Xiaomi’s 1Q25 adjusted earnings at RMB 10.7bn (+28% QoQ, +64% YoY) beat CMBI/consensus expectations by 8%/18, thanks to strong sales across all segments and GPM improvement on better smartphone mix, IoT ASP hike and smart EV GPM improvement. Looking into 2025, we expect smartphone/EV premiumization strategy, IoT/EV capacity ramp-up and in-house SoC chip to continue to boost better revenue mix and earnings growth. We maintain our positive view on Xiaomi’s Human x Car x Home ecosystem expansion, premiumization strategy, SP/AIoT overseas markets and smart EV biz upside. We revise up FY25-27E EPS forecasts by 5-10 % for 1Q25 results beat and better 2025 outlook across all segments. Our new SOTP-based TP of HK$65.91 implies 37.7x FY25E P/E. Maintain BUY.
　　1Q25 results beat across all segments and better GPM. Xiaomi’s 1Q25 revenue grew 47% YoY to RMB 111.3bn thanks to growth across all segments: 1) smartphone: sales climbed 9% YoY and ASP hit record-high at RMB 1,121 (up 5.8% YoY), backed by successful premiumization strategy; No.1 position with share gains in China (18.8% share); 2) IoT: sales jumped 58.7% YoY with rapid growth in air conditioner/refrigerator/washing machine (65%+ YoY shipment); GPM improved 5.4ppts to 25.2% thanks to ASP hike and a better product mix; 3) smart EV: rapid growth with GPM improvement to 23.2% thanks to resilient ASP, cost optimization, channel efficiency, operating leverage on scale and growth of high-margin ultra/accessories; operating loss narrowed to RMB 0.5mn (vs loss of RMB1bn/1.7bn in 4Q/3Q24). Overall GPM improved 0.5ppts YoY to 22.8%, beating market expectation by 1.3ppts. Adjusted net profit grew 64% YoY, 8%/18% above CMBI/consensus estimates.
　　2025 key focus: SP premiumization, AIoT overseas, EV capacity, flagship smartphone SoC. Key highlights from mgmt. call include: 1) premiumization: focus on share gains on RMB6k+ smartphone segment and premiumization to expand into non-SP/EV categories and overseas market; 2) smartphone: 180mn shipment guidance maintained in FY25E and focus on a better mix, given resilient China’s market (+3% YoY) but weaker overseas market (1-2% YoY or potential decline); 3) AIoT: fast-growing phase with shortage in some SKUs, and capacity expansion to accelerate; 3) smart EV: positive on shipment/ASP, capacity expansion and profitability; 4) in-house chips: focus on flagship models and in-house 5G modems next, and profitability is not the priority in the near term.
　　Raise TP to HK$65.91; Maintain BUY. We raise FY25-27E EPS forecasts by 5-10% for 1Q25 beat and stronger outlook across segments. We reiterate BUY with new SOTP-based TP of HK$ 65.91, implying 37.7x FY25E P/E. Upcoming catalysts include Investor Day, smart glasses, EV Phase 2 plant update, and YU7 ASP updates.