Xiaomi's EV Success Drives Stock Target Increase at Goldman
Friday, Oct 4, 2024 12:55 pm ET
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Xiaomi Corporation (HKG: 1810, OTCMKTS: XIACY) has seen a significant boost in its stock price and valuation due to its remarkable success in the electric vehicle (EV) market. Goldman Sachs recently raised its target price for Xiaomi stock, citing the company's strong execution in its EV business and the promising outlook for its upcoming models.
Xiaomi's "Human x Car x Home" strategy has been a driving force behind its EV success. This approach focuses on integrating the user experience across devices, creating a seamless ecosystem that encompasses smartphones, smart homes, and electric vehicles. By leveraging its strengths in consumer electronics and software, Xiaomi has been able to offer competitive EV models at affordable prices, appealing to a broader range of customers.
Strong order momentum and increased manufacturing capacity have played a crucial role in Xiaomi's EV growth. The company's first EV model, the SU7, has enjoyed unprecedented success, with customers waiting up to 30 weeks for delivery. Xiaomi management has targeted over 100,000 deliveries for 2024 and is on track to challenge its 120,000-unit target. Goldman Sachs has raised its estimates for SU7 deliveries to over 225,000 units annually, reflecting the model's popularity and Xiaomi's expanding production capabilities.
The upcoming SU7 Ultra model and the second EV model's launch timelines and sales projections have further influenced Goldman Sachs' target price. The SU7 Ultra, set to debut at the Nürburgring in October, is expected to contribute 5% of Xiaomi's EV revenue in 2025, with projected sales of 4,000 units at an average selling price of RMB 800,000. The second EV model, internally codenamed Lemang, is expected to hit the market earlier than anticipated, with sales volumes projected at 40,000 units in 2025 and 210,000 units in 2026, accounting for 15% and 44% of the company's EV revenue in those respective years.
The success of Xiaomi's smartphone series, particularly the Xiaomi 14 series, has also contributed to the company's overall valuation and stock price. The 14 series saw 80% higher shipments than its predecessor, demonstrating the strong demand for Xiaomi's smartphones. The upcoming flagship Xiaomi 15 smartphone series is expected to perform well both in China and overseas, further driving growth for the company.
Goldman Sachs expects Xiaomi's EV business to grow significantly, projecting a US$18.5 billion valuation for the segment, up from US$12.7 billion. This success, combined with a favorable operating leverage, leads to strong profit forecasts, prompting the bank to maintain its positive outlook on Xiaomi's future.
In conclusion, Xiaomi's EV success, driven by its innovative strategy, strong order momentum, and promising product pipeline, has led to a significant increase in its stock target at Goldman Sachs. As the company continues to expand its EV offerings and capitalize on its strengths in consumer electronics and software, investors can expect Xiaomi to remain a strong player in the EV market.
Xiaomi's "Human x Car x Home" strategy has been a driving force behind its EV success. This approach focuses on integrating the user experience across devices, creating a seamless ecosystem that encompasses smartphones, smart homes, and electric vehicles. By leveraging its strengths in consumer electronics and software, Xiaomi has been able to offer competitive EV models at affordable prices, appealing to a broader range of customers.
Strong order momentum and increased manufacturing capacity have played a crucial role in Xiaomi's EV growth. The company's first EV model, the SU7, has enjoyed unprecedented success, with customers waiting up to 30 weeks for delivery. Xiaomi management has targeted over 100,000 deliveries for 2024 and is on track to challenge its 120,000-unit target. Goldman Sachs has raised its estimates for SU7 deliveries to over 225,000 units annually, reflecting the model's popularity and Xiaomi's expanding production capabilities.
The upcoming SU7 Ultra model and the second EV model's launch timelines and sales projections have further influenced Goldman Sachs' target price. The SU7 Ultra, set to debut at the Nürburgring in October, is expected to contribute 5% of Xiaomi's EV revenue in 2025, with projected sales of 4,000 units at an average selling price of RMB 800,000. The second EV model, internally codenamed Lemang, is expected to hit the market earlier than anticipated, with sales volumes projected at 40,000 units in 2025 and 210,000 units in 2026, accounting for 15% and 44% of the company's EV revenue in those respective years.
The success of Xiaomi's smartphone series, particularly the Xiaomi 14 series, has also contributed to the company's overall valuation and stock price. The 14 series saw 80% higher shipments than its predecessor, demonstrating the strong demand for Xiaomi's smartphones. The upcoming flagship Xiaomi 15 smartphone series is expected to perform well both in China and overseas, further driving growth for the company.
Goldman Sachs expects Xiaomi's EV business to grow significantly, projecting a US$18.5 billion valuation for the segment, up from US$12.7 billion. This success, combined with a favorable operating leverage, leads to strong profit forecasts, prompting the bank to maintain its positive outlook on Xiaomi's future.
In conclusion, Xiaomi's EV success, driven by its innovative strategy, strong order momentum, and promising product pipeline, has led to a significant increase in its stock target at Goldman Sachs. As the company continues to expand its EV offerings and capitalize on its strengths in consumer electronics and software, investors can expect Xiaomi to remain a strong player in the EV market.