Research from Quam Securities, Quam Securities

Quam Securities Research

Research from Quam Securities

Quam Securities

Since its inception in 1986, Quam Securities Limited (Quam Securities) has grown to become one of the few mid-tier securities brokerages in Hong Kong with global execution capabilities for both private and institutional clients. It boasts a well-established network in Greater China including Taiwan and in major world markets through the Global Alliance Partners (GAP). Quam Securities is well-positioned not only to harness and drive business within the China Tonghai International Financial Limited but also between China and the world markets.

Thematic (Sector/Industry)

<div><div><div><div><ul><li>Despite shipment continued to fall y/y, all major markets experienced deceleration in decline.</li><li>DMs like US &amp; W Europe did better with more material deceleration, which helped Apple to solidify its market position.</li><li>EMs remained weak with APAC (ex-Jap &amp; China), CEE and MEA falling 17-20% y/y, which was a bigger headache to the Android camp, especially the Chinese players, among which, Xiaomi had relatively poorer performance.</li></ul></div></div></div></div>

Despite shipment continued to fall y/y, all major markets experienced deceleration in decline.DMs like US &amp; W Europe did better with more material deceleration, which helped Apple to solidify its market position.EMs remained weak with APAC (ex-Jap &amp; China), CEE and MEA falling 17-20% y/y, which was a bigger headache to the Android camp, especially the Chinese players, among which, Xiaomi had relatively poorer performance.

Smartphone – Global Vs China Decelerated Downtrends

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 4Q22 weakness is largely anticipated, and adj. net profit decline of 67% YoY is 9%/13% above our/consensus estimates, driven by stronger margins and improved product mix.</li><li>Looking ahead, we believe smartphone weakness in 1H23E has been largely priced in, and earnings growth will rebound sequentially given improving channel inventory, overseas AIoT recovery and better internet revenue.</li><li>We are also positive on Xiaomi’s focus on operating efficiency and profitability improvement amid macro headwinds in the near term.</li></ul><p><em>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.</em></p>

Xiaomi’s 4Q22 weakness is largely anticipated, and adj. net profit decline of 67% YoY is 9%/13% above our/consensus estimates, driven by stronger margins and improved product mix.Looking ahead, we believe smartphone weakness in 1H23E has been largely priced in, and earnings growth will rebound sequentially given improving channel inventory, overseas AIoT recovery and better internet revenue.We are also positive on Xiaomi’s focus on operating efficiency and profitability improvement amid macro headwinds in the near term.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) – 4Q22 better than feared; All eyes on profitability recovery in 2023

Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

Caixin is a media group dedicated to providing financial and business news through periodicals, online content, mobile apps, conferences, books and TV/video programs. Caixin aims to blaze a trail that helps traditional media prosper in the new media age through integrated multimedia platforms.

News from Caixin

Cross Asset Strategy

<p>Fiscal /: China local governments’ fiscal stress may roll over to 2023, think tank warns</p><p>Containers /: <a href="https://www.caixinglobal.com/2023-03-02/in-depth-how-a-global-shortage-turned-into-a-shipping-container-glut-102003436.html" target="_blank" rel="noopener">How a global shortage turned into a shipping container glut</a></p><p>Corruption /: Corruption charges filed against former China Merchants Bank president</p>

Fiscal /: China local governments’ fiscal stress may roll over to 2023, think tank warnsContainers /: How a global shortage turned into a shipping container glutCorruption /: Corruption charges filed against former China Merchants Bank president

CX Daily: China Local Governments’ Fiscal Stress May Roll Over to 2023, Think Tank Warns

<ul><li>We attended Xiaomi’s 2023 Investor Day in Beijing last week. Mgmt. targeted to maintain healthy profitability level while balancing growth.</li><li>The strategic focus remains the smart EV business with launch schedule in 1H24E. Key takeaways included: 1) FY23E smartphone shipment to stay at FY22 level with potential upside on share gain. 2) EV business R&amp;D spending will increase to RMB 7.5- 8.0bn in FY23E (vs RMB 3bn in FY22). 3) AIoT overseas expansion remains key growth driver with more innovative SKUs. 4) Overseas internet revenue reached a new milestone, and expect gaming recovery due to policy relaxation and advertising headwinds due to macro weakness.</li><li>Looking ahead, we believe the worst is likely over for Xiaomi’s earnings decline, and we believe earnings recovery in 1H23E and EV upside will be major positive catalysts for the stock. </li></ul><p><em>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.</em></p>

