Wall Street Highlights – Equity

GS reiterate their Buy rating on Xiaomi (1810.HK) with a higher 12-month-forward target price of HK27.5, as GS see Xiaomi continues to record early success in its user-centric “Human x Car x Home” strategy in China and globally. More specifically, GS 1) raise estimates on SU7 deliveries in 2025E and onwards to 225k+ p.a. (per annum) on manufacturing capacity ramp-up of Phase I factory (e.g. 20k deliveries in Oct, per management target) and solid order momentum; 2) introduce GS’ assumption on SU7 Ultra, the prototype of which will take on Nürburgring in Oct; 3) raise estimates on Xiaomi’s 2nd EV model on potentially earlier-than-consensus expected delivery (GSe 40k/210k volume in 2025/26E, or 15%/44% of EV revenue in 2025/26E).

October will be a strong month for Xiaomi, in GS’ view. Aside from the abovementioned SU7 delivery pick-up and SU7 Ultra racing, GS look for the flagship smartphone series Xiaomi 15 release toward month-end, in line with Xiaomi 14 release. Compared to Xiaomi 14 series which have shipped 80% more than the prior series and contribute to c.20% of smartphone revenue by GSe, GS expect stable lifecycle shipments in China with higher ASP, and more meaningful shipments in overseas markets.

GS revise up their group revenue estimates in 2024-26E by 0%/3%/8% on higher EV volume assumptions; GS now model 120k/269k/473k delivery volume in 2024-26E, respectively. For the EV segment, GS are largely in line with VA (Value Analysis) consensus on 2024E sales but 11%/34% above on 2025/26E sales. In terms of profitability, GS maintain group net profit in 2024-25E largely unchanged and raise 2026E group net profit by 10% driven by stronger operating leverage at the EV segment; GS model Rmb29bn/31bn/34bn core net profit in 2024-26E, and Rmb7.8bn/Rmb7.3bn/Rmb3.1bn net loss for smart EV segment, respectively.

Release of Xiaomi 15 and HyperOS 2.0

Xiaomi 14 as the best-selling Android premium series in China (ex. Huawei): GS estimate lifecycle shipments of Xiaomi 14 series to be 9-10mn, which are c.80% higher than the prior Xiaomi 13 series (in line with management commentary), and the shipment breakdown between Xiaomi 14 and Xiaomi 14 Pro to be 2.2:1 (vs. close to 5:1 in Xiaomi 13 series) thanks to differentiated, innovative screen specs between Xiaomi 14 and Xiaomi 14 Pro. Accordingly, GS estimate c.Rmb38bn revenue contribution from Xiaomi 14 series (vs. Rmb20bn from Xiaomi 13 series), or c.20% of annualized smartphone revenue.

HyperOS 2.0 with more advanced AI system features and more ecosystem integration: GS expect Xiaomi HyperOS 2.0 to be released along with Xiaomi 15 in late Oct (post Qualcomm Snapdragon Summit 2024 on Oct 21-23), with Gen-AI system/features likely being the most important highlight. Xiaomi released AI Toolbox in China and HyperOS with Advanced AI overseas in Aug-Sep, with features including AI image expansion/erase, translation/subtitle, call assistant (already embedded in system), and AI wallpaper generation, note/recording summary, in-game voice assistant.

Expect stable domestic shipments of Xiaomi 15 series with higher ASP, and more meaningful contribution from overseas: GS believe substantial China shipment growth similar to what GS saw over the last year is not likely, considering 1) slower industry shipment growth, 2) increased competition (e.g. vivo X200 Pro mini and OPPO Find X8) and shorter lead time, 3) potential higher starting price (vs. Rmb3,999 prior). That said, GS look for meaningful growth contribution in overseas markets (e.g. Europe, Japan).

Stock: 1810.HK

Stock Rating: Buy

12m Price Target: HKD27.50