AMTD Research | Xiaomi (1810 HK): Q4’20 results review: GM expansion, strong momentum on smartphone, entering FY21 with multiple growth drivers, reiterate Buy

Xiaomi reported solid Q4 results. Total revenue came in at RMB70.5bn, up 24.8% YoY, but slightly down 2.4% QoQ, mainly due to supply constraints in the smartphone business. Gross margin increased 2.0ppts sequentially to 16.1%, thanks to the improvement in smartphone (10.5% in Q4 vs 8.4% in Q3) and internet services (68.4% in Q4 vs 60.4% in Q3). Non-IFRS net profit grew 36.7% YoY to RMB3.2bn. For the next quarter, we expect total revenue will grow by 45% YoY to RMB72.0bn with smartphone shipment of 45mn~47mn units. Hence, we reiterate Buy on Xiaomi with a PT of HK$35.0, implying a 45x P/E on our FY21E.