- November 27, 2020
We have published a research note on Xiaomi (1810 HK) to reiterate our Buy rating with a new PT of HK$35.0:
Total revenue reached a record high of RMB72.2bn, up 34.8% QoQ/34.5% YoY, driven by impressive smartphone sales and HW strength in the overseas market, where revenue accounted for 55.2% of the total. Given the strong momentum, we raise our EPS forecasts to RMB0.49/sh and RMB0.66/sh in FY20E and FY21E (vs. prev. RMB0.44/sh and RMB0.61/sh), respectively. By applying its historical high of 45x P/E on FY21E, our new PT is HK$35.0 (vs. prev. HK$30.5).
- Smartphone: successful dual brand strategy paved the way for 5G cycle
- smartphone shipment regained top 3 globally in Q3, with a total shipment growing by 42.2% YoY to 46.6mn units
- dual brand strategy played out well as Xiaomi’s premium brand – Mi and mass-market brand – Redmi are respectively one of the most popular smartphones in each market segment
- an upbeat outlook on the shipment for next year, in particular, in the overseas market, and the successful mass production of smart manufacturing will further enhance product competitiveness
- IoT & lifestyle: gaining steam and returned to a growth trajectory
- This sector reported revenue of RMB18.1bn, up 18.8% QoQ/16.1% YoY;
- Smart TV shipments reached 3.1mn in Q3, maintaining the leadership in mainland China and top 5 globally;
- has entered the premium market and benefited from the strong demand of overseas developed markets, the sector margin was expanding
- Internet service: launched new fintech business with cross-sector synergy
- Internet services revenue grew by 8.7% YoY to RMB5.8bn in Q3;
- MIUI MAU increased by 26.3% YoY to 368.2mn;
- rebranded fintech business by introducing Supply Chain Financing, Financial Technology, etc., which will achieve more cross-sector synergies
