China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Xiaomi reported C4Q22 top-line, non-IFRS EBIT and non-IFRS net income in-line, 14%, and 25% vs. our est., and in-line, 78%, and 26% vs. consensus; </li>
<li>Beginning in 2023,  we expect it will be forced to sacrifice for or the other given its lack of moat in any category; </li>
<li>Xiaomi will likely improve phone gross margins due to declining IC prices, RMB appreciation, underlying our TP raise to HK$8.2, but we maintain SELL.  </li>
</ul>


Xiaomi reported C4Q22 top-line, non-IFRS EBIT and non-IFRS net income in-line, 14%, and 25% vs. our est., and in-line, 78%, and 26% vs. consensus; 
Beginning in 2023,  we expect it will be forced to sacrifice for or the other given its lack of moat in any category; 
Xiaomi will likely improve phone gross margins due to declining IC prices, RMB appreciation, underlying our TP raise to HK$8.2, but we maintain SELL.  


[Xiaomi Inc. (1810 HK) Target Price Change]: Picking Both Earnings and Scale, but Obtaining Neither

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 2022 results were in line with expectations and the weakness in the smartphone market. However, we see some positive signs, such as the reasonable Q4 results, improved selling prices on the back of the premiumisation strategy, as well as the stable Internet of Things (IoT) segment. The balance sheet remains in a large net cash position, with cash more than 2x total debt. We believe the worst may be over for Xiaomi. The re-opening of offline stores in China following the easing of COVID-19 related measures in 2023 would drive up demand for the company's premium phones, as well as the average selling prices and gross margins. We expect the smartphone market to stabilise in H2, though overall shipments in the year should remain weak.

  Xiaomi Corp's FY 2022 results were in line with expectations and the weakness in the smartphone market. However, we see some positive signs, such as the reasonable Q4 results, improved selling prices on the back of the premiumisation strategy, as well as the stable Internet of Things (IoT) segment. The balance sheet remains in a large net cash position, with cash more than 2x total debt.   We believe the worst may be over for Xiaomi. The re-opening of offline stores in China following the easing of COVID-19 related measures in 2023 would drive up demand for the company's premium phones, as well as the average selling prices and gross margins. We expect the smartphone market to stabilise in H2, though overall shipments in the year should remain weak. 

Xiaomi Corp - Earnings Flash - FY 2022 Results - Lucror Analytics

Leonard Law, CFA

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.<ul><li><a href='#lucror-entity-26970'>Meituan</a></li><li><a href='#lucror-entity-24409'>Xiaomi Corp</a></li></ul>

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.MeituanXiaomi Corp

Asia Pac IPO & Placement Research, China biotech, Aequitas Research

Ke Yan, CFA, FRM

Asia Pac IPO & Placement Research, China biotech

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Quantitative Analysis

<ul>
<li>We analyzed the latest HK SFC report for aggregate short position as of Mar 17th.</li>
<li>Top short increases and decreases were tabulated for one week and four week period. </li>
<li>We highlight short changes in Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec.</li>
</ul>


We analyzed the latest HK SFC report for aggregate short position as of Mar 17th.
Top short increases and decreases were tabulated for one week and four week period. 
We highlight short changes in Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec.


HK Short Interest Weekly: Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec

<ul>
<li>We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Mar 24th based on HKEx daily reports.</li>
<li>In the past 7 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Ck Asset (1113 HK), Swire Pacific (87 HK).</li>
<li>In the past 30 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Great Wall Motor (2333 HK), Swire Pacific (19 HK).</li>
</ul>


We analyze statistics on top repurchases over one week, one month, one quarter and one year periods ended on Mar 24th based on HKEx daily reports.
In the past 7 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Ck Asset (1113 HK), Swire Pacific (87 HK).
In the past 30 days, the top 3 companies that repurchased the most shares from the market were Aia (1299 HK), Great Wall Motor (2333 HK), Swire Pacific (19 HK).


Hong Kong Buybacks Weekly (Mar 24th): Aia, Ck Asset, Swire Pacific

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 Inc. (1810 HK) Target Price Change]: Picking Both Earnings and Scale, but Obtaining Neither

Beginning in 2023, we expect it will be forced to sacrifice for or the other given its lack of moat in any category and sustained R&D underspending...

Blue Lotus Research Institute

Xiaomi Corp - Earnings Flash - FY 2022 Results - Lucror Analytics

Xiaomi Corp's FY 2022 results were in line with expectations and the weakness in the smartphone market. However, we see some positive signs, such...

Lucror Analytics

Morning Views Asia: Meituan, Xiaomi Corp

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region,...

Lucror Analytics

HK Short Interest Weekly: Meituan, Gcl Tech, Link Reit, Sensetime, Trip.Com, Hsbc, Baba, Wuxi Apptec

We analyzed the latest HK SFC report for aggregate short position as of Mar 17th and highlight short interest changes in Meituan, Gcl Tech, Link...

Ke Yan, CFA, FRM

Hong Kong Buybacks Weekly (Mar 24th): Aia, Ck Asset, Swire Pacific

We analyzed the Hong Kong buyback data in the past week and highlight the top 3 companies that repurchased the most shares were Aia (1299 HK), Ck...

Ke Yan, CFA, FRM

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