Daily Brief China: Xiaomi Corp, AAC Technologies Holdings, Hang Seng Index, Kuaishou Technology and more

• Xiaomi reported CY2Q24 revenue, non-IFRS EBIT and non-IFRS net income 5.6%, 32.2%, and 40.0% vs. consensus. 
• Despite the limited scale and numerous incentives offered at launch, Xiaomi reported an EV gross margin of 15.4%. Greater scale and reduced incentives provide further margin upside in C2H24;
• Xiaomi’s smartphone and IoT market share gain have accelerated amid the halo-effect stemming from the SU7. We reiterate our BUY rating, and raise  TP to HK$27.0, implying 28.3x CY25 P/E.

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.

• AAC Technologies Holdings
• GMR Hyderabad International Airport

• We have correctly forecasted a August rally for the Hang Seng Index in previous insights, here and then here – the rally is on, but a pullback is coming.
• The pullback may come in this week or the next, but it’s probably behind the corner, the index can continue higher after the pullback.
• In this insight we want to expose what are the levels to buy LONG to benefit from a highly probable continuation of the rally in September.

• Kuaishou reported C2Q24 revenue, IFRS operating profit, and IFRS net income in-line, in-line, and 5.7% vs.  our estimates; and in-line, 9.0% and 14% vs. the consensus. 
• The bright spot was strong growth in its advertising and stabilization in the regulation-affected live streaming. Our BUY case of AI empowering mid-sized traffic platforms is intact;
• We cut TP to HK$75 to reflect the sustained damage of weak consumption. The stock is trading at only 8.5x PE for 2025.