Stock Idea Why Xiaomi is in a great position to become the | FSMOne SG - Research Highlights

Stock Idea

Why Xiaomi is in a great position to become the world's #1 smartphone maker

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• While smartphones often come to mind whenever the Xiaomi brand is mentioned, the company also operates in other fast-growing business segments including IoT and lifestyle products as well as internet services.

• As of 2Q 2021, Xiaomi has become the world’s second largest smartphone maker. With an expanding premium smartphone portfolio as well as growth opportunities in mainland China and Europe, the company could be on track to reach the number one position.

• Meanwhile, it holds the market leading position in mainland China for AIoT thanks to a value-for-money proposition. The seamless connectivity of Xiaomi’s products has also successfully led to increased user stickiness.

• Supported by a growing user base, the company’s internet services segment will be an important driver of margin expansion and earnings in the longer term. Its ecosystem strategy creates cross-selling opportunities, lowering customer acquisition cost.

• Based on our fair PE ratio of 25X, our target price for Xiaomi is HKD 38. This represents an upside potential of 61%.

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: Xiaomi (HKEX:1810)