Xiaomi is expected to report 3Q25 results in mid-Nov. We expect 3Q25E to deliver another strong adj. net profit growth of 60% YoY to RMB 10.01bn, in-line with consensus estimates, mainly driven by strong momentum of smart EV with improving profitability and stable IoT/internet growth. For GPM, despite smartphone BOM cost hikes (esp. memory), our 3Q GPM estimate is at 22.9% (vs 22.5% for consensus), backed by resilient smart phone (SP)/IoT/internet GPM at 11%/23%/75.3%, while EV GPM may come in softer at 25.8% (vs 26.4 in 2Q) on capacity constraint, on our estimate. For 4Q, we stay positive on: 1) smartphone: higher sales mix from Xiaomi 17 Pro/Pro-max, Double 11 promotions, and new retail strategy; 2) Smart EV: strong delivery with improving profitability and potential capacity expansion; 3) Internet: stable growth with GPM at 75%. Overall, we slightly trim FY25-27E adj.net profit by 3-4% to reflect softer SP business, EV biz break-even in 3Q and higher BOM costs. Reiterate BUY and our new SOTP-based TP of HK$61.3 implies 33.9x/26.5x FY25E/26E P/E. Upcoming catalysts include 3Q25 results, the Double 11 festival, new product launches, and EV capacity expansion.
Smartphone: stable 3Q shipments with flattish ASP; expect stronger 4Q growth on Xiaomi 17 momentum and Double 11 promotions. For 3Q25, Omdia reported Xiaomi’s global shipments of 43.5mn units (+1.8% YoY), and Xiaomi maintained No.3 ranking with market share of 13.6%, driven by new model launches and Europe & Latin America markets (Redmi Note/Poco). For 3Q25, we estimate ASP to decline slightly QoQ given higher mix from lower-ASP overseas markets (e.g. India/Africa) and China shipment decline. We expect resilient GPM at 11% despite concerns on memory cost hike. Overall, we remain positive on Xiaomi’s continuous global market share gains, premiumization strategy (Pro/Pro-max) and new retail strategy expansion. Overall, we expect Xiaomi's shipments to grow 3%/7%/5% YoY to 174mn/185mn/195mn units in FY25-27E.
Smart EV: strong 3Q ASP/profitability backed by SU7/Ultra deliveries. For EV segment, we estimate 3Q deliveries of 109k and ASP of +5% QoQ thanks to SU7 delivery with higher ASP and Ultra model shipment growth. For margins, we expect 3Q GPM to slightly decline QoQ to 25%, due to capacity constraint on SU7 orders. As for profitability, we believe Xiaomi’s EV business will achieve break-even in 3Q mainly on China’s favourable purchase tax subsidy, economies of scale and superior manufacturing efficiency. For FY25E, we expect 402k EV shipments on strong YU7/Ultra orders and capacity expansion.
IoT/Internet: stable internet growth but softer IoT biz on competition and China fading subsidies. We estimate internet biz revenue growth of 8% YoY with flattish GPM at 75% in 3Q25E. For IoT biz, we expect revenue of +5% YoY/-29% QoQ mainly on market competition and China subsidy effect fading out.