Xiaomi is expected to report 2Q25 results in mid-Aug. We expect that 2Q25E is likely another strong quarter with revenue/adj. net profit growth of 32%/66% YoY to RMB117bn/10.3bn, slightly below consensus estimates, mainly driven by solid smartphone, strong EV demand, robust IoT on China subsidy and stable GPM across all segments. Looking ahead, we stay positive on 1) Smartphone: global share gains to continue, premiumization strategy, and new retail strategy expansion; 2) IoT: China subsidy, home appliances and overseas expansion; and 3) Smart EV: strong backlog with ASP/GPM upside and improving profitability. We slightly lift our FY25-27E adj. net profit forecasts by 6-11% to reflect stronger EV business, IoT momentum and improving GPM. Reiterate BUY and our new SOTP-based TP of HK$ 66.00 implies 34.4x FY25E P/E.
　　Upcoming catalysts include 2Q25 results, new product launches, EV orders/capacity ramp-up/profitability updates.
　　Smartphone: solid revenue with flattish shipment and ASP hike. For
　　2Q25, Canalys reported Xiaomi’s global shipment of 42.4mn units (flattish YoY), and Xiaomi was ranked No.3 with market share of 15%, while its China shipment grew 3% YoY, outperforming the market (-4% YoY). We estimate better ASP in 2Q25 (+6% YoY/ -3% QoQ) due to a higher mix of mid-to-low-end smartphone shipments. We expect GPM of 11.5% mainly due to BOM cost pressure (esp. memory) and more intense competition from Apple/Samsung amid market weakness. For FY25E, we remain positive on Xiaomi’s global market share gains, domestic premiumization strategy and new retail strategy expansion. Overall, we expect Xiaomi’s shipments to grow 5%/7%/5% YoY to 178mn/190mn/200mn units in FY25- 27E.
　　Smart EV: strong demand/backlog with ASP/GPM improvement. For
　　the EV segment, we remain positive on QoQ revenue growth in 2Q-3Q25E, driven by order backlog and capacity ramp-up. For 2Q, we estimate 81k shipments with a higher ASP of RMB250k (+9% YoY/5% QoQ) thanks to Ultra model delivery and capacity expansion. For FY25E, we remain positive on EV shipment with 396k units (vs guidance 350k), backed by strong YU7 orders and rapid capacity growth.
　　IoT/Internet: strong home appliances momentum with stable
　　GPM. We estimate IoT/Internet revenue to grow 36%/10% YoY to RMB 36.4bn/9.1bn in 2Q25E driven by favourable China subsidy, 618 festival and seasonality (especially air conditioners in summer). For GPM, we expect IoT/internet GPM to slightly decline QoQ to 23%/75% in 2Q25E (vs 25.2%/76.9% in 1Q25) given seasonality and product mix shift.