Jefferies Downgrades Xiaomi, Cuts Target to HK$25.49 After 70% EBIT Drop
JEF•Jefferies cut Xiaomi to Underperform and lowered its price target to HK$25.49, implying a 14% downside after Q1 revenue fell 11% to RMB99.1 billion and adjusted net profit dropped 43% to RMB6.1 billion. Jefferies cited a 70% YoY EBIT margin drop to 3.0% from 9.0% and EV shipments down to 81,000 units.
1. Brokerage Downgrade and Price Target Cut
Jefferies downgraded Xiaomi to Underperform and cut its price target to HK$25.49 from HK$26.98, implying a 14% downside relative to recent trading levels.
2. Q1 Financial Performance
Xiaomi reported Q1 revenue of RMB99.1 billion, down 11% year-on-year, and adjusted net profit of RMB6.1 billion, a 43% decline; EBIT plunged 70% YoY, shrinking the margin to 3.0% from 9.0%.
3. Segment Challenges
Smartphone margins were squeezed by rising component costs in sub-US$200 devices, EV shipments fell from 145,000 units in Q4 to 81,000 units in Q1, and AIoT revenue declined 24%, reflecting weaker consumer demand.
4. Outlook and Valuation Adjustments
Management maintains a 550,000-unit EV shipment target for 2026 but forecasts were cut to 495,000 units; Xiaomi plans RMB40 billion in R&D spending, and its EV business valuation was lowered from 2.2x to 1.5x projected sales.
