【行业研究报告】小米集团-W-Corp Day Takeaways: smartphone destocking to continue into 4Q22E

30Nov202230Nov2022CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdateXiaomi(1810HK)CorpDayTakeaways:smartphonedestockingtocontinueinto4Q22EWespoketoXiaomi’smgmt.inourCorporateDayon29Nov,andinvestorsareinterestedin1)smartphoneindustrydestockingprogress,2)businessupdateinoverseasmarkets,3)AIoTstrategyandproductroadmap,4)overseasinternetbusinessand5)R&DinvestmentinEVandnewinitiatives.Overall,weexpectXiaomi’sglobalsharegaininsmartphonetoresumein2023Edespitesoftmarketoutlook.Tradingat16.7xFY23EP/E,thestockoffersanattractiverisk-reward.MaintainBUYwithTPofHK$12.28basedon20xFY23EP/E.Chinasmartphoneinventoryreturnedtohealthylevelwhileoverseasdestockingcontinues.Thanksto618andDouble11festivalsales,Xiaomi’sinventorylevelinChinareturnedtohealthylevelin3Q22,whiledestockingprocesswillcontinueinoverseasmarketsduring4Qfestivalseason(e.g.BlackFriday,Xmas).Lookinginto2023,mgmt.expectedmutedsmartphoneoutlookgivenmacrouncertainties,inflationinoverseasmarkets,andrecentCOVID-19impactonChinaofflinesaleschannels.Near-termheadwindsforAIoTbusinessbutpositiveoutlookinthelongrun.AIoTbusinesssoftenedin3Q22mainlyduetorisinginflationinEUwhichimpactedkeyproductssuchasscooters,whileChinasalesremainedresilientdrivenbysmartTV,whitegoodsandPadsproducts.Overall,weareconfidentinXiaomi’sAIoTsalesrecoveryinChinaandexpansioninoverseasproductportfolioin2023E.CommitmentinR&DinvestmentandpositiveprogressonEVbusiness.Mgmt.reiteratedXiaomi’scommitmenttoinvestRMB100bninR&Dinnext5years,asannouncedpreviously.CompanyexpectedR&DexpenseonsmartEVtorampupsequentiallyin4Q22EandFY23E,focusingonR&DheadcountsandCAPEXintoplants/facilities.Attractiverisk/reward;MaintainBUY.While4Q22demandwillremainsluggish,webelievemostnegativeshavebeenpricedinandsequentialmacrorecoverywillbethepositivecatalystin4Q22E.Currentvaluationat16.7xFY23EP/Eiscloseto1-sdbelow3-yravg.P/Eat15.9x.MaintainBUYwithTPofHK$12.28,basedon20.0xFY23EP/E.CatalystsincludesmartEVprogress,productlaunchandmarketsharegain.TargetPriceHK$12.28(PreviousTPHK$12.28)Up/Downside23.2%CurrentPriceHK$9.97ChinaTechnologyAlexNG(852)39000881alexng@cmbi.com.hkLilyYANG,Ph.D(852)39163716lilyyang@cmbi.com.hkClaudiaLIUclaudialiu@cmbi.com.hkStockDataMktCap(HK$mn)202,809.7Avg3mthst/o(HK$mn)9.752wHigh/Low(HK$)19.66/8.45TotalIssuedShares(mn)20342.0Source:FactSetShareholdingStructureLinBin8.6%SmartMobileHoldingsLtd8.6%Source:HKExSharePerformanceAbsoluteRelative1-mth14.3%-6.7%3-mth-12.5%-3.8%6-mth-14.1%-0.3%Source:FactSet12-mthPricePerformanceSource:FactSetEarningsSummary(YE31Dec)FY20AFY21AFY22EFY23EFY24ERevenue(RMBmn)245,866328,309286,870308,047346,419YoYgrowth(%)19.433.5(12.6)7.412.5Adjustednetprofit(RMBmn)13,006.422,039.58,878.413,734.115,554.5EPS(Adjusted)(RMB)0.540.880.360.550.62ConsensusEPS(RMB)nana0.370.550.67P/E(x)17.426.825.816.714.7P/B(x)2.93.81.71.51.4Yield(%)0.00.00.00.00.0ROE(%)19.814.80.58.58.9Netgearing(%)60.496.070.379.354.1Source:Companydata,Bloomberg,CMBIGMestimates