delivery center building Robert Way/iStock Editorial via Getty Images  Investment thesis I rate Xiaomi Corporation (OTCPK:XIACF) as a Buy with a target price of US$4.5. The continued recovery in smartphone shipments, the ramp-up of SU7 deliveries, and new EV model launches should fundamentally drive Xiaomi's share price higher. AI Glasses, if it materializes, could be a near-term stock catalyst, considering the success of Ray-Ban Meta Smart Glasses. Before diving into Xiaomi's business segments, it's important to get acquainted with its key leader, Chairman Lei Jun. Some critics label him a copycat, noting that Xiaomi's smartphones and the latest smart EV SU7 resemble Apple's iPhone and Porsche. However, I view Chairman Lei as a visionary and transformational leader. The success of the smart EV SU7 is strong evidence of Chairman Lei's capability, leadership, and vision. Smartphone demand has been recovering quite nicely after two years of contraction in 2022 & 23. I am very impressed by the 13% yoy growth in Xiaomi's China smartphone shipment in 9M24 outpacing nationwide by just 3%. Its market share also rose to a recent high of 15.5% in 3Q24 (Tech Insights). With the newly launched Xiaomi 15 in Oct. and government purchase subsidy, the strong momentum is expected to continue. A Smart EV, the SU7, achieved 100k deliveries in Nov. 2024, with full-year deliveries now projected to reach 120k units. If it maintains the current delivery rate, total delivery in 2025E will exceed 240k units. SU7 Ultra (an electric sports sedan) is in the pipeline for 2025E. It might be early to say how many units to be sold upon official launch but its 10-minute pre-sale in Oct. has achieved an impressive result of 3,680 orders. AI Glasses could be another catalyst. While nothing has been officially confirmed, news indicates that Xiaomi is collaborating with Goertek to develop AI glasses, aiming to compete with Ray-Ban Meta Smart Glasses. Rumors are pointing to a potential launch in 2Q25 serving as a near-term catalyst for the stock. I see a bright and exciting business fundamental in Xiaomi fueled by smartphones and EVs. Other businesses like IoT & Internet services are also growing steadily supporting longer-term growth. The share price rose c.80% YTD, but its valuation is still not expensive at 21.8x FY25 P/E (vs. 18.1x average P/E since 2019) considering c.30% earnings growth in 2025E. Smartphone Continued Recovery in Chinese Market, Xiaomi's Market Share Approaching 15% in 2024E The smartphone market is showing signs of recovery. The COVID-19 lockdowns and the subsequent consumption downturn resulted in two consecutive years of declining smartphone shipments, both in China and globally, during 2022-23. Despite ongoing global economic uncertainties, there are indicators that the market has reached its nadir. Globally, smartphone shipment growth turned positive in 4Q23. Similarly, China experienced a resurgence in growth in 1Q24. Global & China smartphone shipment growth (Tech Insights) China Smartphone Shipments Expected to Remain Strong in Q4 2024 Due to Government Purchase Subsidy In response to the weak property and stock markets, Chinese consumers are downgrading or delaying purchases. To stimulate spending, the Chinese central government announced a substantial Rmb300 billion subsidy in late July for car and home appliance purchases. This subsidy covers items including refrigerators, washing machines, TVs, air conditioners, PCs/laptops, water boilers, stoves, and cooker hoods. Local governments like Guangdong and Shenzhen have expanded the subsidy to include smartphones, providing a subsidy of 10% of the phone's retail price, up to a maximum of Rmb1,000. This program is set to conclude on Dec. 31, 2024. Strong Momentum in Xiaomi's Smartphone Shipments in 2024 Xiaomi's China smartphone shipments have shown strong momentum this year, with a 13.4% yoy increase to 30m units in 9M24, boosting its market share from 13.6% in 2023 to 15.1%. According to Tech Insights, Xiaomi's shipments reached 10.2 million units in 3Q24, making it the third-largest smartphone manufacturer in China with a market share of 15.5%. This strong momentum is expected to continue in 4Q24E, driven by the demand boost from the government's purchase subsidy. Xiaomi's Strong Focus on International Markets Xiaomi is investing heavily in markets outside of China, with two-thirds of its global shipments directed to the international market. According to Tech Insights, Xiaomi ranked third globally in 3Q24, with a market share of 13.9%. Canalys data shows that in 3Q24, Xiaomi was among the top three in 52 markets and ranked within the top five in 69 markets