XIAOMI: Everything speaks for renewed highs!

Free Issue No. 07 as of 08.04.2021
The Chinese technology company XIAOMI is dynamic and struggling. An unwelcome hurdle could be overturned in the US, just as we always predicted: A court in Washington has lifted U.S. sanctions against XIAOMI... in our view, should have lifted them from a legal perspective; the ban on American investors buying XIAOMI stock is off the table for now. A second piece of welcome news involves the planned share buyback worth the equivalent of around HKD10bn or USD1.29bn; a testament to the company's confidence in its own business prospects and the buyback will ultimately benefit the group as well as shareholders. Considering the 2020 operating business figures, this is not a problem. Compared to 2019, XIAOMI can report notable increases for the past year: Revenue climbed +20%, operating profit (EBIT) was up +104%, and net income and earnings per share were also up slightly more than +100%. The current price-to-earnings (P/E) ratio is around 28x. If XIAOMI can maintain the pace, we see a return to recent highs! On the negative side, we would probably see "interference" from the Chinese government, which cannot be ruled out.

But there is one more thing: On February 25, 2021, we wrote about a rumor related to the entry into the electric car business. Shortly after, this was denied. But now the thing is picking up speed after all ("where there's smoke, there's often fire"). Anyway, XIAOMI plans to invest a total of USD 10 billion in the development of smart electric vehicles over the next ten years. "I am determined, together with the team, to bring about the success of XIAOMI electric vehicle (unit: smart electric vehicle business)," CEO Jun said. The decision is based on comprehensive evaluations. Knowhow and core technologies are already in place at XIAOMI.
The stock promises excitement and lots of potential! Target price remains at EUR 3.90!