Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>  share price has declined more than 50% over the last 12-months from HK$22.1 to HK$9.46.</li>
<li>In the meantime, the company’s earnings also have weakened with resurgence of Covid-19 in China alongside decline in demand for smartphones in Europe and other markets.</li>
<li>Xiaomi has entered into the premium smartphones segment which has negatively impacted the company’s margins due to aggressive expansion of offline stores.</li>
</ul>



Xiaomi Corp (1810 HK)  share price has declined more than 50% over the last 12-months from HK$22.1 to HK$9.46.
In the meantime, the company’s earnings also have weakened with resurgence of Covid-19 in China alongside decline in demand for smartphones in Europe and other markets.
Xiaomi has entered into the premium smartphones segment which has negatively impacted the company’s margins due to aggressive expansion of offline stores.


Xiaomi: Margins to Remain Under Pressure with Premiumisation and Investment in EV (Quantamental)

Senior Credit Analyst, Lucror Analytics

Trung Nguyen

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

Credit

We view Xiaomi Corp as “Low Risk” on the LARA scale, driven by: [1] the company’s leading market position in smartphones and smart hardware; [2] its increasing market share, scale and brand name; and [3] the company’s strong financial metrics with large positive FCF, solid balance sheet with net cash, as well as sound liquidity position. Xiaomi has a strong track record of execution and innovation, along with the entrance into and success in new verticals (e.g. cleaning robots, smart speakers, smart TVs and smart routers). The company also has fast-growing revenue streams from Internet services and gaming. On the other hand, the mobile phone industry is very competitive with low switching costs, particularly for Android phones (Blackberry and Nokia have gone out of business despite having been leading players). The credit is further weighed down by: [1] potential trade sanctions from the US; and [2] execution risk related to Xiaomi’s entry into the increasingly competitive electric vehicle market. Our Credit Bias is “Stable”, given the company’s robust business risk profile and strong balance sheet.

  We view Xiaomi Corp as “Low Risk” on the LARA scale, driven by: [1] the company’s leading market position in smartphones and smart hardware; [2] its increasing market share, scale and brand name; and [3] the company’s strong financial metrics with large positive FCF, solid balance sheet with net cash, as well as sound liquidity position. Xiaomi has a strong track record of execution and innovation, along with the entrance into and success in new verticals (e.g. cleaning robots, smart speakers, smart TVs and smart routers). The company also has fast-growing revenue streams from Internet services and gaming. On the other hand, the mobile phone industry is very competitive with low switching costs, particularly for Android phones (Blackberry and Nokia have gone out of business despite having been leading players). The credit is further weighed down by: [1] potential trade sanctions from the US; and [2] execution risk related to Xiaomi’s entry into the increasingly competitive electric vehicle market.   Our Credit Bias is “Stable”, given the company’s robust business risk profile and strong balance sheet. 

Xiaomi Corp  - Tear Sheet - Lucror Analytics

Research on International Stock Ideas, Value Punks

Value Punks

Research on International Stock Ideas

Value Punks’ mission is to deliver institutional-grade research on international stock ideas in a digestible, reader-friendly format.

At Value Punks, we blend our background in traditional value-investing with an openness to embrace a constantly and rapidly evolving investment and business landscape.

Institutional-Grade Research

<ul><li>Xiaomi has an ambitious goal to surpass Samsung to become the #1 smartphone brand in the world (shipment basis) by 2024.</li><li>We believe Xiaomi is less like the “Apple of China” and more like the “Costco of smartphones”. We explore the key aspects of this business model, including services monetization and an ecosystem strategy leveraging an “investment + incubation” model.</li><li>Most investors seems to understand Xiaomi’s market share growth story, but may yet be underappreciating its monetization potential</li></ul>

Xiaomi has an ambitious goal to surpass Samsung to become the #1 smartphone brand in the world (shipment basis) by 2024.We believe Xiaomi is less like the “Apple of China” and more like the “Costco of smartphones”. We explore the key aspects of this business model, including services monetization and an ecosystem strategy leveraging an “investment + incubation” model.Most investors seems to understand Xiaomi’s market share growth story, but may yet be underappreciating its monetization potential

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The Hang Seng Tech Index is more widely-followed than many think, and it is reasonably concentrated, so outperformance and underperformance by big names means capping and re-capping.</li>
<li>This time, those flows are worth about 8% of the index in terms of one-way flows. Meituan, Xiaomi, JD.com, Tencent and Kuaishou Tech DOWN. Li Auto back up. </li>
<li>Those who have pre-positioned on the big buy have recently gotten hurt. There are some FAF changes which are less predictable and may be interesting.</li>
</ul>


The Hang Seng Tech Index is more widely-followed than many think, and it is reasonably concentrated, so outperformance and underperformance by big names means capping and re-capping.
This time, those flows are worth about 8% of the index in terms of one-way flows. Meituan, Xiaomi, JD.com, Tencent and Kuaishou Tech DOWN. Li Auto back up. 
Those who have pre-positioned on the big buy have recently gotten hurt. There are some FAF changes which are less predictable and may be interesting.


HSTECH June 2024 Rebal - No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way

Zijin Mining Group Co Ltd H / Event-Driven

<ul>
<li>The HSCEI is well-known and well-followed but sees less passive tracking than you might expect. Quiddity teammember Janaghan had expected up to two ADDs and two DELETEs.</li>
<li>We got one ADD and one DELETE instead as <a href="https://www.smartkarma.com/entities/sensetime-group-inc" target="_blank" data-smartkarma-citation="entities:34319:1" rel="noopener">SenseTime Group (20 HK)</a> was "saved" from deletion by a FFW/FAF increase. </li>
<li>Relatively smaller flows here at 3% one-way with the big flows on the name changes.</li>
</ul>


The HSCEI is well-known and well-followed but sees less passive tracking than you might expect. Quiddity teammember Janaghan had expected up to two ADDs and two DELETEs.
We got one ADD and one DELETE instead as SenseTime Group (20 HK) was "saved" from deletion by a FFW/FAF increase. 
Relatively smaller flows here at 3% one-way with the big flows on the name changes.


HSCEI June 2024 Rebal - Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd

China

Xiaomi Corporation manufactures communication equipment and parts. The Company produces and sells mobile phones, smart phone software,  set-top boxes, and related accessories. Xiaomi markets its products worldwide.

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Xiaomi Corp (1810 HK)

Xiaomi: Margins to Remain Under Pressure with Premiumisation and Investment in EV (Quantamental)

Our quantamental reveals Xiaomi's smartphone GPM is strongly correlated with sales volume. We expect margins to remain stressed due to...

Shifara Samsudeen, ACMA, CGMA

Xiaomi Corp - Tear Sheet - Lucror Analytics

We view Xiaomi Corp as “Low Risk” on the LARA scale, driven by: [1] the company’s leading market position in smartphones and smart hardware; [2]...

Lucror Analytics

Deep Dive: Xiaomi (XIACY, 1810 HKG)

Xiaomi has an ambitious goal to surpass Samsung to become the #1 smartphone brand in the world (shipment basis) by 2024.

Value Punks

HSTECH June 2024 Rebal - No Changes But Big Capping Flows, As Expected; 8% US$1.6bn One-Way

Quiddity did not expect any name changes to the HSTECH index in June 2024 but we expected big flows because of significant capping impact, mostly...

Travis Lundy

HSCEI June 2024 Rebal - Zijin Mining (2899) ADDed, Xinyi Solar (968) DELETEd

The HSCEI Index sees one add and one delete. The ADD of Zijin was expected. Quiddity expected Xinyi Solar to be deleted, and Sensetime too, but it...

Travis Lundy

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