BNP Paribas Rates ‘Sell’ for Leading Chinese Tech Company Xiaomi
Xiaomi’s (01810:HKEX) stock price keeps rising, and has surpassed its IPO price of HKD 17. A skeptical BNP Paribas on July 15 rated the company as a ‘sell’ and proposed a HKD 10 price.
BNP Paribas points out that Xiaomi’s recent stock price rise (as of writing, beyond its IPO rate of HKD 17) was partly due to the Huawei ban in the US, Europe and India. Other factors, such as the positive market sentiment for 5G rollout and the company’s Q1 revenue growth, contributed to the soaring stock price. However, BNP reckons that Xiaomi benefited from its well-developed online sales channels during the pandemic. As people’s social activities and general mobility get back to normal, the company’s market share and revenue are likely to decline.
Featured as a technology company, Xiaomi’s hardware, including smartphones and lifestyle products, does not contain unbreakable technology barriers and consequently cannot be distinguished from its major competitors. For the software/Internet services segment, Xiaomi has so far failed to loop in users who are not its smartphone users. The user volume and profitability remain bleak.