Xiaomi Corporation – 1Q19: smartphone bottoming out and accelerated monetization in internet services

Xiaomi reported 1Q19 revenue of Rmb43.8bn, +27.2% YoY/-1.5% QoQ and beating the consensus by 4.9%. 1Q19 gross profit came at Rmb5.2bn, +21.3% YoY/-7.9% QoQ, with gross margin softened at 11.9%. With the strong new product launch including high-end phone Mi9 in 1Q19, we expect a recovery in margin in 2Q19. AIoT segment maintained strong growth and internet service monetization has made progress in overseas markets. The company consistently demonstrates a high operating efficiency with expense as % of total revenue at 9.4%. Non-IFRS net profit reached Rmb2.1bn, +22.4% YoY/+12.3% QoQ, and Non-IFRS net margin expanded to 4.8%.