Lyon: Xiaomi-W(01810) adjusted net profit for the third quarter increased by 60%, with electric vehicles continuing to be a highlight.

Lyon released a research report stating that Xiaomi-W (01810) is expected to achieve a year-on-year increase of 22% and 60% in total revenue and adjusted net profit in the third quarter, driven by steady sales of electric vehicles, reaching 112.9 billion and 10 billion RMB respectively. Its second electric vehicle factory has been approved for production, which will be a catalyst for boosting stock price reassessment. Lyon maintains a "highly confident outperform the market" rating with a target price of HK$69. Affected by the decline in shipments in China and India, Xiaomi's smartphone revenue may decrease by 3% year-on-year; while the growth rate of the AIoT business may slow down to a year-on-year increase of 5% due to a reduction in subsidies for trade-ins. However, the number of electric vehicle deliveries has further increased to 109,000 units, with an average price of about 260,000 RMB, and may have already achieved a balanced budget. Lyon expects Xiaomi's total revenue and adjusted net profit in the fourth quarter to increase by 15% and 16% respectively year-on-year, mainly due to the recovery of growth in the smartphone business and the continuous increase in electric vehicle deliveries, despite challenges in the AIoT business facing a higher base.