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    1810   KYG9830T1067

XIAOMI CORPORATION

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Xiaomi growth slows as fewer people buy phones, Huawei competition bites

08/21/2019 | 02:04am EST
Xiaomi branding is seen at a UK launch event in London

SHANGHAI (Reuters) - Chinese smartphone maker Xiaomi Corp posted its slowest revenue growth as a public company, missing analysts' estimates, as it lost market share to Huawei and customers held on to their phones before a 5G refresh.

Xiaomi's stock, which has nearly halved from its IPO price, was down 6% in afternoon trading on Wednesday.

China's smartphone market, the world's largest, is shrinking but consumers there are rallying in support of Huawei as it battles U.S. trade restrictions.

Xiaomi's market share in China declined by a fifth in the April-June quarter even as Huawei's share surged by 31%, according to research firm Canalys. Globally, the smartphone market shrank 2.3% in the same period, according to research firm IDC.

Xiaomi, which debuted its shares in July last year, said on Tuesday that it failed to grow smartphone shipments in the second quarter, which stood at 32 million.

"Customers are generally holding existing smartphones for longer with manufacturers hoping that 5G will provide compelling reasons for customers to upgrade their phones," Morningstar analyst Dan Baker said in a research note.

The company's second-quarter revenue rose 15% to 51.95 billion yuan ($7.4 billion) from 45.24 billion yuan a year earlier, but fell short of the 53.52 billion yuan expected by analysts, according to I/B/E/S data from Refinitiv.

Net income slumped 87% to 1.96 billion yuan as the fair value of its investments switched to a loss in the second quarter, from a gain a year earlier.

DIVERSIFICATION

Still, Xiaomi's adjusted profit of 3.64 billion yuan beat the 2.74 billion yuan expected by analysts.

While Xiaomi makes most of its money by selling mobile handsets, like other Chinese tech companies it is seeking new sources of revenue.

The company is investing in artificial intelligence and smart-home devices. Revenue in the "internet of things" and lifestyle products business jumped 44% and accounted for more than a quarter of the total.

The firm has invested in several companies making semiconductors or other key hardware components, trying to emulate the success of Huawei's HiSilicon semiconductor division.

In the second quarter, Xiaomi funded Verisilicon, a Shanghai-based chip design firm. It also invested in Bestechnic, which designs chips for audio devices.

Three of the companies Xiaomi invested in listed on China's newly-opened STAR market, and helped it generate asset-divestment gains of 551.8 million yuan.

Xiaomi's chief financial officer, Chew Shou Zi, said the investments stemmed in part from the company's hopes to build a "Chinese supply chain", while improving its internal research and development abilities.

(Reporting by Josh Horwitz; editing by Jan Harvey and Stephen Coates)

By Josh Horwitz


ę Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
US DOLLAR / CHINESE YUAN RENMINBI (USD/CNY) 0.00% 6.3524 Delayed Quote.0.12%
XIAOMI CORPORATION -0.21% 18.64 End-of-day quote.-1.38%
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Analyst Recommendations on XIAOMI CORPORATION
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Financials
Sales 2021 324 B 51 044 M 51 044 M
Net income 2021 21 472 M 3 380 M 3 380 M
Net cash 2021 64 396 M 10 137 M 10 137 M
P/E ratio 2021 17,3x
Yield 2021 -
Capitalization 378 B 59 500 M 59 505 M
EV / Sales 2021 0,97x
EV / Sales 2022 0,75x
Nbr of Employees 26 110
Free-Float -
Chart XIAOMI CORPORATION
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Xiaomi Corporation Technical Analysis Chart | 1810 | KYG9830T1067 | MarketScreener
Technical analysis trends XIAOMI CORPORATION
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Income Statement Evolution
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Mean consensus BUY
Number of Analysts 34
Last Close Price 15,21 CNY
Average target price 22,43 CNY
Spread / Average Target 47,5%
EPS Revisions
Managers and Directors
Jun Lei Chairman & Chief Executive Officer
Xiang Wang President
Alain Lam Chief Financial Officer
Yan Qi SVP-Internal Operations & Public Affairs
Dong Sheng Chen Independent Non-Executive Director
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