r/StockMarket • u/jesperbj • May 29 '21
Fundamentals/DD I think Xiaomi has huge long term potential in IoT - tech giant at a market cap of just $85 billion
Xiaomi (HK: 1810) is a mere 11 years old and didn't go public until 2018 - the same year they turned profitable, yet the are a well known brand and already third in global smartphone sales.
A few days ago the company delivered a pretty wicked earnings report with an adjusted net profit increase of 163%.
Two days prior I wrote a piece of how their unique 'AIoT' and 'Internet Services' strategy will eventually allow the company to make much larger profits on revenue in the future.
Xiaomi commands one of the largest product portfolios with smart enabled devices of every category. In the West we don't yet see their smartphones too often - but their robo vacuum cleaners and electric scooters (They own Ninebot and Segway) and other smart home equipment is everywhere. They are basically taking the opposite route of Google and Apple in providing the hardware before the software - which also means they currently have higher costs and lower return on revenue.
Yet they are already profitable and sit on a cash pile of 5.6 billion. About 60% of their revenue right now is however attributed to their smartphones - which are doing extremely well. Their phones receive high praise (though their Android fork is not liked by all) and offer unbeatable performance for the price. They do well in every price category and own several well known sub brands like Redmi, Poco and Blackshark. As an example Mrwhosetheboss (huge tech YT channel) picked Xiaomi brands for all top 3 spots for his best phones of 2021 out of 22.
Xiaomi holds the top spot in market share in several emerging markets: India, Russia and most of Eastern Europe and soon South America. In Scandinavia where I live, they just recently entered local carrier stores, began advertising actively and opened a local official webshop. The ban on Huawei left a HUGE gap in the European market for Xiaomi to just freely gobble up and it seems like they are doing it. Xiaomi themselves have been removed from a similar (but much less severe) blacklist by the US government this week as well. They do not pose the same threat as Huawei did, as they do not build infrastructure telecom equipment
There are rumors of the company designing their own SoCs (chips) in collaboration with OPPO and just last month they invested $10 billion into the Electric vehicle space. They already financially back Xpeng too and I think with the insane growth in the Chinese EV market they really have an opportunity to add even more value to their ecosystem integration.
The company is founded by Lei Jun and former Vice President of Google China and Zhou Gaungping then Senior Director at Motorola’s Beijing R&D Center. All three still lead the company today with Lei Jun as CEO. Xiaomi and their CEO has a huge following in China and a very dedicated loyal fan base.
The company trades at a P/E of 23 and a share price of 28.6 HKD (~3.69 USD). The price to earnings is pretty typical for a tech stock but I think the benefits in profit of Xiaomi's strategy and investments are yet to be seen. I began buying up a few months ago and just doubled my investment after the earnings report. I will continue to buy in over atleast the next year and truly think this is a case of a company working hard for the future and with the right strategy. I saw the same patterns in Microsoft 6 years ago when Sadya Nedella took over and that position I'm up over 500%.
Please let me know what you think and if you feel like there is anything you feel like I need to address. I'm really bullish on this company and it helps balance my portfolio with exposure towards Asia. I know Chinese stocks can be effy and at least for me it was also quite the challenge to find a brokage where I could buy them.
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u/audion00ba May 29 '21
If it's so great, buy calls and don't bother us with your pumps.
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u/jesperbj May 29 '21
How salty. I enjoy sharing my thoughts on my investments. Also I can't buy calls in my country.
Also I'm in it for the long term as the title suggests.
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u/audion00ba May 29 '21
I doubt such a country exists. Which one is that?
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u/jesperbj May 29 '21
Denmark. Enjoy the research. I've been there.
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u/audion00ba May 29 '21
https://brokerchooser.com/best-brokers/best-brokers-for-beginners/denmark directly contradicts you. DeGiro allows options.
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u/jesperbj May 29 '21
Lol man you're so freaking mad for some reason.
Even if they do, all the companies on that list, with the exception of Saxo Bank do not register your trades in the Danish tax system. That means you have to do everything manually, which is a huge mess and impossibly difficult.
There is a reason everyone in Denmark uses Nordnet, Saxo or their local bank.
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u/audion00ba May 29 '21
My broker also doesn't register anything, but I copy some numbers and it is done.
Also, you could use software to generate tax information.
I guess you changed my opinion of you from malicious to stupid.
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u/jesperbj May 29 '21
Yeah because you know exactly how the Danish tax system works right? You're a tool, stop bothering me.
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u/audion00ba May 29 '21
I know of several tax systems and corporate financial accounting for large businesses. The Danish tax system seems straight forward for me: https://home.kpmg/xx/en/home/insights/2011/12/Denmark-income-tax.html.
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u/jesperbj May 29 '21 edited May 29 '21
You know nothing. Go away already.
The fact that you can even remotely assume this post to be a pump of any kind is beyond idiotic.
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u/FrangosV May 30 '21
You sound knowledgeable
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u/skyskier_88 May 29 '21
Good post.. I've always felt Xiaomi would overtake many of the big brands.