worldwide. Beyond Asia, Xiaomi has also seen significant growth in its smartphone market share across Latin America, the Middle East, and Africa. Xiaomi's smartphone shipments ranking and market share in 3Q24 (Company's presentation) High Smartphone ASP Driven by Increased Premium Sales Smartphones priced over Rmb3,000 are considered premium in China. Xiaomi has been optimizing its product mix, focusing more on premium smartphones in China. This strategic shift has led to a noticeable increase in Xiaomi's market share within the premium segment, which is expected to translate into higher average selling prices (ASP) in the coming quarters. Xiaomi - Increasing premium smartphone market share in China (Company presentation) The launches of the MIX Fold 4, MIX Flip, and Xiaomi 15 are expected to drive higher ASP in 4Q24/1H25E for Xiaomi. Xiaomi's smartphone ASP (Company data) Smart EV Delivery Ramp-Up & New Model Launches as Key Catalysts for the Stock From Anxiety to Exhilaration - I still recall how worried investors were when Xiaomi announced its entry into EV manufacturing in Mar. 2021. After three years of dedicated effort, Xiaomi successfully delivered its first smart EV, the SU7, in Mar. 2024. Leveraging its Human x Car x Home ecosystem, Xiaomi has firmly established itself as one of the leading smart EV manufacturers in China. In 2Q24, Xiaomi completed the delivery of 27,307 units of the SU7. On Nov 13, 2024, Chairman Lei announced the delivery of the 100,000th SU7 unit and projected over 20k additional units to be delivered in Nov. Consequently, SU7 deliveries are expected to exceed 120k units by the end of 2024, aligning with Chairman Lei's interim results guidance. Group photo of Xiaomi Staff celebrating the delivery of the 100,000th SU7 (Company website) Based on the current delivery rate/capacity, total delivery in 2025E will likely exceed 240k units, more than doubling the deliveries in 2024E. Monthly shipment of SU7 (Company data) Ultra and SUV Models are Coming in 2025 The SU7 has achieved remarkable success, but Chairman Lei's ambitions are far from fulfilled. New models, including the SU7 Ultra and the SUV (MX11), are slated for release in 2025. Additionally, a long-range SUV (N3) is in the pipeline, with an expected launch in 2026. Xiaomi vehicle roadmap (X.com) SU7 Ultra Positions as Luxury Sport Sedan Xiaomi's SU7 smart EV is available in three versions: SU7, SU7 Pro, and SU7 Max, priced at Rmb215,900, Rmb245,900, and Rmb299,900, respectively. Xiaomi smart EV ASP in 2H24 is expected to be higher than the realized ASP of Rmb233,230 in 2Q24 due to increased deliveries of the Pro and Max models. The Ultra version, positioned as a high-performance racing EV, has a significantly higher price tag of Rmb814,900 (US$112,718) which will no question lead to a higher overall ASP of Xiaomi's smart EV segment in 2025. With the expensive price tag, I, personally, don't expect to see very high demand for the Ultra, but this luxury sport sedan could improve/upgrade the overall brand image and potentially drive higher sales for another version of SU7. Nevertheless, Xiaomi received an impressive 3,680 orders during a 10-minute pre-sale event in late Oct 2024. 3,680 SU7 Ultra orders in a 10-minute pre-sale event (Company website) Higher GPM as It Scales Chairman Lei once stated that the SU7 was loss-making despite being priced above Rmb200,000. However, 2Q24 results revealed a GPM of 15%, surpassing most investors' expectations. I expect margins to increase as production scales up and efficiency improves. Monthly shipments have steadily increased from approximately 8,500 units per month in 2Q24 to over 10,000 in 3Q24, and are expected to exceed 20,000 in 4Q24, suggesting margin enhancement in the coming quarters. Peers like BYD, Li Auto, and Tesla, with GPMs around 20% in 3Q24, could serve as a benchmark for the margin outlook of Xiaomi's smart EVs. Peers GPM in 3Q24 could serve as a benchmark for the margin outlook of Xiaomi smart EVs (Company data) IoT and Lifestyle Products High Customer Stickiness through a Well-Integrated Ecosystem In addition to smartphones, tablets, and laptops, Xiaomi offers a broad range of smart products, from TVs to small home and kitchen appliances like sweeping robots and air fryers. These products are all connected and integrated via the Mi Home app, allowing customers to control smart home devices remotely. From Xiaomi's perspective, the primary benefit of building this integrated ecosystem is to enhance customer stickiness. Xiaomi - Users with 5 or more connected devices excluding smartphones, tablets, and laptops (Company data) AI Introduction With the rising demand for AI, Xiaomi