Home » knowledge » Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

Xiaomi finally won.

On May 26, Xiaomi issued an announcement saying that the US government officially removed it from the “blacklist” and lifted all restrictions.

On the same day, Xiaomi announced a new round of financial reports for the first quarter of 2021.

Judging from the fundamental data of the financial report, Xiaomi’s revenue and net profit achieved new growth in the first quarter, especially in terms of net profit, reaching a record high.

After the financial report was issued, it was also optimistic about the capital market. The Hong Kong stock market opened the next day, and Xiaomi once rose by more than 4%.

Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

With the continuous car building boom in the market, Xiaomi, who is addicted to smart products, has now entered the field of car manufacturing. Faced with the increasing competition in the industry, how should Xiaomi respond? Through this financial report, we may also have the opportunity to dismantle it. The opportunities and challenges faced.

Q1 results exceed expectations

In the first quarter of 2021, Xiaomi’s revenue reached 76.882 billion yuan, an increase of 54.7% over the same period, exceeding the market and analysts’ expectations, which was also mainly due to the increase in sales of smartphones and Internet of Things products.

Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

At present, Xiaomi’s business segments are mainly divided into four categories. Among them, smartphone business and IoT and consumer products are the two main revenue growth points of Xiaomi. As of the end of March, the total revenue of the two main businesses accounted for more than 90%, and the revenue of Internet services reached 6.571 billion yuan, an increase of 11% year-on-year.

As Xiaomi’s main business, the revenue of the smartphone segment also achieved new growth, reaching 51.5 billion yuan, a year-on-year increase of 69.8%. Among them, Xiaomi has also made good progress in the high-end mobile phone market. In the first quarter, Xiaomi’s market share of smartphones priced in the range of 4,000 to 6,000 yuan in mainland China increased from 5.5% in the same period last year to 16.1%.

This boosted the gross profit margin of Xiaomi’s smartphone business to 12.9% from 8.1% in the same period last year, a further increase from 10.5% in the previous quarter.

In the first quarter of 2021, the recovery momentum of the smartphone market accelerated. According to data, a total of 347 million smartphones were sold in the global market in Q1 2021, a year-on-year increase of 27%. Among them, Xiaomi accounted for 14.1% of the market with sales of 49.4 million units, ranking first among domestic mobile phone manufacturers.

On the other hand, it also stems from the layout of Xiaomi’s offline channels. On January 9 this year, the millet home thousand stores were opened at the same time. In May, Lu Weibing personally inspected the sinking market, and reached a strategic cooperation with the anchor Weiya. As of the end of April, the number of Xiaomi’s retail stores in mainland China exceeded 5,500, an increase of 2,300 from the end of last year.

However, it is worth noting that in the context of today’s fierce smartphone competition, Xiaomi still has some challenges that cannot be ignored.

In the high-end market, Huawei, Samsung and Apple have occupied a certain market share. The sum of the high-end market share of Huawei and Apple is as high as 90%, and OV manufacturers are also accelerating the deployment of high-end products. In the sinking market, Apple , Huawei and other players are also actively leaping forward.

In addition, Xiaomi accelerates the layout of the offline market, which may affect its own operating efficiency. At present, Xiaomi’s strategy for deploying the offline market is mainly through authorization and franchising, which may lead to irregular management methods and impact on brand reputation. .

In this way, Xiaomi has received a good market response in terms of performance growth and high-end products during the reporting period. However, combined with the current lack of cores in the industry, which is particularly critical to the market, and the unoptimistic situation of the Indian epidemic, it has also triggered some concerns about Xiaomi in the market.

The growth rate of global mobile phone shipments has narrowed, and what is the story of Xiaomi’s high growth under the industry’s lack of core trends?

In addition to the Chinese market, the layout of Xiaomi’s overseas markets is also increasing. In the first quarter, Xiaomi’s overseas market revenue reached 37.4 billion yuan, a year-on-year increase of 50.6%, especially in the European market and emerging markets, which achieved new breakthroughs, both of which achieved a year-on-year growth rate of more than 80%.

In the Indian market where the epidemic is severe, Xiaomi stated in its financial report that in the first quarter, it continued to maintain the number one shipment in the Indian market, with a market share of 28.3%.

In the face of the epidemic in India, Xiaomi is trying to maintain its market share in India through online and offline channels, and Xiaomi’s online channel sales are still the key to opening up the Indian market.

However, regional blockades may hinder the movement of raw materials and equipment due to restrictions on travel between states in India. For Xiaomi’s smartphone sales and channels, ensuring a reasonable inventory may be a major obstacle to Xiaomi’s performance growth in the next quarter.

In addition, in the short term, the impact of the epidemic on the Indian market has not yet subsided. The smartphone shipments in the Indian market will plummet in the second quarter. Quarterly orders in the Indian market are about 10%-20%.

Although Xiaomi emphasized on the earnings conference call, the return of the epidemic in the Indian market did not have a great impact on Xiaomi’s shipments. However, judging from its shipment performance in India in recent consecutive quarters, Xiaomi’s shipments in the Indian market have actually been on a downward trend.

Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

Source: Canalys Data Agency

Looking at the impact of chip shortages in the entire industry is still obvious, and it is unavoidable for Xiaomi. From the perspective of the entire industry, the shortage of chip supply will lead to a rise in the ASP of smartphones, which will make it more and more difficult for manufacturers to maintain profits at the current price. Consumers will be directly impacted by this cost. Products will be affected. Although Xiaomi has made breakthroughs in high-end, this is not friendly to Xiaomi, which still contributes a lot of revenue to the low-end market.

