tearing off the "cost-effective" label and focusing on high-end models is the mobile phone business transformation route chosen by Xiaomi Group (01810.HK) after its listing. However, from the stock price trend, the market gave "not optimistic" feedback.
html On June 3, Xiaomi Group's stock price continued to decline and fell to a new historical low. As of the close, Xiaomi's stock price was 9.09 Hong Kong dollars, down 5.11%, and the Hong Kong stock market value was 218.1 billion Hong Kong dollars. Compared with the issue price of HK$17 when it was listed on the Hong Kong Stock Exchange on July 9, 2018, Xiaomi's current share price is nearly halved.The market is waiting and trading
In the past month, Xiaomi’s stock price has continued to fall.
On May 20, 2019, Xiaomi Group released its financial report for the first quarter of 2019. In the quarter, Xiaomi Group 's total revenue was RMB 43.8 billion, a year-on-year increase of 27.2% and a month-on-month decrease of 1.5%; gross profit was RMB 5.216 billion. It rose 21.3% year-on-year and fell 7.9% month-on-month. At the close of the day, the share price of Xiaomi Group fell 2.66% to HK$9.89, with the Hong Kong stock market value being HK$248.1 billion.
Recently, Xiaomi's stock price has been declining for many days. It once fell to a low of HK$8.92 during the session today, the lowest since its listing. Futu Securities analyst told China Business News that when Xiaomi was launched, it carried a high premium due to various halo bonuses. The performance after listing is more like a return of value. Today's plunge is actually not very negative in terms of news, but is more like an emotional release.
To a certain extent, Xiaomi continues to not be favored by investors because of doubts about Xiaomi abandoning the "cost-effectiveness" label and transforming into a high-end route. Competing in the high-end machine fleet requires solid core technology R&D and innovation capabilities. Can Xiaomi withstand the technical wars of other competitors? In addition to the stock price, the market gives a certain answer through the sales volume of high-end machines.
html On March 19, Xiaomi released its first annual report after its listing. The mobile phone business, which accounted for 65% of revenue, did not perform well in the fourth quarter of 2018. The financial report shows that in the fourth quarter of last year, Xiaomi's smartphone shipments declined both year-on-year and quarter-on-quarter, which may be related to the poor sales of the most expensive flagship product Xiaomi MIX3 launched in October last year.Xiaomi Group CFO weeks of investment said that this was mainly because it only released a high-end flagship phone Mix3 in the fourth quarter of last year. The high-end positioning with a starting price of 3,299 yuan will inevitably affect the target audience who originally pursued cost-effectiveness. The financial report shows that Xiaomi mobile phone The average selling price has increased for three consecutive quarters. In the fourth quarter, the average selling price reached 1,003 yuan, a year-on-year increase of 22%. The decline in sales is also the inevitable pain that Xiaomi will face when testing the high-end market.
Analyst of Futu Securities expressed his recognition to Xiaomi's layout in AIoT to China Business News. He said that Xiaomi's current growth logic is mainly based on the power conversion between mobile phone business and IoT and Internet services. Judging from the current financial report, the proportion of IoT revenue has maintained a high growth rate, and the IoT gross profit is more impressive than that of the mobile phone business. As Xiaomi’s IoT product line continues to expand, AIoT’s short-term driving role will still be obvious.
In addition, he said that due to the "bloody storm" in the domestic market of the mobile phone business, it is indeed the best policy to vigorously develop overseas markets. But this does not mean abandoning the domestic market. The Redmi K20 series recently released by Xiaomi is a complement to the mobile phone product line. What Xiaomi needs to do next is to come up with a truly high-end flagship product to break the inherent "low-end" impression and enhance brand competitiveness. The success of Huawei high-end products shows that domestic brands can make high-end mobile phones this way.
However, the more important issue is that when Xiaomi itself has not yet completed its high-end transformation, on May 28, the Redmi series, which was split from the Xiaomi system, released the Redmi K20 and K20 Pro products, which were the first high-end flagships launched by the Redmi brand after its independence. product. To a certain extent, the Redmi series, which emphasizes the "cost-effectiveness" label, is more like the characteristics of Xiaomi that were highly praised by rice fans in the past. However, Xiaomi itself, which has been chasing high-end phones all the way, has a much harder time.
Red Sea hand-to-hand combat
The domestic smartphone market has fallen into a close-to-hand fight, including price-performance competition and high-end technical barriers.
Currently, OPPO’s sub-brand Realme, vivo’s sub-brand iQOO, etc. all have “cost-effective” labels.In response, Lu Weibing, vice president of Xiaomi Group and general manager of the Redmi brand, responded that more and more people will join (in the battle for cost-effectiveness), which is most beneficial to the industry and users. He characterized Xiaomi as the leader in "cost-effectiveness" and other competitors as "followers." "Low prices without the support of a business model with a low-cost structure are not sustainable."
Lu Weibing told China Business News that the mobile phone industry will go through four stages - initial stage, rapid growth stage, maturity stage, and decline stage. cycle, but no matter which cycle it is in, Xiaomi will adhere to the principle of cost-effectiveness.
In addition, Lu Weibing said that the entire mobile phone industry has now entered the 3G, 4G back-end, and 5G front-end. It is extremely saturated and has even entered a period of decline in scale. Everyone hopes that the market will return to rapid growth after the release of 5G mobile phones, so more and more Many friends have joined the cost-effective team. "I personally think this is more of a response test based on competition, rather than a behavior based on values and business models."
In addition, in terms of high-end technology, an interesting coincidence today is that Xiaomi mobile phones and OPPO were announced at the same time. Under-screen camera solution.
OPPO issued an article through its official WeChat public account "OPPO has implemented an under-screen camera for the first time", saying that after the current solutions for full screens include lift cameras, notch screens, water drop screens, or hole-punch screens, etc., new solutions have emerged and will soon be available. The camera is placed under the screen to achieve a true full screen. In June 2018, OPPO applied for patents related to under-screen cameras. On the same day, Xiaomi issued an article "Xiaomi Under-Display Camera is Really Coming", calling a solution similar to OPPO's Under-Display Camrea technology, and considered it to be the final version of the current full-screen solution.
In addition, under the 5G trend, specific implementation of technology applications also provides another way out for mobile phone manufacturers trapped in the red sea. Today, according to Xinhua News Agency report, the Ministry of Industry and Information Technology will issue 5G commercial licenses in the near future, and 2019 will officially enter the first year of 5G commercial use.
Xiaomi Group founder, chairman and CEO Lei Jun has high hopes for 5G. He said that we are already on the eve of the arrival of 5G spring. In the 5G era, the new replacement wave in the global smartphone market will bring huge opportunities. Xiaomi continues to lay a solid foundation in innovation, quality, and delivery, as well as significantly increasing its R&D investment year by year, and is also ready to win a new explosion in the 5G era.
