HSBC: Lowered the target price for Xiaomi Group-W (01810.HK) to 50 Hong Kong dollars. The momentum of electric vehicles is strong but the profitability of core business is weaker than expected.

According to the Zhongtong Finance and Economics APP, the research report released by Morgan Stanley stated that the momentum of Xiaomi Group-W's (01810.HK) electric car business exceeded expectations, with a delivery volume of approximately 110,000 vehicles in the third quarter, and the business may turn profitable. Although the approval of Beijing's second factory has been delayed, the delivery volume in the fourth quarter may further increase. With sustained healthy demand, the launch of a new large SUV next year, and the opening of exports in 2027, the firm expects the shipment volume of electric cars in 2027 to grow by 23% and profitability to improve. It is estimated that the net profit margin in the second half of 2027 will be 4.5%. Considering the sharp deterioration of the core business, the firm has lowered its core business operating profit forecast for Xiaomi in 2026 and 2027 by 2% and 1% respectively, maintaining a "neutral" rating with a target price lowered from HK$60 to HK$50.