HSBC Research raises Xiaomi's target price to 76.6 yuan, with profit forecasts for 2025 to 2027 increased by 6% each

HSBC Research published a report indicating that Xiaomi Corporation-W (01810.HK) exceeded profit expectations in the first quarter of this year, recording a net profit of RMB 10.7 billion, significantly higher than the bank's forecast of RMB 10 billion and the market's general expectation of RMB 9.1 billion. This is believed to be primarily driven by strong growth in the IoT business, a record high gross margin, and improvements in the gross margin and average selling price of the electric vehicle business.

The bank believes that the expansion of the group's IoT and electric vehicle business gross margins is sustainable. Considering that SoC chips typically have a product lifecycle of 12 to 24 months and require high R&D investment, it is expected that the group will begin to equip its self-developed Xuanjie O1 chip in mid-range mobile phone products starting in 2026, which will significantly reduce costs. HSBC Research has raised its net profit forecasts for Xiaomi for 2025 to 2027 by 6% each, maintaining a "Buy" rating and raising the target price from HKD 73.5 to HKD 76.6