We attended Xiaomi’s 2023 Investor Day in Beijing last week. Mgmt. targeted to maintain healthy profitability level while balancing growth.The strategic focus remains the smart EV business with launch schedule in 1H24E. Key takeaways included: 1) FY23E smartphone shipment to stay at FY22 level with potential upside on share gain. 2) EV business R&amp;D spending will increase to RMB 7.5- 8.0bn in FY23E (vs RMB 3bn in FY22). 3) AIoT overseas expansion remains key growth driver with more innovative SKUs. 4) Overseas internet revenue reached a new milestone, and expect gaming recovery due to policy relaxation and advertising headwinds due to macro weakness.Looking ahead, we believe the worst is likely over for Xiaomi’s earnings decline, and we believe earnings recovery in 1H23E and EV upside will be major positive catalysts for the stock. 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) – 2023 Investor Day: All eyes on profitability and smart EV business upside

<ul><li>Xiaomi will report 4Q22 results in late March. We estimate 4Q revenue/adj. net profit to decline 23%/70% YoY to RMB65.5bn/1.33bn, mainly driven by global smartphone weakness, higher R&amp;D expense for smart EV and one-off charges for warranty policy change.</li><li>Looking ahead, we believe 4Q22E weakness has been priced in, and smartphone sales is poised to recover sequentially in 1Q23E, driven by China re-opening and improving channel inventory.</li><li>Overall, we believe the worst is likely over for Xiaomi’s earnings decline, and we adjusted our TP to HK$14.73, based on P/E multiple of 24x FY23E P/E (vs prev. 20x FY23E P/E). Maintain BUY. Catalysts include EV progress and market share gain</li></ul><p><em>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.</em></p>

Xiaomi will report 4Q22 results in late March. We estimate 4Q revenue/adj. net profit to decline 23%/70% YoY to RMB65.5bn/1.33bn, mainly driven by global smartphone weakness, higher R&amp;D expense for smart EV and one-off charges for warranty policy change.Looking ahead, we believe 4Q22E weakness has been priced in, and smartphone sales is poised to recover sequentially in 1Q23E, driven by China re-opening and improving channel inventory.Overall, we believe the worst is likely over for Xiaomi’s earnings decline, and we adjusted our TP to HK$14.73, based on P/E multiple of 24x FY23E P/E (vs prev. 20x FY23E P/E). Maintain BUY. Catalysts include EV progress and market share gainContent 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) – 4Q22 Preview: A Challenging Quarter but the Worst Is Likely Over

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)

Smartphone – Global Vs China Decelerated Downtrends

Despite shipment continued to fall y/y, all major markets experienced deceleration in decline. DMs like US & W Europe did better with more material...

Quam Securities

Xiaomi (1810 HK) – 4Q22 better than feared; All eyes on profitability recovery in 2023

Xiaomi’s 4Q22 weakness is largely anticipated, and adj. net profit decline of 67% YoY is 9%/13% above our/consensus estimates, driven by stronger...

CMB International

CX Daily: China Local Governments’ Fiscal Stress May Roll Over to 2023, Think Tank Warns

Fiscal /: China local governments’ fiscal stress may roll over to 2023, think tank warns Containers /: How a global shortage turned into a shipping...

Caixin Global

Xiaomi (1810 HK) – 2023 Investor Day: All eyes on profitability and smart EV business upside

We attended Xiaomi’s 2023 Investor Day in Beijing last week. Mgmt. targeted to maintain healthy profitability level while balancing growth.

CMB International

Xiaomi (1810 HK) – 4Q22 Preview: A Challenging Quarter but the Worst Is Likely Over

Xiaomi will report 4Q22 results in late March. We estimate 4Q revenue/adj. net profit to decline 23%/70% YoY to RMB65.5bn/1.33bn

CMB International

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