Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

Xiaomi Corp's FY 2023 results were better than expected in our view, with much-improved profitability. The balance sheet remains healthy, and liquidity is sound. We expect the company to continue performing well, driven by a projected recovery in the smartphone market, Xiaomi's premiumisation strategy and strong demand in overseas markets. Global smartphone shipments remain weak, but may be bottoming out. We believe the company is well-positioned for future growth. The smart EV development has drained less cash than we had expected so far. Xiaomi has been able to fund the investment using internal cash flow. Pricing for the SU7 (scheduled to be launched next week) has not been disclosed. The EV market in China is extremely competitive, with over 150 carmakers. Apple has exited the EV business due to a lack of competitive advantage, and Xiaomi may face the same issue. While it is unclear if Xiaomi will be successful in the EV business, we believe it may not be as detrimental to the credit as originally feared.

  Xiaomi Corp's FY 2023 results were better than expected in our view, with much-improved profitability. The balance sheet remains healthy, and liquidity is sound. We expect the company to continue performing well, driven by a projected recovery in the smartphone market, Xiaomi's premiumisation strategy and strong demand in overseas markets. Global smartphone shipments remain weak, but may be bottoming out. We believe the company is well-positioned for future growth.   The smart EV development has drained less cash than we had expected so far. Xiaomi has been able to fund the investment using internal cash flow. Pricing for the SU7 (scheduled to be launched next week) has not been disclosed. The EV market in China is extremely competitive, with over 150 carmakers. Apple has exited the EV business due to a lack of competitive advantage, and Xiaomi may face the same issue. While it is unclear if Xiaomi will be successful in the EV business, we believe it may not be as detrimental to the credit as originally feared. 

Xiaomi Corp - Earnings Flash - FY 2023 Results - Lucror Analytics

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Xiaomi’s 4Q23 revenue/net profit of 11%/236% YoY growth beat our/consensus estimates, driven by stronger margins, improving mix and investment gains.</li><li>Looking ahead, mgmt. is positive on smartphone recovery, premiumization strategy and EV business expansion.</li><li>We believe Xiaomi’s global smartphone share gain, AIoT overseas sales and internet revenue improvement will continue to drive growth into FY24E-25E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi’s 4Q23 revenue/net profit of 11%/236% YoY growth beat our/consensus estimates, driven by stronger margins, improving mix and investment gains.Looking ahead, mgmt. is positive on smartphone recovery, premiumization strategy and EV business expansion.We believe Xiaomi’s global smartphone share gain, AIoT overseas sales and internet revenue improvement will continue to drive growth into FY24E-25E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi (1810 HK) – Raise TP and Estimates on 4Q23 Beat

<ul><li>Xiaomi will report its 4Q23 results in late March. We estimate 4Q revenue will deliver +10% YoY/+3% QoQ growth, and adj. net income will climb 180% YoY to RMB 4,096mn, mainly driven by strong smartphone sales and resilient internet revenue.</li><li>We think 4Q23E results will be largely in-line with market expectations given outstanding sales of Xiaomi 14 and Double 11 sales event.</li><li>Overall, we expect Xiaomi’s smartphone sales will continue to improve with market recovery and continued share gains, and we are positive on EV product launch in 2Q24E and shipment ramp-up into 2H24E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi will report its 4Q23 results in late March. We estimate 4Q revenue will deliver +10% YoY/+3% QoQ growth, and adj. net income will climb 180% YoY to RMB 4,096mn, mainly driven by strong smartphone sales and resilient internet revenue.We think 4Q23E results will be largely in-line with market expectations given outstanding sales of Xiaomi 14 and Double 11 sales event.Overall, we expect Xiaomi’s smartphone sales will continue to improve with market recovery and continued share gains, and we are positive on EV product launch in 2Q24E and shipment ramp-up into 2H24E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi (1810 HK) - 4Q23E Preview: Strong Smartphone Recovery, Eye on EV Product Launch in 2Q24

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>  share price has declined more than 50% over the last 12-months from HK$22.1 to HK$9.46.</li>
<li>In the meantime, the company’s earnings also have weakened with resurgence of Covid-19 in China alongside decline in demand for smartphones in Europe and other markets.</li>
<li>Xiaomi has entered into the premium smartphones segment which has negatively impacted the company’s margins due to aggressive expansion of offline stores.</li>
</ul>



Xiaomi Corp (1810 HK)  share price has declined more than 50% over the last 12-months from HK$22.1 to HK$9.46.
In the meantime, the company’s earnings also have weakened with resurgence of Covid-19 in China alongside decline in demand for smartphones in Europe and other markets.
Xiaomi has entered into the premium smartphones segment which has negatively impacted the company’s margins due to aggressive expansion of offline stores.


