JPMorgan released a research report stating that XIAOMI-W (01810) has shown stronger-than-expected momentum in its electric vehicle (EV) segment, with Q3 deliveries reaching approximately 110,000 units, and the business could turn profitable. Although the approval for its second Beijing factory has been delayed, Q4 deliveries may further increase.

Demand remains healthy, and with the launch of a new large SUV next year and exports opening in 2027, the bank expects EV shipments to grow by 23% in 2027, with profitability also improving—projecting a net profit margin of 4.5% in the second half of 2027.

However, due to a sharp deterioration in core business performance, JPMorgan has lowered its operating profit forecasts for XIAOMI's core business by 2% and 1% for 2026 and 2027, respectively, while maintaining a "Neutral" rating. The target price has been reduced from HK$60 to HK$50.

The decline in core business profitability has been more severe than the bank's already cautious expectations, driven by slowing growth in China's smartphone market, a post-Q2 demand correction in IoT business, and rising component costs pressuring margins. As a result, JPMorgan expects core earnings to remain under pressure over the next two to three quarters, with significant year-on-year recovery likely only in the second half of next year.