has recently unveiled its next-generation AI assistant, Super Xiao AI. According to Xiaomi, the upgraded assistant is \"thoughtful and capable,\" and able to handle more complex tasks than its predecessor, Xiao AI. The number of MAUs is also expected to rise after the recent upgrade and integration with EVs. Super Xiao AI (Company website) Xiaomi - AI assistant monthly active users (MAU) (Company data) AI glasses could be a new catalyst News (Xiaomi's AI-Powered Glasses, Techopedia) indicates that Xiaomi is collaborating with Goertek to develop AI glasses, aiming to compete directly with Ray-Ban Meta Smart Glasses. Rumor suggests that Xiaomi's AI glasses could be launched in 2Q25 potentially during the Mi Fan Festival scheduled in April. There is no official confirmation from Xiaomi so far, but this could be a stock catalyst if it is true given the success of the 2nd Gen Ray Ban Meta Smart Glasses. For context, 1m Ray Ban Meta Smart Glasses have been sold in the last three quarters. The market expects shipment of Ray-Ban Meta Smart Glasses to reach 1.5m pairs. Ray Bay Meta Smart Glasses (www.Ray-ban.com) Valuation Since Xiaomi Corporation (XIACF) is traded on the US OTC market, I will assess its valuation using the Hong Kong-listed shares (1810.HK). The share price movement of XIACF generally aligns with that of its Hong Kong-listed counterpart, as illustrated in the performance chart below. YTD performance chart of XIACF and 1810.HK (Investing.com, Author Analysis) Xiaomi's valuation is not expensive considering its revenue growth profile and margin expansion potential 33 analysts covering Xiaomi estimate its revenue in 2025 to grow by 17% in a base case scenario and by 36% in a blue-sky scenario. I anticipate Xiaomi's margin will expand due to smartphone sales mix optimization and EV production ramp-up. Therefore, I believe 20% earnings growth in the base case and 40% in the blue-sky scenario seem reasonable. Using a midpoint of 30% earnings growth for calculation, Xiaomi (1810.HK) is currently trading at a 12-month forward P/E of 21.8x, which is slightly above its average of 18.1x between 2019-24, excluding extreme values during 2022 due to plummeting earnings. Seeking Alpha - Xiaomi's annual revenue estimate (Seeking Alpha) Xiaomi's 12m forward P/E chart (Investing.com, Author's Analysis) My DCF model suggests a fair value of HK$35.2 (US$4.5) While capex is projected to trend upwards in 2024-26E due to ongoing investments in SU7 Ultra and MX11, I model Xiaomi's FCF to grow at an average rate of 26% between 2025-29E and 11% between 2030-34E. This estimate is based on a 20% annual growth rate assumption in Xiaomi's OCF from 2025-29E and a 10% annual growth rate assumption from 2030-34E. Applying a 10% WACC and a 3% terminal growth rate, I arrive at a fair value of HK$35.2 (US$4.5) for Xiaomi, indicating approximately a 25% upside from the current share price of HK$28 (1810.HK) and US$3.6 (OTCPK:XIACF). Sensitivity of Xiaomi's fair value to changes in OCF growth assumptions (Author's Analysis) Risks to Our Recommendation Smartphone Demand Recovery Might Come Weaker Than Expected While I have observed a recovery in smartphone shipments in China and globally over the past few quarters, this recovery may not be sustainable if the overall economy slows down further. Margin expansion could be at risk, as premium smartphones are more vulnerable during economic downturns. Delay in Smart EV New Model Launches The current share price reflects optimism regarding the launches of Xiaomi's SU7 Ultra and SUV MX11 in 2025. Any delays in these launches could directly impact Xiaomi's share price. Although demand for the SU7 and pre-sale results for the Ultra has been strong, it is crucial to monitor for any potential slowdown in demand. Conclusion In conclusion, I view Xiaomi as an ideal fusion of smartphones, EVs, and home electronics under its latest \"Human x Car x Home\" corporate strategy, which seamlessly integrates these three elements. I believe a competitive moat will be established over time as more customers rely on multiple interconnected devices through the Mi Home App and Super Xiao AI. Xiaomi's share price has had a great run in 2024, up more than 80% YTD. Despite this impressive rally, I believe Xiaomi still has further upside, given the growth potential from continued smartphone recovery, new EV launches, delivery ramp-ups, and other new initiatives like AI Glasses. In the long run, the massive MAU globally could be a valuable asset driving growth for Xiaomi such as high-margin advertising revenue.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. 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