Beast Finance's Core Views:

(1) Xiaomi Group's share price has risen to its highest level since 2022.

(2) The share price has increased by more than 185% from its lowest point in 2023.

(3) With the rebound in smartphone demand and the growth in electric vehicle margins, Beast Finance believes there is still room for Xiaomi Group's share price to rise.

(4) Beast Finance's technical analysis of Xiaomi Group's share price: Xiaomi Group's share price will continue to rise, with the next key resistance level at HK$30.45.

Xiaomi Group's Business Continues to Grow

According to IDC data, Xiaomi Group's (01810) revenue has been volatile over the past few years. After its annual revenue increased from $29.5 billion in 2019 to a high of $51.6 billion in 2021, it declined to $40.6 billion in 2022 and further to $38.7 billion last year. However, over the past 12 months, its revenue has rebounded to $42.5 billion.

Although Xiaomi Group's revenue growth has been unstable or volatile in recent years, its profits remain high, with total net income reaching $2.5 billion over the past four quarters.

IDC's latest data shows that global smartphone sales grew by 6.5% in the second quarter, and the growth momentum continues to strengthen, with shipments rising to 285.4 million units, marking the fourth consecutive quarter of growth.

Xiaomi Group holds a significant market share in this industry, with shipments reaching 42.3 million units, ranking second only to Samsung and Apple (APPL).

Currently, Xiaomi ranks second in Latin America, third in Africa, third in Europe, and second in Southeast Asia. In addition, Xiaomi has become the top-ranked smartphone brand in India.

This is one of the key reasons for the rebound in Xiaomi Group's share price over the past few months.

Xiaomi Group's Revenue is Rebounding

The latest financial results show that Xiaomi Group's revenue rebounded in the second quarter, reaching RMB 88.8 billion, a significant increase from RMB 67.0 billion in the same period last year.

Its gross profit also increased by nearly 30% to RMB 18.3 billion, while its profit exceeded RMB 5 billion in the same period.

In the second quarter, most of Xiaomi Group's revenue came from its smartphone and IoT (Internet of Things) businesses, with revenue growing by 22% to RMB 82.5 billion.

In terms of the electric vehicle business, Xiaomi has sold over 27,307 electric vehicles. The company aims to sell 120,000 electric vehicles this year, a remarkable achievement for a company that has just entered the automotive industry.

Most importantly, Xiaomi Automobile's profit margins are very high. In the most recent quarter, its gross margin reached 15.4%, compared to NIO's gross margin of only 7.8% and Xpeng's gross margin of only 7.29%.

Therefore, while the automotive business may drag down Xiaomi Group's profitability in the short term, Beast Finance believes that if this trend continues, Xiaomi Automobile has a high likelihood of achieving profitability within the next few years.

Moreover, Xiaomi Group will also benefit from China's recently announced stimulus plans and the decline in global interest rates, which are catalysts for increased consumer demand for non-essential products.

In addition, Xiaomi Group has a very healthy balance sheet, currently holding over RMB 141 billion in cash and short-term investments, and has returned billions of dollars to shareholders through share repurchases.

These factors are all positive for Xiaomi Group's stock.

Technical Analysis of Xiaomi Group's Stock

The daily chart shows that Xiaomi Group's share price has been in a rebound mode over the past few weeks, with this rebound starting on August 4 at a low of HK$15.38.

Currently, Xiaomi Group's share price has broken through the previous resistance level of HK$20.35, which was the highest volatility since May 14 and also the previous historical high. Above this level, the double-top pattern that Xiaomi Group's share price was previously forming has failed.

At this stage, Xiaomi Group's share price has consistently remained above the 50-day and 100-day exponential moving averages (EMAs), indicating that the bulls are still in control.

Meanwhile, oscillator indicators such as the Relative Strength Index (RSI) and Stochastic Oscillator are trending upwards, suggesting that there is still significant momentum.

Therefore, Beast Finance believes that Xiaomi Group's share price may continue to rise, as the bulls have set their sights on the next key resistance level of HK$30.45 (which was Xiaomi's highest share price level in June 2021).

If this happens, Xiaomi Group's share price has more than 27% upside potential in the future.