小米集团-W（01810.HK）：股价已反映不利因素，看好基本面强劲增长

科技硬件FLAG · 公众号 · · 2021-03-14 09:19

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What's new

On March 11, Xiaomi announced that it would repurchase shares no more than 10% of the total outstanding at a maximum aggregate price of HK$10bn. We believe that this share buyback shows company’s strong confidence in its current business development and long-term growth under its 5GxAIoT strategy.

Reiterate OUTPERFORM and HK$34.0 TP, offering 49.5% upside. We think that the negative effect from US restricted list will be mostly priced-in after March 15 (60 days after taking effect). Xiaomi plans to deliver its 4Q20 and 2020 result on March 24. With strong fundamental ahead and new products to be launched, our outlook on Xiaomi in 2021 is positive.

Comments

Smartphones: Xiaomi’s annual shipment to be global No.3 by 2021; to launch new models. We expect Xiaomi to ship 195mn smartphone globally and become No.3 in 2021, with revenue growing 44% YoY, thanks to a better competitive landscape following the decline of Huawei and possible market recovery from the effects of COVID-19. Chinese media reports that Xiaomi will launch several new models that have advanced technology in 1H21, including foldable screens and under-screen cameras. We believe that such models will help Xiaomi increase its global market share, especially in China premium-end market. We expect smartphone revenue to grow 44%YoY in 2021 with ASP rising 7% YoY.

IoT and lifestyle products: AIoT to be a key business in 2021. We expect Xiaomi’s internet of things (IoT) business revenue to grow only 13% in 2020 mainly due to COVID-19 and boost its long-term growth under its 5GxAIoT (AI+IoT) strategy. With more products entering overseas market (e.g., TVs and small home appliances), we believe revenue in IoT & lifestyle products division will grow 33% YoY in 2021.

Internet: MAU and ARPU to return to growth in 2021. QuestMobile reports that MAU at Xiaomi returned to growth in China in August. With Xiaomi continue to improve its smartphone market share in China premium-end market; we expect a 27%YoY MAU growth with a 10%YoY ARPU growth in 2021. As a result, we expect 40%YoY growth for 2021 internet-services revenue.

Valuation and recommendation

We maintain OUTPERFORM rating and our 2020/2021/2022 non-GAAP EPS forecasts at Rmb 0.52/0.75/0.95. Xiaomi trades at 26.1/20.6x 2021/2022e non-GAAP P/E. We maintain our HK$34.0 target price based on SOTP valuation, representing 40.3/31.8x 2021/2022e non-GAAP P/E, offering 49.5% upsid e. Risks: COVID-19 may still affect smartphone sales and demand.

Figure 1: 4Q20 preview and earnings forecast