Xiaomi (OTC:XIACF) Corporation (1810.HK), a leading technology company, has reported a significant increase in revenue and net profit for the third quarter of 2024, according to the earnings call held on November 13, 2024. Under the leadership of Ms. Anita Chan, Head of Investor Relations, and Mr. Lu Weibing, Partner and President, the company delivered a resilient performance with total revenue reaching RMB 92.5 billion, marking a 31% increase. A notable growth in the premium handset segment, innovative product launches, and expansion in global markets were key drivers of this success.
Key Takeaways
- Total (EPA:TTEF) revenue for Q3 2024 was RMB 92.5 billion, a 31% increase year-over-year.
- Gross margin stood at 20.4%, with a net profit increase of 4.4% to RMB 6.3 billion.
- Xiaomi's premium handset segment, including the Xiaomi 15 series, led to an ASP increase.
- Home Appliance and IoT revenue grew by 20%, with significant growth in smart home appliances.
- The vehicle segment reported RMB 9.7 billion in revenue, with plans to deliver 130,000 vehicles in 2024.
- Global active users reached 686 million, with internet services revenue hitting RMB 8.5 billion.
- The company has committed over HKD 3.71 billion to share buybacks and was recognized as a top ESG performer in China.
Company Outlook
- Xiaomi anticipates continued growth in the home appliance and vehicle sectors.
- The company aims to sell around 170 million handsets in 2023, up from 146 million in 2022.
- Plans to expand its sales network to 20,000 shops by 2025, with a focus on premium products.
- Targeted expansion efforts in Europe, Southeast Asia, the Middle East, Latin America, and Africa.
Bearish Highlights
- The company faces fierce competition and rising supply chain costs.
- There is anticipated pressure on higher-end handsets in global markets.
Bullish Highlights
- Xiaomi's premiumization strategy has driven an increase in high-end smart handset deliveries.
- The vehicle segment's gross margin improved to 17.1%, with positive contributions to brand influence.
- The company's tablet sales ranked fifth globally, with a 55% increase in delivery volumes.
Misses
- There were no specific financial misses reported in the earnings call.
Q&A Highlights
- Xiaomi's strategies include expanding its sales network and enhancing product offerings.
- The small screen design of the Xiaomi 15 model focuses on user experience, with the Pro version's larger screens and superior battery capacity aiding customer retention.
- Expansion into rural areas and maintaining a strong presence in major cities are part of the growth strategy.
In conclusion, Xiaomi Corporation has demonstrated a strong performance in Q3 2024, with a solid increase in revenue and profit, driven by its handset and IoT segments, as well as an emerging vehicle business. The company's commitment to product innovation, market expansion, and ESG initiatives positions it for continued success in the technology sector.
InvestingPro Insights
Xiaomi Corporation's impressive Q3 2024 performance is further supported by real-time data from InvestingPro. The company's market capitalization stands at a robust $90.6 billion USD, reflecting its strong position in the Technology Hardware, Storage & Peripherals industry.
The revenue growth of 17.16% over the last twelve months aligns with the reported 31% increase in Q3 2024, indicating a consistent upward trajectory. This growth is particularly noteworthy given the company's substantial revenue base of $42.45 billion USD.
InvestingPro Tips highlight Xiaomi's financial strength, noting that the company "holds more cash than debt on its balance sheet." This solid financial footing supports Xiaomi's ambitious expansion plans and investments in new product categories, such as the vehicle segment.
The company's profitability is also noteworthy, with InvestingPro data showing a gross profit margin of 21.7% for the last twelve months, closely mirroring the 20.4% gross margin reported in Q3 2024. This consistency in maintaining healthy margins despite rapid growth is a positive indicator for investors.
Xiaomi's stock performance has been particularly strong, with InvestingPro reporting a 63.69% price total return over the past three months and an impressive 88.61% year-to-date return. This aligns with the company's reported success in premium handset sales and expansion into new markets.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for Xiaomi Corporation, providing a deeper analysis of the company's financial health and market position.
Full transcript - Xiaomi Corp (XIACF) Q3 2024:
Operator: 2024 Third Quarter Results Announcement. Investor Conference Call and Audio Webcast. Today's conference is being recorded. If you have any objection, you may disconnect at this time. [Operator Instructions] Ms. Anita Chan, Head of Investor Relations and Corporate Finance, will be your host today.
