Company Coverage
Xiaomi Corp (1810 HK): 2Q26: Smartphone May See Better-Than-Expected Trough Levels, But Other Segments Continue To Deteriorate
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$26.18
HK$26.20
+0.1%
HK$31.50
Analyst
Analyst
Highlights
2Q26’s adjusted net profit was 6% above our estimate, but slightly missed consensus by 2.4% due to weaker-than-expected blended margins.
The smartphone business was solid, with ASP and margins likely surprising on the upside in 2H26; but IoT, EVs and internet services remain sluggish.
Maintain HOLD with a lower target price of HK$26.20.
Analysis
2Q26 earnings above our conservative estimates but still below consensus due to weaker margins. Xiaomi Corp’s (Xiaomi) 2Q26 revenue declined 6.1% yoy but rose 9.9% qoq to Rmb109b (5.7% above our estimate and in line with consensus); blended gross margin dropped 2.7ppt yoy and 1.0ppt qoq to 19.8% (1.2ppt/1.1ppt below our/consensus forecasts), and adjusted net profit fell 42.6% yoy but rose 2.4% qoq to Rmb6.2b, beating our estimate by 5.7% but missing consensus by 2.4%.
Smartphone business is likely to see a better-than-expected trough on ASP hikes and mix enhancements. Smartphone revenue of Rmb42.1b beat our/consensus estimates by 5.1%/3.1% respectively, driven by a higher-than-expected blended ASP. Gross margins were largely in line with consensus at 8.5% (-3.0ppt yoy, -1.4ppt qoq) with component prices hikes still being major drag. That said, with mix improvements continuing to surprise on the upside, we expect Xiaomi to deliver a better-than-expected performance during the cycle trough in 2H26-1H27, and we are now expecting higher ASPs and margins to offset the weakening shipment volume through 2H26.
Highlights
2Q26’s adjusted net profit was 6% above our estimate, but slightly missed consensus by 2.4% due to weaker-than-expected blended margins.
The smartphone business was solid, with ASP and margins likely surprising on the upside in 2H26; but IoT, EVs and internet services remain sluggish.
Maintain HOLD with a lower target price of HK$26.20.
Analysis
2Q26 earnings above our conservative estimates but still below consensus due to weaker margins. Xiaomi Corp’s (Xiaomi) 2Q26 revenue declined 6.1% yoy but rose 9.9% qoq to Rmb109b (5.7% above our estimate and in line with consensus); blended gross margin dropped 2.7ppt yoy and 1.0ppt qoq to 19.8% (1.2ppt/1.1ppt below our/consensus forecasts), and adjusted net profit fell 42.6% yoy but rose 2.4% qoq to Rmb6.2b, beating our estimate by 5.7% but missing consensus by 2.4%.
Smartphone business is likely to see a better-than-expected trough on ASP hikes and mix enhancements. Smartphone revenue of Rmb42.1b beat our/consensus estimates by 5.1%/3.1% respectively, driven by a higher-than-expected blended ASP. Gross margins were largely in line with consensus at 8.5% (-3.0ppt yoy, -1.4ppt qoq) with component prices hikes still being major drag. That said, with mix improvements continuing to surprise on the upside, we expect Xiaomi to deliver a better-than-expected performance during the cycle trough in 2H26-1H27, and we are now expecting higher ASPs and margins to offset the weakening shipment volume through 2H26.
HOLD (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$26.18
HK$26.20
+0.1%
HK$31.50
Analyst
Analyst
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