Xiaomi will report 4Q24 results on 18 Mar. We estimate 4Q revenue/adj. net profit to grow 42%/44% YoY to RMB 103.9bn/7.0bn, 0.5%/9% above Bloomberg consensus, driven by a better mix in smartphones, China subsidies for smartphones/IoT and stronger EV GPM. Looking ahead to FY25E, we remain positive on 1) Smartphone: global share gains and an improving mix, backed by its flagship models and expansion in LATAM/EMEA/SEA; 2) IoT: China national subsidies, AI smart glasses and overseas expansion; and 3) Smart EV: strong backlog of SU7, launch of SUV YU7 and improving profitability. Overall, we are confident on Xiaomi’s core biz strength and growth momentum of EV business.
　　We lift FY24-27E EPS by 8-22% to reflect a better product mix and stronger EV margin. Reiterate BUY and raise SOTP-based TP to HK$ 54.53 for higher EPS estimates and sector re-rating, implying 33.9x FY25E P/E. Upcoming catalysts include 4Q24 results, Mi 15 Ultra/SU7 Ultra/AI glasses and EV order/delivery/profitability updates.
　　Smartphone: better product mix and improving GPM. For 4Q24, Canalysreported Xiaomi’s global shipments increased 5% YoY (vs 3% YoY for the industry) with market share of 13%. We estimate a higher 4Q24 ASP (+3% YoY/2% QoQ) due to better sales of flagship models and higher China sales.
　　We think GPM will continue to improve QoQ to 12.0% in 4Q24 (vs 11.7% in 3Q) on lower memory cost. For FY25E, we expect Xiaomi’s global share gains to continue, helped by high-end models and expansion in LATAM/EMEA/SEA. Overall, we expect Xiaomi’s shipments to grow 16%/10%/5% YoY to 169mn/185mn/195mn units in FY24/25/26E.
　　IoT/Internet/EV: China subsidies, better advertising, strong EVdelivery/ profitability. We estimate IoT/Internet revenue to grow 48%/15% YoY to RMB 30bn/9.0bn in 4Q24E (vs 26%/9% in 3Q24), driven by China subsidies for home appliances/tablets/wearables and higher advertising/pre- installation revenue. For GPM, we expect IoT GPM to stay strong at 20.0% in 4Q24, while Internet GPM will remain solid at 75.0%. For EVs, we estimate Xiaomi’s 4Q EV shipments/ASP of 69k units/RMB 230k and a better GPM of 20.0% (vs 17.1% in 3Q24).
　　Positive on core business outlook and new SUV launch; reiterate BUY.
　　We believe Xiaomi’s “Human x Car x Home” ecosystem will continue to benefit from global share gains, SUV launch and AI product cycle into FY25/26E. Reiterate BUY and raised SOTP-based TP to HK$ 54.53 for higher earnings estimates and sector-re-rating, implying 33.9x FY25E P/E.