Xiaomi unveiled its latest ambitious premiumisation plan through launching SU7 Ultra EV with Xiaomi 15 Ultra flagship phone. The debut of SU7 Ultra (starting at RMB529,900) marks its first foray into the luxury car market, with the Nürburgring Limited Edition (RMB814,900) setting the performance benchmark for top sports cars. In traditional segment, Xiaomi 15 Ultra strengthens its high-end smartphone positioning with top quality Leica camera, stylish design and top-notch hardware performance. Last but not least, Xiaomi also launches a series of new high-end IoT products including AIPC, TWS, smart speaker, large home appliance, dehumidifier, etc., which also surprises us with the speed and quality of its new product introduction nowadays. With new surprises, we further lift Xiaomi TP from HK$58.2 to HK$70. Reiterate sector top BUY.
　　Key Factors for Rating
　　Smart EV business: With much lower MSRP range (RMB529.9-814.9k), we deem SU7 Ultra will significantly expand its addressable market by gaining share from core BBA audience and stimulating upgrade demand from potential SU7 Max buyers. Hence, we expect SU7 ultra sales volume likely to reach 40-50k units per year with much higher profitability. To reflect improved product structure with higher ASP and margin, we lift our revenue forecasts by 3-4% to RMB100.6bn/168.5bn and non-GAAP net income forecasts to RMB-972m/8.9bn for 2025-26E respectively. The premium brand strength and Human x Car x Home smart ecosystem edges are set to support valuation re-rating for Xiaomi’s smart EV and new initiative business segment. By adopting 4x 2026E P/S multiple (with 50% discount to Tesla’s 8x), we nudge up TP for smart EV business to HK$28.70.
　　Traditional business: Xiaomi launches Xiaomi 15 Ultra, Xiaomi Buds 5 Pro TWS, REDMI Book Pro 2025, Mi Smart Speaker Pro, central A/C and other large home appliance, which together shows its strong ability to introduce new stylish and innovative smartphone and IoT products within a short time frame. We believe this is a secular and structural trend as a result of Xiaomi’s self R&D initiative. With Xiaomi’s expanding AI infra and AI expertise, we believe Xiaomi will be a key winner in the smart consumer electronics market.
　　Valuation
　　We increase our TP from HK$58.2 to HK$70.0 based on SOTP combining 22x P/E (was 20x) on traditional business and 4x P/S (was 3x) on EV business. We lift valuation multiple to reflect Xiaomi’s growing long term competitiveness in the global consumer electronics and EV market while benefiting from near term stock catalysts including AI glasses and robotics. Reiterate Xiaomi as top BUY.