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Xiaomi has been selling cars for half a year and is still the king when it returns.

On August 21, Xiaomi Group (HK01810) released its second quarter performance announcement, with revenue growth once again breaking the record, achieving positive growth both year-on-year and quarter-on-quarter for four consecutive quarters and double-digit growth for three consecutive quarters.

At the same time, Xiaomi's product lines have been fully expanded. During this quarter, Xiaomi's smartphones, IoT business, and Internet business achieved substantial growth, with revenues of 46.5 billion yuan, 26.8 billion yuan, and 8.3 billion yuan, respectively, all exceeding market expectations.

The automotive business was listed separately for the first time in Xiaomi's financial report, which was both surprising and unsurprising. According to the financial report data, the cumulative delivery of Xiaomi SU7 series new cars in Q2 exceeded 27,000 units, and the monthly delivery exceeded 10,000 units for two consecutive months from June to July. At the same time, as of the end of the reporting period, the overall gross profit margin of Xiaomi's automotive and other innovative businesses was 15.4%, and the business revenue was 6.4 billion yuan, accounting for 7.2% of the total revenue.

In general, this performance has excited Mi fans and reassured shareholders. Xiaomi's high-end process seems to be going smoothly and seems to have ushered in a new round of explosive growth cycle.

Supported by the full product matrix built on the "full ecosystem of people, cars and homes", Xiaomi's achievements are still worth the market's expectations.

The industry has entered a recovery cycle, and Xiaomi has achieved rapid growth across the board

Xiaomi’s growing performance is inseparable from the recovery of terminal demand.

According to the latest data from Canalys, in the second quarter of 2024, the smartphone market in mainland China further recovered after experiencing the inflection point of recovery in the previous quarter, with shipments increasing by 10% year-on-year, returning to the level of 70 million units.

The technology manufacturing industry, which has been struggling for several years, has finally ushered in the double-click of terminal demand recovery and inventory liquidation in the industrial chain, and the industry's prosperity is gradually bottoming out.

Xiaomi took advantage of the trend and entered a stage of comprehensive and rapid growth.

First of all, in the mobile phone business, benefiting from the continuous iterative innovation of product strength and brand strength, Xiaomi's smartphone business achieved new breakthroughs within the quarter. According to Canalys data, in the second quarter of 2024, Xiaomi's global smartphone shipments reached 42.2 million units, a year-on-year increase of 28.1%, far exceeding the global average, ranking third with a market share of 14.6%.

The "strength" of the mobile phone business is inseparable from the "surging" sales of Xiaomi mobile phones overseas.

In the second quarter of this year, Xiaomi's mobile phone shipments in the Japanese market increased by 359%, rising to third place for the first time. In the Latin American market, Xiaomi jumped to second place with 6.2 million units shipped. This is also the highest record of Xiaomi's shipments in the region, breaking the 6 million mark for the first time. Xiaomi's smartphone business revenue achieved strong growth in 24Q2, reaching RMB 46.5 billion, a year-on-year increase of 27.1%.

The deepening of the "Full Ecosystem for People, Cars and Homes" strategy also helped Xiaomi's IoT and consumer products business achieve a breakthrough in the quarter. The financial report shows that in Q2 24, Xiaomi's IoT and consumer products business revenue increased by 20.3% year-on-year to RMB 26.8 billion.

Among them, the revenue of large home appliance business increased by 38.7% year-on-year. The shipment volume of Xiaomi air-conditioning products in 24Q2 exceeded 3.3 million units, an increase of more than 40% year-on-year. Xiaomi refrigerators and washing machines also achieved substantial growth, with shipment volumes exceeding 600,000 units and 400,000 units respectively.

As of June 30, 2024, the number of IoT devices connected to the Xiaomi AIoT platform (excluding smartphones, tablets and laptops) increased by 25.6% year-on-year to 822 million, and the number of users with 5 or more devices connected to the Xiaomi IoT platform (excluding smartphones, tablets and laptops) increased by 24.2% year-on-year to 16.1 million. As of June 2024, the number of monthly active users of the Mi Home APP increased by 16.8% year-on-year to 96.9 million, both of which were historical highs.