Anita Chan: Good evening, ladies and gentlemen. Welcome to the investor conference call and audio webcast hosted by Xiaomi Corporation. Before we start we want to remind you that this call may include forward-looking statements which are underlined by a number of risks and uncertainties and may not be realized in the future for various reasons. Information about general market conditions comes from a variety of sources outside of Xiaomi. This presentation also contains some unaudited non-IFRS financial measures that should be considered in addition to the company's financials prepared. Joining us, we have Mr. Lu Weibing, Partner and President; Mr. Alain Lam, VP and CFO of Xiaomi Corporation, Chairman of Airstar Digital Technology. To start, Mr. Lu will share strategies and business updates and then Mr. Lam will review the company's financial performance in the third quarter and following that, we'll turn over to Q&A. Mr. Lu, over to you.
Lu Weibing: Good evening. Welcome to our third quarter resource announcement. At the beginning of the year when we made these changes, I have talked about fundamental changes to the capability building of Xiaomi in the recent years. We are now able to tackle uncertainties in the external environment. After three quarters, I can show you that our capabilities have been enhanced, showing good, very profit and premium. And we have very solid foundation to support future development. We're approaching the end of year. Earlier this year you had some questions. What is happening to Xiaomi's automobiles and what about premiumization strategies? What about profit level? When the cost along the supply chain has increased? And also can we sustain the big home appliance and also eco-chain profit level. I think you have seen the results today, so I will focus on these questions that I have just mentioned and also what we have done behind the scenes. In the third quarter, with fierce competition and higher cost along the supply chain, we have maintained stable growth. Total revenue of the group reached RMB92.5 billion. The first quarter [went beyond] (ph) RMB90 billion up 31%, handset IOT core business, revenue RMB82.8 billion up 17%, gross margin 20.4%, which is above the healthy level of 20%. Gross margin for handset 11.7%. Smart e-car, and innovative business, 17.1%. After adjustment, total profit RMB6.3 billion. And we have narrowed the losses for the innovative business, RMB1.5 billion. After restoration, RMB7.7 billion. And I will talk about our major strategy development. For premiumization, we invest heavily in tech, and we need a lot of tolerance and determination. HyperOS 2, behind this product, we have a team of more than 3,000 engineers, and we are able to provide high-end offerings. After accumulating our capability, Xiaomi 15's selling price increased from RMB4,000 to RMB4,499. But still, it was selling faster compared to Xiaomi 14. The Pro version actually sold more quickly than a standardized version. The Xiaomi 15 series has shown our strong capability. Other than the 15 series, we have other high-end handset products with very good results. For the premium price range between $3,000 to $6,000 in the Chinese market, our market share increased. For the $4,000 to $5,000 range, we are Number #1 in mainland China. So we enjoyed RMB47.5 billion revenue for the segment, a growth of 13.9%. Secondly, it is about Home Appliance and IoT Business. Total revenue, RMB26.1 billion, up by 20%. Because of the results behind our strategies of full ecology and industry capability, we are well supported by our capability and also our products. We have switched over to self-research, and we have synchronized our launch of products and continuously launch new products with IPT process. In October this year, we have shown some results for IoT products. In recent years, we have been invested very heavily in the core technologies for our home appliance offering. We offer younger appearance and smart experience, differentiating ourselves from our competitors. We've also realized product innovation in terms of our air-con and dry washer, and we have gone beyond expected sales level showing our user driven R&D capability, proving that we still enjoy great room for further development. Concerning the fully connected ecology strategy, we are combining vehicles with handsets and other smart devices. So after accumulating our capability, we have identified new starting point, we will continue to launch chic products and rely on IoT growth to support our future development. Globalization, we have launched our brand and also our model overseas, and we have done very good localized operations. We've complete the first step towards going global. In Q3, we continue to increase the level of brand influence and we rank Number #3 in terms of handset delivery and we are Number #3 in 52 countries in terms of handset delivery. And in September, we have achieved total active number of users around the world, 686 million and those in China, 168 million. In October, we have been chosen to be one of the best brands around the world by Interbrand. We are one of the two Chinese brands listed on that. New retail model has created great support to our business and our handset has enhanced its market share to 14.7%, ranking number #4 by the end of September. Off-line retail shops exceeded 13,000. By the end of the year, we expect to