Founder, Market Thinker

Mark Tinker

Founder

Market Thinker

Mark Tinker has over 35 years experience as an investor, market strategist and economist. Having spent more than 20 years as a sell side strategist and being top rated on numerous occasions and surveys he moved to investment management in 2006 to run global equity portfolios in London and subsequently moved to Hong Kong in 2013 to help establish an Investment Management business for a top 20 international asset manager. He first started writing investment weeklies for his employers in 1989, developing a style characterised under the title Market Thinking and has been a regular commentator and presenter on CNBC, Bloomberg and other business channels, where his approach of rationalising market behaviour rather than making short term predictions on high frequency market data provides a welcome balance to his client audience.

Making Sense of the Narrative

Macroeconomics

<ul><li>Every year, for as long as we can remember, we have written a weekly or a monthly note with some variation of the ‘Sell in May’ trope, so we see no reason to break the habit this year.</li><li>The chart (courtesy of Nick Glydon and team at Redburn Atlantic) shows the steady uptrend in searches for the expression every April over the last 14 years and while obviously there is a ‘usage factor’, it is certainly on a lot of traders’ minds at the moment.</li><li>The historic rationale for the expression comes from the leveraged trading end of the spectrum and tended to reflect the fall in speculative activity in the commodities markets over the summer months and while the speculators have moved heavily into other markets since those days, the seasonal drop off in activity as the head traders head to the beach remains a factor - the juniors tend to flatten the books and keep things ticking over.</li></ul>

Every year, for as long as we can remember, we have written a weekly or a monthly note with some variation of the ‘Sell in May’ trope, so we see no reason to break the habit this year.The chart (courtesy of Nick Glydon and team at Redburn Atlantic) shows the steady uptrend in searches for the expression every April over the last 14 years and while obviously there is a ‘usage factor’, it is certainly on a lot of traders’ minds at the moment.The historic rationale for the expression comes from the leveraged trading end of the spectrum and tended to reflect the fall in speculative activity in the commodities markets over the summer months and while the speculators have moved heavily into other markets since those days, the seasonal drop off in activity as the head traders head to the beach remains a factor - the juniors tend to flatten the books and keep things ticking over.

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>Xiaomi’s 3Q23 adj. net income of RMB 5.99bn (+183% YoY) is ahead of our estimate and consensus, mainly driven by strong GPM beat on smartphone/AIoT, resilient smartphone and recovery in advertising/overseas internet businesses.</li><li>Looking ahead, we believe strong earnings momentum will continue into 4Q23E and smartphone business will be boosted by strong Xiaomi 14 model shipment and Double 11 festival sales.</li><li>We estimate 4Q revenue will deliver +17% YoY growth and adj. net profit will climb 189% YoY to RMB 4.23bn. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi’s 3Q23 adj. net income of RMB 5.99bn (+183% YoY) is ahead of our estimate and consensus, mainly driven by strong GPM beat on smartphone/AIoT, resilient smartphone and recovery in advertising/overseas internet businesses.Looking ahead, we believe strong earnings momentum will continue into 4Q23E and smartphone business will be boosted by strong Xiaomi 14 model shipment and Double 11 festival sales.We estimate 4Q revenue will deliver +17% YoY growth and adj. net profit will climb 189% YoY to RMB 4.23bn. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi (1810 HK) – 3Q23 Beat on GPM and Resilient Smartphone

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

<ul><li>Xiaomi’s 2Q23 adj. net income of RMB 5.14bn (+147% YoY) beat our/market estimates, mainly thanks to record-high GPM in smartphone/AIoT segments, healthy inventory levels and operating efficiency improvements.</li><li>2Q23 adj. net income RMB 5.14bn was 29%/26% above our estimate/consensus, while revenue of RMB 67.4bn (-4% YoY) was largely in-line.</li><li>Looking into 2H23E, we maintain our positive view on Xiaomi’s earnings recovery driven by smartphone premiumization strategy, easing component costs, efficiency enhancement and new model launches. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi’s 2Q23 adj. net income of RMB 5.14bn (+147% YoY) beat our/market estimates, mainly thanks to record-high GPM in smartphone/AIoT segments, healthy inventory levels and operating efficiency improvements.2Q23 adj. net income RMB 5.14bn was 29%/26% above our estimate/consensus, while revenue of RMB 67.4bn (-4% YoY) was largely in-line.Looking into 2H23E, we maintain our positive view on Xiaomi’s earnings recovery driven by smartphone premiumization strategy, easing component costs, efficiency enhancement and new model launches. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi (1810 HK) – 2Q23 Beat on Record-High Margin; Reiterate BUY

<ul><li>Xiaomi hosted its Chairman’s annual speech yesterday and released a series of highly anticipated products including MIX Fold 3, Redmi K60 Ultra, Pad 6 Max, smart band 8 Pro and CyberDog 2.</li><li>Mr. Lei also disclosed the progress in Xiaomi’s large model on smartphones and smart AI assistant.</li><li>We believe most spec upgrades in MIX Fold 3 is in-line with expectations, and no price cut from prior version is not surprising considering high BOM costs and peers’ similar pricing strategy. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi hosted its Chairman’s annual speech yesterday and released a series of highly anticipated products including MIX Fold 3, Redmi K60 Ultra, Pad 6 Max, smart band 8 Pro and CyberDog 2.Mr. Lei also disclosed the progress in Xiaomi’s large model on smartphones and smart AI assistant.We believe most spec upgrades in MIX Fold 3 is in-line with expectations, and no price cut from prior version is not surprising considering high BOM costs and peers’ similar pricing strategy. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Xiaomi (1810 HK) – MIX Fold 3/Redmi K60 Ultra/Pad 6 Max/CyberDog 2 and More

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.

Xiaomi Corp (1810 HK)

Market Thinking May 2024

Every year, for as long as we can remember, we have written a weekly or a monthly note with some variation of the ‘Sell in May’ trope, so we see no...

Mark Tinker

Xiaomi (1810 HK) – 3Q23 Beat on GPM and Resilient Smartphone

Looking ahead, we believe strong earnings momentum will continue into 4Q23E and smartphone business will be boosted by strong Xiaomi 14 model...

CMB International

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

Xiaomi (1810 HK) – 2Q23 Beat on Record-High Margin; Reiterate BUY

2Q23 adj. net income RMB 5.14bn was 29%/26% above our estimate/consensus, while revenue of RMB 67.4bn (-4% YoY) was largely in-line.

CMB International

Xiaomi (1810 HK) – MIX Fold 3/Redmi K60 Ultra/Pad 6 Max/CyberDog 2 and More

Xiaomi hosted its Chairman’s annual speech yesterday and released a series of highly anticipated products including MIX Fold 3, Redmi K60 Ultra,...

CMB International