Xiaomi: Margins to Remain Under Pressure with Premiumisation and Investment in EV (Quantamental)

We view Xiaomi Corp as “Low Risk” on the LARA scale, driven by: [1] the company’s leading market position in smartphones and smart hardware; [2] its increasing market share, scale and brand name; and [3] the company’s strong financial metrics with large positive FCF, solid balance sheet with net cash, as well as sound liquidity position. Xiaomi has a strong track record of execution and innovation, along with the entrance into and success in new verticals (e.g. cleaning robots, smart speakers, smart TVs and smart routers). The company also has fast-growing revenue streams from Internet services and gaming. On the other hand, the mobile phone industry is very competitive with low switching costs, particularly for Android phones (Blackberry and Nokia have gone out of business despite having been leading players). The credit is further weighed down by: [1] potential trade sanctions from the US; and [2] execution risk related to Xiaomi’s entry into the increasingly competitive electric vehicle market. Our Credit Bias is “Stable”, given the company’s robust business risk profile and strong balance sheet.

  We view Xiaomi Corp as “Low Risk” on the LARA scale, driven by: [1] the company’s leading market position in smartphones and smart hardware; [2] its increasing market share, scale and brand name; and [3] the company’s strong financial metrics with large positive FCF, solid balance sheet with net cash, as well as sound liquidity position. Xiaomi has a strong track record of execution and innovation, along with the entrance into and success in new verticals (e.g. cleaning robots, smart speakers, smart TVs and smart routers). The company also has fast-growing revenue streams from Internet services and gaming. On the other hand, the mobile phone industry is very competitive with low switching costs, particularly for Android phones (Blackberry and Nokia have gone out of business despite having been leading players). The credit is further weighed down by: [1] potential trade sanctions from the US; and [2] execution risk related to Xiaomi’s entry into the increasingly competitive electric vehicle market.   Our Credit Bias is “Stable”, given the company’s robust business risk profile and strong balance sheet. 

Xiaomi Corp  - Tear Sheet - Lucror Analytics

China

Xiaomi Corporation manufactures communication equipment and parts. The Company produces and sells mobile phones, smart phone software,  set-top boxes, and related accessories. Xiaomi markets its products worldwide.

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Xiaomi Corp (1810 HK)

Xiaomi Corp - Earnings Flash - FY 2023 Results - Lucror Analytics

Xiaomi Corp's FY 2023 results were better than expected in our view, with much-improved profitability. The balance sheet remains healthy, and...

Lucror Analytics

Xiaomi (1810 HK) – Raise TP and Estimates on 4Q23 Beat

Xiaomi’s 4Q23 revenue/net profit of 11%/236% YoY growth beat our/consensus estimates, driven by stronger margins, improving mix and investment gains.

CMB International

Xiaomi (1810 HK) - 4Q23E Preview: Strong Smartphone Recovery, Eye on EV Product Launch in 2Q24

Overall, we expect Xiaomi’s smartphone sales will continue to improve with market recovery and continued share gains, and we are positive on EV...

CMB International

Xiaomi: Margins to Remain Under Pressure with Premiumisation and Investment in EV (Quantamental)

Our quantamental reveals Xiaomi's smartphone GPM is strongly correlated with sales volume. We expect margins to remain stressed due to...

Shifara Samsudeen, ACMA, CGMA

Xiaomi Corp - Tear Sheet - Lucror Analytics

We view Xiaomi Corp as “Low Risk” on the LARA scale, driven by: [1] the company’s leading market position in smartphones and smart hardware; [2]...

Lucror Analytics

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