Alex NG, an analyst from CMB International Securities, maintained the Buy rating on Xiaomi (XIACF – Research Report). The associated price target remains the same with HK$59.52.
Alex NG has given his Buy rating due to a combination of factors surrounding Xiaomi’s strategic financial moves and growth potential. The company has announced a significant share placement to raise approximately HK$42.5 billion, which is intended to fund its global expansion, research and development, and general corporate purposes. This move is seen as a long-term positive, supporting Xiaomi’s ambitions in the smartphone, AIoT, and electric vehicle sectors.
Despite the immediate dilution effect of 3.2% on existing shares, the capital raised is expected to bolster Xiaomi’s aggressive targets, such as expanding its electric vehicle production capacity and increasing its global smartphone market share. Historical performance also supports this optimism, as Xiaomi’s stock rallied significantly after a similar placement in December 2020. Therefore, the current placement is viewed as an opportunity for investors to accumulate shares, anticipating future growth and value appreciation.
In another report released on March 25, Macquarie also maintained a Buy rating on the stock with a HK$66.75 price target.
XIACF’s price has also changed dramatically for the past six months – from $2.660 to $6.860, which is a 157.89% increase.