XIACY - Xiaomi: Interesting Yet Highly Speculative EV Play
2024-03-07 09:48:14 ET
Summary
- Xiaomi has the potential to surpass expectations by innovating outside its current core business, presenting a wildcard element.
- This renders Xiaomi as a highly speculative investment, with tangible substance present but requiring success in the EV sector to justify its current valuation.
- Xiaomi targets highly competitive markets: the saturated smartphone market and the rapidly growing EV market.
- I am attempting a sum-of-the-parts valuation, with a particular focus on the EV segment.
- Current investors might hold their stocks. While staying in the sector might offer a balanced risk-reward ratio, I personally favor less competitive fields and companies with clearer prospects.
With this analysis, I aim to shed light on Xiaomi ( XIACF ) in the bigger picture, rather than delving too deeply into quarterly figures or short-term performance metrics. As a long-term investor, I am interested in Xiaomi's long-term orientation and the predictability thereof. Quarterly figures have been thoroughly dissected in existing articles. I stem my thesis on the following key pillars:
- The Cash Cow - Xiaomi's successful but deterrently competitive Smartphone business
- The Question Mark - Xiaomi's EV play with my very own rough, simplified and indicative yet highly transparent valuation estimates
- Sum of the parts - Summing up Xiaomi's current business, my EV estimations and the company's high Net Cash position