CITIC Securities released a research report projecting XIAOMI-W (01810) to achieve revenues of RMB 473.9 billion and RMB 606.6 billion in 2025/2026 (YoY +30%/+28%), with adjusted net profits of RMB 43.3 billion and RMB 54.4 billion (YoY +59%/+25%). The target price is set at HK$58.8, maintaining a "Buy" rating.
The report highlights that XIAOMI's current valuation offers attractive value, with 2026 earnings expected to benefit significantly from its automotive segment. The stock's forward P/E for 2026 appears compelling. Additionally, factors such as expanded automotive production capacity, new product launches, and improved market sentiment are likely to support the stock.
For Q3, the firm estimates revenue of RMB 110.1 billion (YoY +19%) and adjusted net profit exceeding RMB 10 billion (YoY +62%), marking the first profitable quarter for its automotive business. In smartphones, while rising memory costs pressured margins, the premiumization trend strengthened. IDC data shows XIAOMI shipped 43.5 million smartphones globally in Q3 2025 (YoY +1.8%), maintaining a 13.5% market share. ASP dipped slightly QoQ due to shifts in overseas and domestic product mix, with Q3 smartphone gross margin easing to 11% amid memory price pressures. Q4 margins are expected to stabilize.
The premium 17 series is outperforming its predecessor (15 series) in lifecycle sales, with a significantly improved product mix (Pro/Pro Max models now account for over 80%, Pro Max alone exceeding 45%). IoT revenue grew 5% YoY despite high comparables, subsidy reductions, and competition, with both domestic and international markets contributing. Gross margins remained resilient with a slight QoQ increase, avoiding deep price wars. Internet services sustained steady growth.
In automotive, Q3 likely marked the first profitable quarter, with deliveries reaching 109,000 units. ASP rose QoQ (driven by higher YU7 deliveries), while gross margin edged down slightly to 25%+ (due to a lower Ultra variant mix). September deliveries exceeded 40,000 units, with October expected to show further growth, outpacing last year’s SU7 production ramp-up. Looking ahead, 2026 capacity constraints will ease, shifting focus to new models and overseas expansion.