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<Research>BofAS Hikes XIAOMI-W (01810.HK) TP to $16.6 to Reflect Higher NEV ASP Forecast
Recommend 15 Positive 31 Negative 5 |
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BofA Securities wrote in a report that XIAOMI-W (01810.HK)'s NEV shipment target of 100,000 units this year is in line with the broker's forecasts, and even higher than the consensus expectations, mainly because the company only has 8 months left to achieve the target. The broker found XIAOMI's product portfolio better than expected, and it forecasted the average selling price (ASP) of the related new energy vehicles (NEVs) to probably be higher. In terms of profitability, the broker cited that XIAOMI estimated the NEV business's gross profit margin to be 5%-10%, while its operating expenses for FY24 may reach RMB11 billion to RMB12 billion. XIAOMI also expected the business to achieve breakeven after achieving a scale of 300,000 to 400,000 annual shipments. Meanwhile, according to BofAS, XIAOMI predicted its global smartphone market to grow by only 2%-3% this year, while targeting an increase in shipments of 15 million to 20 million units this year. XIAOMI aims to expand overseas, particularly in the Middle East, Latin America and Europe. While higher parts costs will have some impact on the business's margins, the broker believed the situation seemed manageable, mainly due to the company's increased scale, which may lead to stronger bargaining power. BofAS lowered its adjusted earnings forecasts on XIAOMI by 26%-28% for 2024/25/26, reflecting the latest guidance on NEV operating expenses. The broker also believed that XIAOMI's NEV business would need time to prove its sustainable growth given the intense competition in the domestic market. Therefore, BofAS raised its target price on XIAOMI to $16.6 from $16.2, reflecting the upward revision in ASP forecasts for NEVs, and reiterated its Neutral rating. AAStocks Financial News |
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