Broker: UOB Kay Hian
Date of Report: Friday, 23 May 2025

Xiaomi Corp Surges Ahead: In-House XRING Chips, EV Ambitions, and Strong Financials Drive Bullish Outlook

Introduction: Xiaomi’s Bold Technological Leap

Xiaomi Corporation has taken a significant step forward, officially launching its in-house developed XRING O1 and T1 system-on-chips (SoCs). These chips are the foundation for a new wave of Xiaomi products, including the Mi15S Pro smartphone, Mi Pad 7 Ultra tablet, Watch S4, and the much-anticipated YU7 electric SUV. UOB Kay Hian maintains its BUY recommendation on Xiaomi, with a target price of HK\$66.00, representing a 24.1% upside from current levels.

Xiaomi’s Stock Snapshot and Performance Highlights

• Current Share Price: HK\$53.20
• Target Price: HK\$66.00
• Market Cap: HK\$1.33 trillion (US\$195.2 billion)
• Shares Issued: 24,498 million
• Major Shareholders: Smart Mobile Holdings Ltd (8.56%), Lin Bin (2.09%)
• 52-week High/Low: HK\$59.45 / HK\$15.36
• Stellar Returns: 1-year +173.7%, YTD +54.2%

XRING O1 and T1: Xiaomi’s Foray into Advanced Chip Design

XRING O1 SoC: Flagship Performance

• Deca-core architecture: 2x Cortex-X925 prime cores, 8x A725 performance cores, and 2x A520 efficiency cores.
• 16-core Immortalis-G925 GPU and a 6-core NPU rated at 44 TOPS.
• Manufactured on a second-generation 3nm node.
• Debuts in the Mi15S Pro and Mi Pad Ultra.

XRING T1: Next-Gen Wearable Chip

• Powering the new Mi Watch S4.
• Features Xiaomi’s self-developed 4G LTE modem, claimed to be 35% more efficient than the previous version.
• 5G modem under development, expected in 1-2 years.

Strategic Rationale and Forward-Looking Investment

• Xiaomi aims for tighter hardware-software integration, inspired by Apple and Samsung’s in-house chip strategies.
• Current chips are exclusively for Xiaomi’s own products—no IP sales or foundry plans.
• Xiaomi will blend self-developed and third-party SoCs (e.g., Qualcomm, Mediatek), mirroring Samsung’s approach.
• R&D investment to ramp up: RMB200 billion planned for 2026–2030, with over RMB50 billion earmarked for chip development in the next decade.

Xiaomi 15S Pro: Hardware Refresh and Competitive Pricing

• Key Upgrade: New XRING O1 SoC.
• Display: 6.73” LTPO AMOLED.
• Cameras: Triple setup – 50MP main, 50MP 5x periscope telephoto, 50MP ultrawide.
• Battery: 6,100 mAh silicon carbon, 90W wired charging.
• OS: Ships with Android 15.
• Pricing: 16GB/512GB at RMB5,499; 16GB/1TB at RMB5,999. Both are RMB300–RMB500 cheaper than the Mi15 Pro equivalents, making them eligible for trade-in subsidies in China.

Xiaomi YU7: Electric SUV in Three Variants

• Variants: YU7 Standard, YU7 Pro, YU7 Max.
• Customization: 9 exterior colors, 3 interior color options.
• Release: Full launch set for July 2025.
• Self-Driving Tech: All models equipped with LiDAR, NVIDIA Drive AGX Thor (700 TOPS), 4D mmWave radar, and ALD-coated anti-glare cameras.
• Software: Xiaomi’s own end-to-end assisted driving system.

Other Launches: Mi Pad 7 Ultra and Watch S4

• Mi Pad 7 Ultra: Xiaomi’s largest tablet, 14” 3:2 display, powered by XRING O1. 3.2K OLED panel, twice the brightness of standard Pad 7. Prices from RMB5,700 (12GB/256GB) to RMB7,400 (16GB/1TB with nano-texture glass).
• Xiaomi Watch S4: Now powered by XRING T1 with a more efficient 4G modem, battery life up to 9 days (up from 7 days in the previous version).

Stock Impact and Real-World Performance

• XRING O1, on paper, matches top chips like Qualcomm Snapdragon 8 Elite and Apple’s A18 Pro.
• Market will closely monitor real-world performance, especially for flagship devices.
• Initial consumer feedback post-launch will be crucial.

Valuation and Recommendation

• Rating: BUY maintained.
• Target Price: HK\$66.00.
• Valuation includes HK\$49.50 for the core business (30x 2025F PE, 1 standard deviation above 5-year mean) and HK\$16.50 for the EV segment (10-year DCF, 9.6% WACC, 4.7x 2025F P/S implied).

Xiaomi Financials: Robust Growth Forecast

Key Growth and Leverage Metrics

• Turnover growth: 35.0% (2024), 26.4% (2025F), 13.2% (2026F), 9.9% (2027F).
• Net Profit (adj.) growth: 41.3% (2024), 33.7% (2025F), 21.8% (2026F), 15.5% (2027F).
• Debt to equity ratio improves from 16.2% (2024) to 9.5% (2027F).
• Net cash position strengthens significantly, with net debt/(cash) to equity at (20.9)% (2024) to (31.9)% (2027F).

Conclusion: Xiaomi Positioned for Sustained Growth

Xiaomi’s aggressive investment in R&D, in-house chips, and EV innovation underpins its ambition to become a global technology leader. With a robust product pipeline, expanding profit margins, and improving financial strength, Xiaomi is well positioned for long-term value creation. The stock remains a top BUY with further upside potential as new products and technologies begin to deliver in real-world markets.