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Briefing Jul 27, 2020 05:19 pm EqualOcean

Hang Seng TECH Index Starts with Plunge

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Sep 27, 2020 01:59 pm ·

Xiaomi's Expansion Is Not Stopped By Lockdowns, Profit Up 29.3% in 1H 2020

Although the COVID-19 pandemic caused strict lockdown measures and the sales were greatly affected in the first six months of 2020, Xiaomi's financial results outperformed the market consensus forecasts. The corporation reported CNY 103.2 billion revenue, representing an increase of 7.9% year-on-year. The profit for the period was approximately CNY 6.65 billion, up 29.3% year-on-year. The share price of Xiaomi rose from HKD 11.22 on January 2 to 19.72 on September 25 this year, which is equivalent to a 75.8% increase in market capitalization.  Despite the impact of the pandemic and global uncertainties in 2020, Xiaomi's diversified business ecosystem has demonstrated its resilience. There are upgrades in almost all sectors. One is the rising return from equity investment in the industry line. Until the end of June, Xiaomi has invested CNY 36.8 billion in more than 300 upstream and downstream companies. The return in 2Q was more than four times the return in 1Q 2020. The operating synergies between Xiaomi and the invested companies are becoming more apparent. Another important change was the 'Smartphone x AIoT' strategy, which was announced by Lei Jun as Xiaomi's core strategy in the next decade to drive synergistic benefits. The peer company Apple reported an 11% increase in revenue (USD 59.7 billion) and a 12.1% increase in net profit (USD 11.25 billion) year-on-year for its third fiscal quarter of 2020. In the same period, Xiaomi made a smaller progression in revenue but created a 129.8% increase in net profit, to CNY 4.49 billion. We can thus see that Xiaomi is far smaller than Apple in market capitalization – but is expanding vigorously.

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Sep 27, 2020 12:02 pm ·

Chinese Smartphone Profitability Driven by 5G, Huawei Ranks Second by Revenue

Surpassing Samsung (005930:KR) and Apple (AAPL:NASDAQ), and taking 20% of the global smartphone shipment in the second quarter of 2020, Huawei once again beat its major Korean competitor Samsung in terms of smartphone revenue volume. During the second quarter of 2020, Huawei accounted for 20% of the global smartphone revenue, ranking the second. The first position is taken by Apple, the one with apparent technology premium driven by its operating system and in-house designed processor. Apple capture over one-third of the global revenue and in the meanwhile captured around 59% of the global smartphone industry profit. According to Counterpoint Research, Huawei's considerable revenue volume is partly driven by the averaging selling price enhancement in the Chinese market, which is the result of the aggressive 5G smartphone shipments. Though according to our previous analysis, Chinese vendors have been competing for 5G smartphone market by launching lower priced phones and dragged the average 5G phone price 43% down to USD 369 from January to June 2020, the new releases of high-end 5G phones, such as Huawei P40 series flagship, Mi 10 and OPPO Reno series have significantly driven the average price up. During the second quarter of 2020, the average selling price in the Chinese market increased by 13% year-over-year. Among the top five global revenue generators, Chinese vendors took three positions, leaving Xiaomi(01810:HK) outside the list. Pledged to have net profit margin less than 5%, the company is still aligning to the low-price strategy, which present issues with the corporate profitability.

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Sep 27, 2020 10:28 am ·

OPPO and Midea to Co-create Smart Home and IoT Ecosystem

As proposed by the Chinese smartphone vendor Xiaomi (01810:HK) in 2018, the 'AI + IoT' or the IoT (Internet of Things) ecosystem strategy, has been followed and further developed by major Chinese electronics companies including Huawei. These vendors intend to take advantage of smartphone user bases by making the smartphone a control center to connect and empower other electronics products like earbuds and tablets, and white home appliances to realize remote control and some even more intelligent machine actions like auto-alarm. At the Huawei Developer Conference 2020, Huawei revealed a bunch of strategic cross-industry cooperation projects with many leading companies such as VIPKID in education and Joyoung (002242:SZ) in cooking machines to further develop Huawei's IoT ecosystem. Xiaomi has resorted to another IoT business model, whereby Xiaomi's IoT products are mainly self-branded or developed by its invested startups. Xiaomi's model has shown up a shortage of tech development among mature industries like air-conditioners – though the company could hardly compete with the traditional leading companies such Gree Electric (000651:SZ) and Midea (000333:SZ). OPPO chose Huawei's IoT model and announced that it would release its smart home products in cooperation with Midea, one of the largest home appliance vendors in China. Except for the hardware product cooperation, OPPO also planned to have R&D partnership with Midea to develop user portal and Midea appliance controlling apps based on OPPO smartphone's operating system ColorOS. Last, the two agreed to share business data in terms of users, sales, products and operations, to realize optimal product designs.

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Sep 23, 2020 02:56 pm ·

Xiaomi to Release Its First '8K + 5G' TV Series

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