This also makes Xiaomi have to increase channels in the supply chain. It is reported that Xiaomi is currently actively strengthening cooperation with MediaTek and other companies to reduce its dependence on Qualcomm chips. In addition, Xiaomi is also making strategic investments to increase its own raw material and chip supply channels. As of the end of March, Xiaomi has invested in more than 320 companies, most of which are mainly engaged in chip manufacturing and mobile phone parts production.

In the long run, if Xiaomi’s dependence on external chips can be reduced, it may also promote the continued improvement of its gross profit margin.

Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

The gross profit of Xiaomi in the quarter reached 14.161 billion yuan, a year-on-year increase of 87.4%, and the gross profit margin reached 18.42%. In terms of net profit, Xiaomi continued the growth trend of the previous quarter, reaching 7.788 billion yuan, an increase of 260.6%, and the adjusted net profit reached 6.069 billion yuan, achieving a new growth year-on-year.

Xiaomi’s Q1 revenue and net profit hit a new high, and the high-end mobile phone market has stabilized?

But after all, the impact of the cyclical inventory brought about by the lack of cores cannot be solved overnight. Even if Xiaomi has made efforts in the chip field, Xiaomi’s performance may still have a certain impact in the short term. According to the Financial Associated Press, manufacturers including Xiaomi and Honor have lowered their shipment targets for 2021. Among them, Xiaomi lowered its shipments from 240 million to 190 million, a drop of nearly 25%. In the future, under the situation of chip shortage and severe epidemic situation in India, whether Xiaomi’s data such as gross profit and gross profit margin will be affected may require further answers from the market.

IoT growth hits a new high, and car manufacturing continues to tell a new story of “AloT”

In this quarter’s financial report, in addition to the mobile phone business and product shipments, the market also pays special attention to potential IoT and consumer products and Internet services.

For a long time, Xiaomi has been focusing on the “mobile phone + AIoT” strategy, and by improving the way of linking smart homes and mobile terminals, it has accelerated its layout of the AIoT strategy.

It is worth noting that in 2020, Xiaomi frequently included “frustrated executives” from major companies. In May of the same year, Liu Yaoping, the former CEO of Baofeng TV, joined Xiaomi as the general manager of the TV department and reported directly to Lei Jun, which was also interpreted as Xiaomi hopes to further strengthen the IoT business with this.

At the end of March, Xiaomi announced that it would build a car. It announced that it would invest 10 billion yuan in the first phase, and then invest 10 billion US dollars in the next 10 years. In fact, it also responded to the trend of AloT and the Internet of Everything.

After the influence of the first generation of new car-building forces, more and more Internet companies have taken a fancy to the dividend field of car-making. Apple, Baidu, Huawei and even the home appliance industry have also been involved in this wave, and they themselves use AIoT as their main strategy. Xiaomi, coupled with the existence of basic advantages, it is not difficult to understand the shortlisted car.

However, car manufacturing is an asset-heavy business. While consuming a lot of resources, it is likely to affect the company’s profitability. The three companies of Lipengwei are living examples for us. For Xiaomi, it also requires long-term investment. Prepare.

In addition, making a car is far more complicated than making a mobile phone, and the supply chain is longer. In addition to continuous capital investment, a more complete supply chain channel is required to ensure an adequate supply of spare parts.

But what can be seen is that Xiaomi has achieved development results in the popularity of AloT. As of the end of March, the IoT business achieved revenue of 18.24 billion yuan, a year-on-year increase of 41%, exceeding market expectations, and Xiaomi AIoT connected devices (except mobile phones and laptops) reached 351.1 million units.

In fact, this is also in response to the industry trend. With the acceleration of the 5G era, the Internet of Everything has become a development trend in the future. “Smart home” and “whole house intelligence”, including unmanned driving, are the derivatives of the Internet of Everything. .

On the other hand, the market development space is broad. According to the “2020 China Intelligent Internet of Things White Paper” data, the scale of China’s AIoT market in 2019 is approaching 400 billion yuan, and by 2022, this figure will exceed 750 billion yuan. In the face of such an amazing industry scale, Xiaomi, who has been following the trend all the time, believes that he will not let it go.

At Xiaomi’s own level, it is more in line with the development of smartphones. Xiaomi still attaches great importance to the smartphone business. If you want to stand firm, the ecological expansion of smartphones has become an inevitable choice. The financial report shows that Xiaomi is used for “mobile phones”. +AloT” research and development expenses reached 3 billion yuan, a year-on-year increase of 61%, almost the same as the growth rate of Xiaomi’s marketing expenses.

But what can’t be ignored is that almost every Internet player wants to seize the tuyere of AloT and car building. Apple, Huawei, Baidu and other players are also making frequent efforts. Can Xiaomi compete in the new round of car building qualifying competition? There are still more market suspense in the position.

In general, Xiaomi’s new round of financial reports has achieved relatively good results, and it has also brought a certain boost to investors. The mobile phone business continues to provide growth momentum for Xiaomi’s revenue, as the “mobile phone” of Xiaomi’s strategic focus. The potential of “+AloT” has gradually emerged, but the recurrence of the epidemic in India and the global “lack of cores” have brought some uncertainty to Xiaomi’s subsequent performance growth.

But it is worth noting that after the stock price plummeted by 40% in the first quarter, with the lifting of the ban by the US government and the return to the FTSE index, Xiaomi’s valuation may be further repaired, and the Hong Kong Stock Research Institute will also continue to pay attention.

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