Xiaomi (1810.HK) Short-term performance is under pressure; Expect some relief in later period of second quarter July 21, 2022 140

PSR Recommendation: BUY Status: Initiation
Target Price: HKD16.24

Investment highlights
Xiaomi Corporation released its first quarterly report that the company’s revenue was
RMB73.4 billion, a decrease of 4.6% YoY; The gross profit was RMB12.7 billion, a decrease of
10.2% YoY; Adjusted net profit was RMB2.9 billion, a decrease of 52.9% YoY. In the first
quarter of 2022, due to the supply shortage of key components, the domestic lockdown
caused by the epidemic and the impact of the global economic environment, the shipments
of smartphone business dropped sharply. However, thanks to the premiumization strategy of
smartphones, the decline in shipments was partially offset by the increase in average selling
price (ASP); As for the IoT and lifestyle products business, smart TVs, laptops, smart home and
smart wearables all maintained rapid growth. Revenue from Internet services remained stable
and the global and mainland China MAU of MIUI continued to grow. In general, the demand
for smartphones in the first quarter of 2022 was weak. IoT and lifestyle products business was
negatively affected. Internet service business maintained steady growth. At the same time,
the company will continue to increase investment in research and development of electric
vehicle in the next 1-2 years which may cause a negative impact on the company’s overall

About the author

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Victoria Wei

魏書詠小姐 (Victoria Wei) 分析師 畢業於城市大學和浸會大學,分別獲得市場營銷和應用經濟學理學碩士學位。現為輝立証券持牌證券分析師,主要負責醫藥,能源,科技等板塊的研究。她曾在受託人、資產管理和證券公司工作,具備股票研究分析和投資經驗。 Graduated from City University and Baptist University with Master of Science Degree in Marketing and Applied Economic respectively. Currently worked at Phillip Securities as a licensed securities research analyst. She is now responsible for the sector covers healthcare, energy, technology and etc. She has working experience in trustee, asset management and securities companies, which equipped her to have equity research analysis and investment experience.

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