Xiaomi Corporation: Riding the Wave of AI and Innovation
Xiaomi Corporation, a technology giant founded in 2010, has solidified its position as a global leader in smartphones, IoT products, and internet services. Leveraging its unique business model that combines affordably priced, high-quality smartphones with a robust IoT ecosystem and internet services monetization, Xiaomi has been on an upward trajectory. Despite macroeconomic challenges and rising competition, its growth momentum appears unstoppable.
Key Highlights and Performance
- Xiaomi experienced a stellar 15% YoY growth in global smartphone shipments in 2024, significantly outpacing the industry’s 7% YoY growth.
- The company shipped 168.6 million units globally in 2024, contributing the most to the industry’s volume growth.
- In Q4 2024, Xiaomi secured 13% of the global smartphone market, maintaining its third-place ranking behind Apple (23%) and Samsung (16%).
- Within China, Xiaomi achieved 16% market share in Q4 2024, marking the highest annual growth among top vendors and securing the fourth spot.
Future Outlook
2025 is expected to bring continued growth for Xiaomi, with Canalys forecasting a 2% increase in smartphone shipments in China. The growth will be driven by steady demand recovery, improved macroeconomic conditions, and enhanced product features such as AI-powered operating systems, longer battery life, and sleeker designs.
Xiaomi is also well-positioned to capitalize on AI proliferation through its AIoT ecosystem. The company’s upcoming product launches, including the SU7 Ultra EV and smart glasses, alongside its trade-in program covering smartphones, tablets, and smartwatches, are expected to boost sales further. Additionally, its EV segment, particularly the SU7, promises strong weekly orders and ASP growth.
Financial Highlights
- Revenue for FY2024 is estimated at CNY 354,388 million, with a projected 20.9% growth in FY2025 to CNY 428,405 million.
- Net profit is expected to grow 27.2% in FY2025, reaching CNY 30,431 million.
- Operating margin is forecasted to improve to 7.0% in FY2025, up from 5.6% in FY2024.
ESG Updates
Xiaomi’s ESG rating improved in October 2024 due to better corporate governance and enhanced recycling practices. While its environmental score ranks above industry averages, its social score lags behind due to supply chain risks and allegations of indirect involvement in controversial labor practices. The company has implemented measures to mitigate risks, including supplier oversight and external security certifications for data protection.
Recommendation
OCBC Investment Research maintains a BUY rating for Xiaomi, with a revised fair value of HKD 57.60, citing strong growth momentum and extensive opportunities in AI, IoT, and EV segments.
Tencent Holdings Limited: A Stable Performer
Valuation Metrics
- FY2024 Price/Earnings (P/E): 17.3
- FY2024 Price/Book (P/B): 3.9
- FY2024 Return on Equity (ROE): 21.6%
- FY2024 Dividend Yield: 1.0%
Performance Highlights
Tencent remains a dominant player in its sector, supported by strong fundamentals and a robust business model. Its diversified portfolio across gaming, cloud computing, and advertising ensures stable revenue streams. The company is well-poised to navigate market challenges with its innovative strategies and extensive user base.
Recommendation
The report indicates Tencent as a strong investment option due to its consistent growth and innovation capabilities.
Apple Inc.: A Premium Player
Valuation Metrics
- FY2024 P/E: 31.0
- FY2024 P/B: 56.4
- FY2024 ROE: 181.0%
- FY2024 Dividend Yield: 0.5%
Performance Highlights
Apple continues to lead the premium smartphone market while expanding its ecosystem through wearables and services. Its ability to maintain high margins and a loyal customer base underscores its strong brand value. Despite its premium valuation, Apple remains a reliable choice for long-term investors.
Recommendation
The report suggests Apple as a suitable investment for those seeking exposure to a high-margin, premium technology brand.
Samsung Electronics Co. Ltd.: A Global Technology Leader
Valuation Metrics
- FY2024 P/E: 12.0
- FY2024 P/B: 0.9
- FY2024 ROE: 7.5%
- FY2024 Dividend Yield: 2.7%
Performance Highlights
Samsung continues to dominate the global smartphone and semiconductor markets. Its competitive pricing and innovation in chip technology make it a formidable player. The company’s diversified revenue streams provide resilience against market volatility.
Recommendation
The report views Samsung as a stable investment option with room for growth in key markets.
AAC Technologies Holdings Inc.: A Niche Player
Valuation Metrics
- FY2024 P/E: 31.1
- FY2024 P/B: 2.1
- FY2024 ROE: 7.3%
- FY2024 Dividend Yield: 0.5%
Performance Highlights
AAC Technologies specializes in miniaturized acoustic components and optical lenses. While the company operates in a niche market, its innovation in advanced technologies offers significant growth potential. However, heightened competition and pricing pressures pose challenges.
Recommendation
The report indicates AAC Technologies as a high-risk, high-reward investment, suitable for those seeking exposure to specialized technologies.
