5 foreign brokers holding Xiaomi’s stock price against the market 8%

Xiaomi (01810) surrendered its expected third-quarter results, which was generally sung by foreign banks, and the expansion of Internet service contribution and the acceleration of overseas business became the key to success. Xiaomi’s share price soared 8.4% yesterday to close at 14.74 yuan, with a turnover of 2.26 billion yuan, two times more than the average daily transaction since the listing in early July.

Goldman Sachs, Citigroup, Morgan Stanley, Deutsche Bank and Lyon all give positive investment rating to Xiaomi. The latest target price ranges from 13.6 to 24 yuan, which means that the potential increase of Xiaomi is as high as 63%.

Goldman Sachs, which is more enterprising, believes that Xiaomi’s contribution to Internet services revenue and its share increase have effectively offset the income pressure on smartphones and IoT devices, and the gross profit contribution from Internet services has clearly improved. Revenue increased by 1%, while raising the gross profit margin target for the next three years, ranging from 0.3 to 0.6 percentage points.

After adjusting the RMB against the US dollar forecast, taking into account the impact of foreign exchange on income and cost, Goldman Sachs adjusted the target price of Xiaomi from 23 yuan to 24 yuan, maintaining a “buy” rating.

In the last quarter, Xiaomi’s revenue from overseas markets surged 113% to 22.3 billion yuan. Citigroup’s overseas business, especially the overseas Internet service, is faster than expected, which will help the market to rebuild investment confidence and benefit short-term stock price movements.

Economic downside competition has intensified

Citi maintains a target price of $17, but specifically marks the investment rating as “Buy/High Risk” to reflect the risk of competition in the smartphone market and the slowdown in overseas liquidation.

Morgan Stanley reminded the three macro risks of unfavorable millet performance, including: (1) the downward pressure on the mainland economy and increased competition in the mobile phone market, which has the opportunity to drag down mobile phone shipments in the next few quarters; (2) India and other overseas User growth in major markets slowed down, slowing down the pace of realisation; (3) Xiaomi users’ loyalty to IoT eco-devices decreased and turned to other brands. Deutsche Bank and Lyon also pointed out that investors should pay attention to the trend of the US dollar against the renminbi and emerging market currencies, and measure whether the exchange factor will increase the pressure on sales costs.