Xiaomi (SEHK:1810): Taking Stock of Valuation After Latest Share Price Rebound

Shares of Xiaomi (SEHK:1810) are in focus as investors look for signals in the company's recent market moves. With prices edging up by almost 3% in the last day, market watchers are curious about what might be driving sentiment.

See our latest analysis for Xiaomi.

This latest share price bump comes after a challenging stretch for Xiaomi, including a 16.9% drop over the past month. Still, momentum looks strong when you zoom out: the total shareholder return for the past year is an outstanding 94.4%, and the five-year total return sits at 115.7%. Recent gains could signal that investors are warming to Xiaomi’s growth outlook despite recent volatility.

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So with Xiaomi’s stock bouncing back from recent lows and analysts predicting further upside, should investors consider this a rare window to buy before the next leg higher? Or has the market already priced in all the optimism?

Most Popular Narrative: 28.6% Undervalued

Xiaomi’s current share price of HK$47.14 trades well below the most popular narrative’s fair value estimate of HK$66.01. This suggests substantial upside if forecasted growth is realised. The valuation reflects a strategic bet on Xiaomi’s push beyond smartphones into premium products, connected devices, and electric vehicles.

“The company’s successful push into premiumization, evidenced by growing sales of high-end smartphones, appliances, and electric vehicles, along with the launch of proprietary 3nm chips and advanced AI features, supports higher average selling prices and improves net margins as Xiaomi captures greater value per customer.”

Read the complete narrative.

What is the game-changing assumption baked into this sky-high fair value? Spoiler: it hinges on future profit multiples and bold bets on high-margin new business lines. Want to see which growth projections could shock the market? Unlock the numbers the narrative is banking on by reading the complete story.

Result: Fair Value of $66.01 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent smartphone price wars and sluggish premiumization in international markets could undermine Xiaomi’s ambitious growth targets and temper analysts’ bullish outlook.

Find out about the key risks to this Xiaomi narrative.

Another View: Market Ratios Send a Different Signal

While the fair value narrative points to upside, Xiaomi is currently priced at 30.2 times earnings, which is higher than both the Asian tech industry average of 23.7 and the peer average of 19.5. The market’s fair ratio model suggests a move toward 26.1 could be in store. Does this gap mean untapped potential, or extra risk for buyers?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Xiaomi Narrative

If you want to dive deeper or challenge these perspectives, you can quickly explore the data and develop your own outlook on Xiaomi. Do it your way

A great starting point for your Xiaomi research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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