In addition, Xiaomi's Internet business continued to maintain rapid growth, with revenue reaching RMB 8.3 billion, setting another record. As Xiaomi continues to deepen its cooperation network in the global market, its overseas Internet service revenue reached RMB 2.7 billion in Q2 24, a year-on-year increase of 32.9%, and its proportion of total Internet revenue increased to 32.1%.

With several business lines making progress in parallel, Xiaomi's second quarter financial report was particularly powerful and the atmosphere was enthusiastic.

Revenue grew by double digits for three consecutive quarters, and the automotive business exceeded market expectations

According to Xiaomi Group's (HK01810) second quarter results announcement, its revenue growth rate further expanded to 88.9 billion yuan, a year-on-year increase of 32.0% - this is the fourth consecutive quarter that Xiaomi has achieved positive growth on a quarter-on-quarter basis, and three consecutive quarters of double-digit growth. Adjusted net profit was 6.2 billion yuan, a year-on-year increase of 20.1%, maintaining a high level.

Given that the overall market environment has not yet recovered, this growth momentum is truly astonishing.

In addition, although Xiaomi has invested heavily in its money-consuming automobile business this year, it has no shortage of cash reserves. According to the financial report, as of June 30, 2024, Xiaomi's cash reserves reached RMB 141 billion, which is at the industry-leading level - this means that Xiaomi's automobile business development and core technology innovation still have very strong financial support.

Competition in the new energy vehicle field is becoming increasingly fierce. Abundant cash flow is a necessary condition for car companies to participate in the competition, and it is also a good guarantee for providing users with continuous high-quality services.

In addition to sufficient cash reserves, Xiaomi Group's debt-to-asset ratio has remained low, and the company maintains a healthy financial condition.

Xiaomi Group's debt-to-asset ratio was 49% in the second quarter of 2024, far lower than the debt-to-asset ratio level of new car-making forces.

The automotive business was also listed separately for the first time in Xiaomi's financial report. According to the financial report data, the cumulative delivery of Xiaomi SU7 series new cars in Q2 exceeded 27,000 units, and the monthly delivery exceeded 10,000 units for two consecutive months from June to July. At the same time, as of the end of the reporting period, Xiaomi's overall gross profit margin for automobiles was 15.4%, and the revenue of innovative businesses such as automobiles was 6.4 billion yuan, accounting for 7.2% of the total revenue.

In terms of delivery, since its official launch in March 2024, the Xiaomi SU7 series has made rapid progress in capacity expansion and delivery execution, with a total of 27,307 new vehicles delivered in a single quarter.

After the Xiaomi Automobile Factory started double-shift production in June, monthly deliveries exceeded 10,000 for two consecutive months from June to July. The goal of delivering 100,000 Xiaomi SU7 series vehicles in 2024 is expected to be achieved ahead of schedule in November 2024, and the new goal of delivering 120,000 new Xiaomi SU7 series vehicles in 2024 will be achieved. The production capacity ramp-up speed is better than that of its peers, demonstrating strong competitive strength.

In terms of sales and service network, as of June 30, 2024, Xiaomi has 87 auto sales stores in 30 cities in mainland China, which continue to contribute to order growth.

SU7, indeed, exceeded market expectations.

In addition, the upper limit of SU7 is still being raised by Xiaomi——

In July 2024, the Xiaomi SU7 Ultra prototype was unveiled, and it was announced that it would officially enter the Nürburgring Nordic track in October 2024, challenging to become the fastest four-door tram in the Nürburgring Nordic track within ten years.

The whole vehicle is equipped with one V6s + two V8s, Xiaomi's super three-motor all-wheel drive, and has a combined maximum power of 1548PS. The Xiaomi SU7 Ultra has the most powerful horsepower among the four-door cars in the world, and it seems that it does have the confidence to be so arrogant.

