- May 28, 2021
We just published Q1’FY21 results review of Xiaomi (1810 HK) to reiterate our Buy rating with a new PT of HK$38.3.
In Q1’21, Xiaomi’s total revenue reached RMB76.9bn, up 9.1% QoQ/54.7% YoY, driven by strong smartphone sales. Gross margin expanded substantially to 18.4% this quarter, vs 15.2%/16.1% in Q1’20/Q4’20. Opex ratio declined sequentially to 10.6% from 13.4% last quarter. Non-IFRS net profit came in at RMB6.1bn, up strongly 89.4% QoQ/163.8% YoY. As the anchor product in Xiaomi’s ecosystem, the strong smartphone momentum will boost more sustainable growth of its AIoT products and internet services ahead, we revise up our EPS forecasts by 9.8%/8.8% to RMB0.71/RMB0.92 in FY21E/FY22E. We reiterate Buy on Xiaomi with a new PT of HK$38.3 on 45x FY21E P/E to reflect Xiaomi’s future ambitions and its long-term commitment.
- Smartphone: solid outlook despite supply-side headwinds: We raise our 2021 full year forecast of Xiaomi’s smartphone shipment to 199mn units from previous 185mn units. The upside mainly comes from its continued gaining market share from competitors in both China and Europe market.
- AIoT ecosystem: back on rapid growth trajectory: Xiaomi is the first manufacturer to introduce 5G smart white appliance products into the market segment dominated by traditional manufacturers, which is another growth driver for its AIoT sector, in our view. Besides, the rapidly growing brick and mortar Mi-Home Store will drive the sales of AIoT products as well
- Internet services: overseas expansion accelerating: Overseas internet services revenue increased 50.0% YoY to RMB0.9bn, accounting for 13.8% of total internet services revenue. The fast expanding smartphone user base and increasing number of connected AIoT devices will continue to boost future growth of the internet services, in our view
