Xiaomi Group (01810.HK) dips below HK$40, hitting a seven-month low

ZC Asia has learnt that on 19 November, Xiaomi Group (01810.HK) exhibited a divergence between its fundamentals and market performance. Despite posting robust third-quarter financial results the previous day, the company's share price suffered a significant decline today, continuing its recent downward trajectory.

Impressive Financial Performance

According to the latest financial report, Xiaomi Group achieved revenue of RMB 113.1 billion in the third quarter of 2025, representing a 22.3% year-on-year increase. Adjusted net profit reached RMB 11.3 billion, surging 80.9% year-on-year to set a new record for the company's quarterly net profit.

Notably, the smart electric vehicle business achieved breakthrough progress during the quarter. Revenue from the innovation business segment, which includes automobiles, surged to RMB 29 billion, nearly tripling year-on-year. The automotive division recorded its first quarterly profit, generating approximately RMB 700 million in operating income. Vehicle deliveries reached 108,800 units, also setting a new record.

Share price remains under pressure

In stark contrast to the robust performance, Xiaomi's share price showed weakness, opening down 1.91% today. It fell nearly 6% at its intraday low and closed over 4% lower. The share price breached the HK$40 threshold, with the company's total market capitalisation falling below HK$1 trillion to reach a seven-month low.

Analysts suggest market concerns stem primarily from the company's cautious outlook on future performance. Xiaomi management indicated during the earnings call that gross margins for its automotive business may face downward pressure by 2026, citing potential adjustments to new energy vehicle purchase tax subsidies next year and intensifying industry competition.

Additionally, the slight 3.2% year-on-year decline in smartphone revenue and rising costs for components such as memory chips have become focal points for market attention.

Despite short-term market volatility, Xiaomi Group continues to increase its R&D investment. Data shows the company's total R&D expenditure for the first three quarters reached RMB 23.5 billion, with third-quarter R&D spending alone growing by over 50% year-on-year.

The company has also confirmed it expects to surpass its annual target of delivering 350,000 vehicles ahead of schedule within this week. With the ‘Human-Vehicle-Home Full Ecosystem’ Partner Conference approaching on 17 December, the market will closely monitor Xiaomi's further strategic moves in building its smart ecosystem.

Overall, Xiaomi Group is navigating a pivotal phase transitioning from delivering financial results to demonstrating sustainable growth capabilities, making its subsequent performance worthy of continued attention.

Disclaimer: The content herein is for reference only and does not constitute any form of investment advice. Should any information contained herein prove inaccurate, incomplete, or potentially misleading, please refer to the company's official announcements. Market risks exist; investment requires caution.