Smartphone shipment to stay solid in FY22F
? Xiaomi is confident to achieve 10%+ smartphone shipment growth in FY22F,
driven by Southeast Asia, the EU and LATAM markets, premium segment.
? Internet services to achieve 20%+ yoy revenue growth and maintain 70%+
GPM in FY22F, driven by advertising business and growing premium users.
? Reiterate Add on Xiaomi due to stable global smartphone market share gain.
Xiaomi’s key takeaways from Tech and EV Corporate Day meetings
Xiaomi Corporation attended CGS-CIMB Tech & EV Virtual Conference on 7-8 Apr and
met over 60 investors. Investors’ concerns included rising smartphone competition from
other Chinese brands and potential margin pressure in both smartphone and Internet
services. Investors were also interested in Xiaomi’s strategy in the premium smartphone
segment and surging spending on EV development. Management remained confident on
10%+ smartphone shipment growth in FY22F and a sustainable GPM of over 70% in
Internet services segment; it also promised to keep its EV spending within its original
budget of not more than US$1bn p.a.
Xiaomi to achieve over 10% smartphone shipment growth in FY22F
Management believes c.210m smartphone shipment in FY22F is achievable, driven by
Southeast Asia and the EU and LATAM markets, overseas premium segment growth and
improving chips supply. Management expects weak smartphone growth in 1Q22F due to
the Omicron outbreak in China and sustained chip shortages. However, it foresees
sequential qoq shipment improvement due to easing chip shortages and new model
launches in 2H22F. Xiaomi continues its premium strategy (premium segment accounted
for 13% of total shipment in FY21) with increase in R&D investment for innovative new
product launches, such as the Mi12-series and K50 gaming phone. Management believes
the premium segment would lead smartphone ASP growth and protect GPM, as well as
help ARPU growth in the Internet services segment, as premium users spend more screen
time and money on pre-installed apps. Management revealed smartphone GPM could fall
slightly to 10-12% in FY22F (c.13% in FY21) on higher marketing and promotion expenses.
Internet services GPM to rise above 70%+ on premium user growth
Management expect Internet services to achieve 20%+ yoy revenue growth (+19% in
FY21) and maintain GPM at above 70% in FY22F (c.74% in FY21), driven by its highmargin advertising business and fast-growing premium user base. It believes overseas
revenue will continue to grow strongly (over 20% in 4Q21) on better monetisation of
overseas MIUI users. Xiaomi will be very disciplined in its EV spending, at Rmb3.5bn-4.5bn
p.a., mainly for R&D investment. Xiaomi plans to launch its first EV in 2024F.
Reiterate Add: TP slightly lower at HK$27.00
We cut FY22F EPS by 6.6% as we lower smartphone shipment forecast to 218m units
(previously 225m units) on weaker smartphone sales in China in 1H22F. Reiterate Add as
we believe Xiaomi will continue to gain global smartphone market share and increase
monetisation of its overseas MIUI users. We lower our TP to HK$27.00 on a c.2% EPS cut
in FY23-24F, still based on 20x P/E, a 10% premium over its closest China Internet peer.
Share price catalysts: solid smartphone shipment growth and resumption of ARPU growth
in Internet services segment. Risks: Intensifying smartphone competition.