CCB International has slightly revised down its target price for XIAOMI-W (01810) by 2.9% from HK$69 to HK$67 while maintaining an "Outperform" rating. The adjustment reflects minor revisions to the company's fiscal 2025/2026/2027 forecasts, primarily due to lower gross margins in IoT and smartphone segments.

The bank expects XIAOMI-W's Q3 2025 results to be slightly below consensus estimates, with revenue rising 22% year-on-year to RMB112.7 billion but declining 3% quarter-on-quarter. This is attributed to growth in the EV business, partially offset by weaker smartphone sales. Adjusted net profit is projected at RMB9.7 billion, up 55% year-on-year but down 10% sequentially.

Rising component costs, particularly for LPDDR4X smartphones, continue to pressure margins, with Q3 smartphone gross margins expected at around 11%. IoT growth is anticipated to slow significantly due to a high base effect from last year (driven by government subsidies) and reduced subsidies this quarter. However, XIAOMI-W remains relatively insulated from price wars, supporting resilient gross margins. The bank forecasts 25% and 22% growth for this segment in fiscal 2025 and 2026, respectively.

For internet services, growth is projected at 9% and 6% for fiscal 2025 and 2026. EV deliveries in Q3 are estimated at 108,800 units, up 34% quarter-on-quarter, with rising average selling prices driven by contributions from the YU7 model. EV-related revenue is expected to reach RMB28.7 billion.