Citi expects Xiaomi's quarterly results to be below expectations, lowering the target price to 42 yuan

Citi pointed out that Xiaomi (01810.HK) will announce its fourth-quarter results for last year on the 24th of this month, which is expected to fall short of market expectations due to disappointing sales and gross margins, as well as higher operating expenses and lower non-operating income. The bank estimates that Xiaomi's adjusted net profit for the quarter will decline by 35% year-on-year to RMB 5.4 billion, which is less than the expectations of institutional investors of RMB 6 billion to 7 billion, and also lower than the bank's previous estimate of RMB 7.4 billion, based on lower gross margins for smartphones and electric vehicles, higher operating expenses, and less non-operating income.

Citi has lowered its earnings per share forecast for Xiaomi from last year to 2027 by 5% to 7%, with the target price reduced from HKD 43 to HKD 42. This valuation reflects lower revenues from smartphones and the Internet of Things, lower gross margins for electric vehicles, and less non-operating income. Short-term catalysts for the stock price include guidance for the first quarter and full-year results, spring product launches, and the official launch and orders for the SU7 facelift model.

The bank has given Xiaomi an investment rating of "Buy."