Moody's ratings upgrades Xiaomi’s ratings to Baa1: outlook stable

Moody's ratings upgrades Xiaomi’s ratings to Baa1: outlook stable

Moody's Investors Service has upgraded Xiaomi Corporation's credit rating to Baa1 from Baa2, with a stable outlook. The upgrade reflects the company's strong financial performance and robust growth prospects, particularly in its electric vehicle (EV) business.

According to a recent earnings report, Xiaomi's adjusted net profit reached RMB 10.831 billion in the second quarter of 2025, a 75.4% year-on-year increase, marking the highest quarterly profit in the company's history [1]. The upgrade by Moody's is a testament to Xiaomi's ability to navigate the challenging market conditions and drive growth through diversification.

The EV business has emerged as a key driver for Xiaomi, with deliveries serving as a significant catalyst for the stock price. Morgan Stanley and UBS Group have highlighted the potential of the EV segment, with UBS maintaining a delivery forecast of 720,000 units for 2026 [1]. The strong performance of high-end models like the SU7 Ultra and YU7, with average selling prices increasing by 6.4% quarter-on-quarter to RMB 254,000, has contributed to the company's profitability [1].

However, Xiaomi's smartphone business continues to face challenges, with revenue declining by 2% year-on-year. The company's AIoT and Internet services businesses, on the other hand, have shown robust growth, with AIoT revenue increasing by 45% year-on-year and Internet service revenue growing by 10% [1].

The upgrade by Moody's reflects the company's ability to manage its diverse business portfolio effectively. As Xiaomi continues to ramp up production capacity and increase delivery volumes, it is well-positioned to secure a significant position in the high-growth sector of new energy vehicles.

References:
[1] https://news.futunn.com/en/post/60840491/xiaomi-s-q2-earnings-report-analysis-high-gross-margin-from