$小米集团-W(01810)$  Xiaomi Group Valuation ReportExecutive SummaryXiaomi Corporation (1810.HK), a leading consumer electronics and smart manufacturing company, has demonstrated robust growth in recent quarters, driven by its diversified portfolio spanning smartphones, IoT devices, and electric vehicles (EVs). As of Q2 2025, the company reported record revenue of RMB 116 billion, a 30.5% year-over-year increase, with adjusted net profit rising 75% to RMB 10.8 billion.

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However, recent sentiment from hedge funds, as highlighted in a Goldman Sachs report, indicates a consensus short position in the short term due to a perceived lack of catalysts and surging short interest by 53% in the past week.

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This report provides an objective valuation analysis based on financial metrics, market positioning, and analyst forecasts as of November 2025. Using multiple valuation methods, Xiaomi's fair value is estimated in the range of HK$60-70 per share, suggesting moderate upside from current levels around HK$43, though risks from competitive pressures and EV segment losses persist.Company OverviewFounded in 2010, Xiaomi operates in three main segments: smartphones and laptops (accounting for 60% of revenue), IoT and lifestyle products (20%), and smart EVs and new initiatives (~18% in Q2 2025).

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The company has expanded globally, holding the third-largest smartphone market share worldwide at 14.7% in Q2 2025, behind Samsung (18.9%) and Apple (15.8%).

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Xiaomi's ecosystem strategy integrates hardware with software and services, including AIoT platforms connecting over 1 billion devices. In EVs, Xiaomi launched its SU7 model in 2024, targeting 400,000 deliveries in 2025, which could represent ~20% of total revenue.

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The firm invests heavily in R&D, with expenses up 41.2% to RMB 7.8 billion in Q2 2025, focusing on AI innovations like multimodal models and AI glasses.

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Recent developments include the launch of the Xiaomi 17 series, which drove strong initial sales (over 80% from Pro models), and expansions in air conditioning and AR/AI glasses markets.

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However, Goldman Sachs noted hedge fund bearishness, citing slowing smartphone growth and EV profitability challenges as key concerns for the second half of 2025.

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Financial AnalysisKey Financial Metrics (Trailing Twelve Months as of Q2 2025)Revenue: RMB ~400 billion (annualized from H1 2025 figures of RMB 205 billion, up 25% YoY).

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Gross Margin: 22.5% in Q2 2025 (up 1.8 ppt YoY), reflecting improved efficiency in smartphones and IoT.

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Operating Margin: 8.61%.

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Net Profit Margin: 8.68%, with adjusted net profit of RMB 17 billion in H1 2025.

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EPS (Diluted): ~RMB 0.68 (annualized from H1).

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Cash Position: Strong liquidity with net cash from operations at RMB 25 billion in H1 2025.

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Debt/Equity Ratio: Low at ~0.3, indicating conservative leverage.

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Segment breakdown for Q2 2025:Segment

Revenue (RMB Bn)

YoY Growth

Gross Margin

Smartphones

68.5

+22%

11.5% (down from 12.1%)

IoT & Lifestyle

25.4

+15%

18.2%

EVs & New Initiatives

21.3

N/A (new)

17.1%

Services

8.2

+10%

75%

EV segment reported an adjusted loss of RMB 1.5 billion in the latest quarter, highlighting scaling challenges despite demand surges.

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Q3 2025 results are scheduled for review on November 18, 2025, with analyst EPS forecasts at ~RMB 0.05-0.31.

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Growth Drivers and ChallengesPositive: Smartphone shipments up 27% YoY to 42.2 million units in Q2 2025; EV deliveries on track for 130,000 in 2025; AIoT connections grew 20% to 1.1 billion devices.

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Negative: Intense competition in smartphones (e.g., from Transsion in emerging markets); EV margins pressured by pricing wars in China; global economic slowdown impacting consumer spending.

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Industry and Competitive AnalysisThe global smartphone market grew 2.6% in Q3 2025, with upgrades driven by AI features.

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Xiaomi holds 14% share, focusing on mid-range devices in Europe, Latin America, and India (No. 3 with 12.8% share).

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Competitors include:Samsung: 19% share, premium focus.

Apple: 16% share, ecosystem lock-in.

Vivo/OPPO: Strong in China/Asia.

Transsion: Dominating low-end in Africa (sub-$200 segment).

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In EVs, Xiaomi competes with BYD and Tesla in China, pricing SU7 under $30,000 to gain share.

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IoT market share is growing, targeting 10% in China's air conditioning by 2026, with AI/AR glasses projected at 56% CAGR.

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Overall, Xiaomi's platform strategy (hardware + services) positions it for ecosystem monetization, but valuation shifts from hardware to tech multiples remain debated.

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Valuation MethodsRelative ValuationP/E Ratio: Current 27.8x trailing earnings, above Asian tech average of ~20x but justified by growth.

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Forward P/E ~22x based on FY2025 EPS forecasts of RMB 1.00-1.20. Implied fair value: HK$60-72 (assuming 25x multiple).

EV/EBITDA: ~15x, comparable to peers like Samsung (14x); suggests fair value HK$65.

P/S Ratio: 1.8x, below Apple (8x) but above traditional hardware firms.

Discounted Cash Flow (DCF)Assuming 15% revenue CAGR over 5 years (driven by EVs/IoT), 10% terminal growth, 10% WACC: Enterprise value ~RMB 1.2 trillion, equity value HK$65 per share (post-net debt adjustment). Sensitivity: If EV losses persist, downside to HK$50.Analyst ConsensusOut of 41-46 analysts:Average Rating: Buy/Overweight.

Average Price Target: HK$64-66 (range HK$41-80).

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Upside ~50% from current levels, though short-term sentiment is cautious per Goldman Sachs.

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Risks and OpportunitiesRisks: Geopolitical tensions affecting supply chains; EV profitability delays (current 17.1% margin); smartphone saturation in mature markets; currency fluctuations (RMB exposure).

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Opportunities: AI integration boosting margins; EV capacity expansion to 20,000/month; emerging market growth in Africa/India; potential re-rating to tech valuation (P/E 30x+).

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ConclusionXiaomi's valuation reflects a transition from a hardware vendor to an ecosystem player, with strong Q2 2025 performance offsetting short-term bearish hedge fund views from Goldman Sachs. At a consensus fair value of HK$65, the stock appears undervalued for long-term investors, contingent on EV breakeven and sustained smartphone...