Earnings First Take : 1Q22 adjusted net profit decreased 53% y-o-y to Rmb2.9bn, missing the market consensus
- 1Q22 revenue decreased by 4.6% y-o-y to Rmb73.3bn mainly due to the smartphone shipment decline
- Adjusted net profit decreased by 52.9% to Rmb2.9bn, missing the market consensus by 6%
- Gross margin eased down to 17.3%, down 0.9ppt y-o-y because of the smartphone segment’s destocking
- Short-term price pressure was expected
What’s New
– Xiaomi Corp (1810 HK) announced 1Q22 results after market close yesterday.
– 1Q22 revenue was Rmb73.3bn, down 4.6% y-o-y growth mainly due to the smartphone shipment decline.
– Meanwhile, the IoT and Internet Service’s revenue maintained y-o-y growth of 6.8% and 8.2% y-o-y.
– Gross margin eased down to 17.3%, down 0.9ppt y-o-y. The drop in the smartphone segment’s gross margin due to destocking was partially offset by IoT business’ margin expansion.
– A net loss of Rmb5.3bn was recorded, mainly due to the one-off equity investments fair value loss of Rmb3.6bn.
– The adjusted net profit decreased by 52.9% to Rmb2.9bn after the adjustment mainly on the net fair value changes on investments, missing the market consensus by 6.0%
Our View:
– We expect short-term pressure on stock performance as the earnings missed the market consensus.
– The smartphone shipment decline was mainly due to the 1) weak customer sentiment on smart devices in the worry of the global inflation, geopolitical risk and Covid-19 lockdown, and 2) the supply chain woe and logistic constraints.
– We expect the smartphone shipment decline to slow down in 2H22 thanks to the resolving supply chain woe.
– We expect a potential turnaround in 2Q22 in the absence of a one-off fair value loss of equity investment.
– We currently rate BUY on the counter with TP at HK$22.6.