In addition, including the industry-leading 9,100-ton super die-casting technology, full-stack self-developed intelligent driving technology, and advanced smart cockpit technology based on Xiaomi Surge OS, Xiaomi's strength in software and hardware is still growing rapidly, and its competitive advantages and market potential are immeasurable.

AI empowers the entire ecosystem, but Xiaomi has not yet reached its peak?

Foresight is about seeing the future clearly, and Xiaomi is particularly aggressive in investing in a visionary future.

The financial report shows that Xiaomi's R&D expenditure in the second quarter was 5.5 billion yuan, a year-on-year increase of 20.7%. "Full AI empowerment" is an important strategy of Xiaomi. On the one hand, it has led to the high-end mobile phones, and on the other hand, it is also widely used in the automotive field.

In terms of intelligent assisted driving, Xiaomi Pilot, the Xiaomi intelligent driving system, is fully self-developed and fully supports the leading intelligent assisted driving functions. It uses an end-to-end large model, that is, integrated perception, decision-making, and planning. It has currently achieved parking in extremely narrow parking spaces with an accuracy of 5 cm and valet parking at a maximum cruising speed of 23 km/h with extremely high availability.

Thanks to Xiaomi's self-developed innovation in core intelligent technologies, Xiaomi's automotive intelligent capabilities have a clear competitive advantage in the industry.

In addition, Xiaomi's AI technology is also enabling the production and construction of Xiaomi's smart factory. In July 2024, Xiaomi officially released the new generation of Xiaomi mobile phone smart factory-Xiaomi Changping Smart Factory. It has an annual production capacity of 10 million flagship mobile phones. Through in-depth self-research of manufacturing equipment, it achieves 100% automation of key processes, and the software self-research rate reaches 100%. From the product side, the process innovation verification and production of popular flagship models such as Xiaomi 14 Bay Blue, Xiaomi 14Ultra, Xiaomi MIX Fold 4, Xiaomi MIX Flip are all from this factory.

The return on Xiaomi’s R&D investment is also very impressive.

According to third-party data, in mainland China, Xiaomi's Q2 high-end smartphone shipments with a retail price of RMB 3,000 and above accounted for 22.1%, up 2.0 percentage points year-on-year.Among them, in the price range of RMB 3,000-4,000, RMB 4,000-5,000, and RMB 5,000-6,000, the market share of smartphones was 16.8%, 20.1% and 8.9% respectively, all of which increased year-on-year, and Xiaomi continued to break through in the high-end market.

With the support of AI technology, Xiaomi has made major breakthroughs in production and manufacturing, material research and development, engineering development and other fields, and has also won the favor of capital.

On August 13, JPMorgan Chase issued a report, predicting that Xiaomi's second-quarter revenue will increase by 15% quarter-on-quarter (less than half of Xiaomi's actual growth) and 29% year-on-year, and maintained its "overweight" rating on Xiaomi;

During the same period, China Construction Bank International raised Xiaomi's target price, expecting the second-quarter performance to be solid and better than expected, and rated it as "outperforming the market"; Bank of China International raised Xiaomi's second-quarter adjusted earnings forecast, reiterated its "buy" rating, and ranked it as the industry's top choice.

In addition, many leading institutions such as Citi and CICC have given Xiaomi a "buy" rating.

At present, the first year of Xiaomi's formal closed-loop strategy of "full ecosystem for people, cars and homes" has achieved a good start. In the future, with continuous iterative innovation on the technological end, better cross-end collaborative experience and a more complete multi-scenario product matrix development, Xiaomi's growth potential boundaries will be further broadened.

Lu Weibing, partner and president of Xiaomi Group, said that the smart travel devices with cars as the core are Xiaomi's third growth curve. Previously, Xiaomi formed the first growth curve of smart devices with mobile phones, tablets and wearable devices as the core, and the second growth curve of home smart devices with large appliances as the core. Xiaomi's full ecological strategy of people, cars and homes is unique in practice, and this closed loop has just begun. Xiaomi's future development has unlimited possibilities.

At that time, perhaps it will be the "ultimate form" of the full release of Xiaomi's business vitality.