Tiger Securities: Xiaomis 5g strategy has been steadily promoted and aiot has brought growth momentum

category:Internet
 Tiger Securities: Xiaomis 5g strategy has been steadily promoted and aiot has brought growth momentum


Key points of investment

5g enters upgrade cycle

Chinas 5g deployment and 5g mobile phone brand launch speed is faster than most countries in the world, which is completely different from the past 4G period. During the two sessions, the Ministry of industry and information technology stressed that the government will continue to promote the development of 5g, and the Ministry of industry and information technology also made a prediction that more than 600000 5g base stations will be built in China this year. With the improvement of 5g infrastructure, the penetration rate of 5g smart phones in China will also increase rapidly in the second half of the year. We are looking forward to the increase in the shipment volume of mobile phone manufacturers driven by the wave of 5g replacement.

Xiaomi 5g mobile phones account for 26% of the companys shipping volume, and the domestic 5g mobile phone market share is 14%, higher than the market average. Taking into account the six 5g mobile phones that have been launched in the first quarter, it is expected that 10 5g mobile phones will be launched this year. At present, the price of 5g mobile phones of the four major domestic brands has entered the price range of about 2000 yuan. Xiaomi launched the 5g mobile phone redmi10x on May 26, which has reduced the price to 1599 yuan. So far, there are few competitors in the low-end market, and the lower price of domestic brands will accelerate the popularity of 5g mobile phones.

Aiot injects growth into millet

According to IDC statistics, the global wearable device shipment increased by 29.7% in the first quarter. Xiaomis IOT business strategy focuses on mobile phones and expands to surrounding products. We can see that Xiaomi has made good achievements in smart bracelets, routers and other categories, which brings more powerful growth momentum to Xiaomi.

Prospect: looking forward to 5g permeability improvement

From the perspective of global epidemic control, the recovery process of Chinas smartphone purchase is faster than that of Europe and the United States. Referring to the recovery degree of supply chain, the recovery order is: China > Europe > the United States > India and other developing countries. We expect that Chinas 5g mobile phone penetration rate will exceed 50% in the second half of this year, and Xiaomis share in China and Europe is relatively large.

Risk tips

The development of overseas mobile phones has been hindered, and the epidemic situation continues to ferment,

Supply chain recovery is not as expected, 5g construction is not as expected

The penetration process of IOT equipment slows down, and the realization of Internet is not as expected

Body part

2013 is known as the first year of 4G in China. After the Ministry of industry and information technology issued the 4G license in December, 4G began to be popularized the following year. At that time, in order to promote consumers to upgrade 4G, the three major operators in China directly subsidized the terminals and gave the contract machines bound with 4G packages free of charge to users to complete the product import.

In the 5g era, as the marketization of smart phones has been fully completed, operators gradually promote 5g by building 5g networks, and no longer attract consumers to migrate packages to 5g through subsidies. Since the Ministry of industry and information technology issued the 5g license in June 2019, this round of Chinas 5g upgrade cycle is more dominated by mobile phone brands to compete for market share, which also leads to the overall penetration rate of 5g slower than that of 4G cycle.

During the two sessions, the Ministry of industry and information technology stressed the governments determination to continuously promote 5g development. According to the data of the Ministry of industry and information technology in May, the number of 5g base stations in China has reached 250000 and the number of 5g users has reached 36 million.

At the beginning of June this year, the Ministry of industry and information technology also predicted that more than 600000 5g base stations will be built in China this year, and the shipment of 5g mobile phones will reach 180 million. With the improvement of 5g infrastructure, the penetration rate of 5g smart phones in China will also increase rapidly in the second half of the year. We are looking forward to the increase in the shipment volume of mobile phone brands by 5g replacement tide.

2u3001 5g deployment of Xiaomi

Tiger securities investment research team believes that compared with major manufacturers at home and abroad, the advantages of Xiaomi 5g are mainly reflected in the following aspects:

Xiaomi is constantly improving its sales channels in Europe. With the alleviation of the epidemic situation in Europe, Millets shipment in Europe will gradually recover. Although Europe has not yet built 5g infrastructure on a large scale, 5g will naturally be the trend in Europe in the future.

2) Domestic manufacturers have frequent new mobile phones, and 5g mobile phones have entered the era of competition. From the price point of view, millet occupies an advantage in the low-end market.

At present, the price of 5g mobile phones of the four major domestic brands has entered the price range of about 2000 yuan. The redmix105g mobile phone released by Xiaomi in late May has lowered the threshold to 1599 yuan. So far, there are few competitors of Xiaomi 10 series in the middle and low-end market.

From this point of view, the lower price of domestic brands will probably promote the penetration rate of 5g mobile phones in the second half of the year, while the new generation of iPhone supporting 5g communication will not be released until autumn at least.

From January to may, the overall shipment of 5g mobile phones was 46.084 million, accounting for 37.0% of the total shipment. Among them, 81 5g mobile phones were newly launched, accounting for 47.9% of all new phones. From this group of data, 5g mobile phones have gradually become the mainstream of the market, and its proportion has reached more than half. I believe that with the passage of time, the proportion will become larger and larger.

3u3001 Wearable devices grow steadily

According to IDC statistics, the worlds wearable device shipment increased by 29.7% year-on-year in 1q2020. In this field, the four brands with the highest share are apple (AAPL), Xiaomi group-w (01810) and Samsunguff08 SMSN.UK uff09Huawei.

Xiaomis IOT business strategy is to focus on mobile phones and expand to surrounding products. By 2020q1, the number of smart devices connected by Xiaomi IOT platform has reached 252 million, with a year-on-year increase of 42.6% and a month on month growth of 7.33%. The number of users using 5 or more millet devices has reached 4.6 million, with a year-on-year increase of 67.9%. It can be seen that Xiaomi has achieved very good performance in smart bracelets, routers and other categories. This also brings stronger growth momentum to hand millet.

4u3001 Certainty and uncertainty in Millet recovery

The investment and research team of tiger securities is optimistic about Xiaomis growth. Despite the twists and turns of Xiaomis stock price in the past, the domestic 5g mobile phone penetration rate is accelerated, new models are released intensively, and Xiaomis advantages in IOT and overseas markets will be the highlights of Xiaomi in the third quarter.

1) From the perspective of global epidemic situation, the recovery process of Chinas smartphone purchase is faster than that of Europe and the United States. From the perspective of supply chain recovery, the order is as follows: China > Europe > the United States > India and other developing countries. Xiaomis share in China and Europe is a big advantage.

2) Chinas 5g development speed is faster than most countries in the world, which is completely different from the past 4G period. From the price point of view, the domestic 5g mobile phone price has entered the price range of about 2000 yuan. From this perspective, the penetration rate of domestic 5g mobile phones is likely to increase in the second half of the year.

3) The growth trend of wearable devices in the past few quarters. Looking around the world, Xiaomi and apple are high share brands. Under the strategy of Internet of things (IOT), Xiaomi smart bracelet, router and many other categories have achieved good sales.

5u3001 Risk tips

Consumption recovery is less than expected, and domestic mobile phones have not been successfully scaled up

The development of overseas mobile phones has been hindered, and the epidemic situation continues to ferment,

Supply chain recovery is not as expected, 5g construction is not as expected

The penetration process of IOT equipment slows down, and the realization of Internet is not as expected

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