Moody's ratings upgrades MTU's rating to Baa2: outlook stable

Moody's ratings upgrades MTU's rating to Baa2: outlook stable

Moody's Ratings has upgraded Xiaomi Corporation’s issuer rating to Baa1 from Baa2 and revised its outlook to stable, reflecting the company's robust performance in its smart electric vehicle (EV) and Internet of Things (IoT) businesses. The upgrade underscores Xiaomi's strengthened business profile, solid financial position, and excellent liquidity.

Xiaomi, the third-largest global smartphone provider since 2021, has also established a leading market position in IoT smart hardware products. As of June 30, 2025, Xiaomi had approximately 989 million connected devices, up from 434 million at the end of 2021 [1].

Moody's projects Xiaomi's revenue to grow by about 31% over the next 12-18 months compared to 2024 levels, reaching approximately RMB478 billion. This growth is expected to be driven by increasing smartphone demand, market share gains, expansion in IoT products and internet services, and further development of its smart EV business. The company's smart EV business, which began deliveries in the second quarter of 2024, has demonstrated stronger-than-expected profitability in terms of gross margin, reflecting its premium segment positioning, high volume per model, and strong cost control.

Despite these positive developments, Moody's forecasts Xiaomi's adjusted EBITDA margin to contract to about 8.8% over the next 12-18 months from 9.2% in 2024, due to higher operating expenses as the company invests in research and development across its business lines. The company’s leverage is expected to improve to around 0.9x over the next 12-18 months compared to 1.1x in 2024, reflecting EBITDA growth and steady debt levels. Xiaomi's liquidity remains excellent with a net cash position of RMB64 billion as of June 30, 2025. In March 2025, Xiaomi raised approximately RMB40 billion in equity capital, further strengthening its liquidity and financial flexibility [1].

References:
[1] https://www.investing.com/news/stock-market-news/moodys-upgrades-xiaomi-to-baa1-on-strong-ev-and-iot-performance-93CH-4211209