exceed 15,000 enriching 20,000 next year. Overseas layout, we have already launched our models to the rest of the world. Our handsets IoT products and also vehicles about to be launched overseas will show our full chain advantage. With IoT products being launched overseas, we see this unprecedented potential in the international market. Our vehicle business, SU7 delivery volume at 40,000, We exceeded 20,000 units in October alone. October sales for Sedans ranked number #1. And on 13th November, we spent only 230 days to complete production of 100,000. Total delivery for 2024, the target is 130,000. The revenue of RMB9.7 billion and net losses narrowed to RMB1.5 billion. We continue to enhance our network. Right now, we have 130 shops. And SU7 has performed very well in safety tests, and we're the only one receiving 3G+ and A-level grade of safety performance. In October, we have broken new record with our Xiaomi SU7 Ultra, and we have pre-sold [114,000] (ph) units of SU7 Ultra in 10 minutes. We have exceeded 3,680 orders. They will be officially sold in March next year. So we have taken one step forward. Our success and also premiumization of our handsets are unprecedented. Finally, AI which affects all walks of life. With AI empowerment, we are satisfying the needs of our users so that we are truly people-centered. And that is the ultimate direction to combine humans, vehicles and the homes. We need to allow fresh experience to penetrate the user's daily lives. AIOS is the soul of AI for chain and progression of the OS is necessary. But at the moment, OSS are not AIOS, and they have not yet realized sensing memory and inference programming and execution. According to – in relation to the experience side, we should allow AI to become very supportive and they will be able to help our users to finish all the small tasks in life. There is plenty of room for further development for AI. Finally, I would like to share three growth curves that have already been completed. The first one is about handset tablets and wearables. We have a [mature stage] (ph), but still plenty of room for further development. The second one, air-con, fridge and washers. They may be very traditional, but plenty of room for innovation. Third curve is about vehicles against great changes. There's plenty of room for imagination. And we have supported different types of products and around global markets to tackle external uncertainties. This is the unique business model around the world. In the past five years, we have continued strong momentum. We enhanced our understanding. In [2000] (ph), we have completed our overall strategies. In 2023, we decided we are going to be the world leader in terms of tech. And we have the overall strategies to combine [OS AI] (ph), new retail, and also leading capability and premiumization. In the past five years, we've enhanced our systems processes, information, digitalization, and also establishment of talents. So -- we expect a greater future for Xiaomi and that's what I would like to share today and over to you Alain.
Alain Lam: Thank you Mr. Lu, good evening. As Mr. Lu has said just now, we have clear strategy and guidance and we have seen very good growth in revenue for Q3 this year and also continuously increasing profit. Total revenue for Q3 RMB92.5 billion up 30.5%. With the stable growth of the vehicle business, revenue for mainland China 56.6% overseas portion 43.4%, consolidated gross margin 20.4%, very satisfactory. Our handset AIoT segment in Q3 revenue was RMB82.8 billion up 16.8%. Gross margin 20.8% at a healthy level. I will now provide segment breakdowns. Smart handset. Revenue for the quarter RMB47.5 billion, which is 51.3% of the revenue growth of 13.9%. Delivery level for the 43.1 million sets, up by 3.1%. According to Canalys data for 17 consecutive quarters we’ve been ranking Number #3 in terms of smart handset delivery. Market share 13.8%, among which in mainland China, our ranking has been enhanced to Number #4 with obvious enhancement of market share to 14.7% up by 1.2 points, which is five consecutive quarters of enhancement. Despite certain impacts from the process of components, we maintain a healthy level of gross margin at 11.7%. At the same time, we have seen good results from premiumization strategy, continuous enhancement of capability of our products. According to third-party data for the first nine months in Mainland China, our high-end smart handset delivery has taken up 21.3%. And among the overall figure up by 3.9 percentage points. In terms of IoT, our revenue and gross margin presented good performance for the third quarter, IoT and our IoT revenue sustained good growth to RMB26.1 billion, a growth of 26.3%. IoT gross margin in the quarter reached 20.8%, which is a historical high up by 2.9 percentage points. In terms of offerings, our core IT products maintain good growth and at the same time, contribute substantially towards profit. In the quarter, Smart Home Appliance segment had outstanding performance. Air-con delivery, more than 1.7 million, up 55%. Fridges grew by 20%, and washers up by more than 50%. Tablets sustained good growth, ranking Number #5 around the world with 55% growth in terms of delivery volumes, [wearable] (ph) sustain good growth as well. In October this year, we launched a new version of Xiaomi Watch S4 and Xiaomi Bracelet 9 Pro. They are chic, and they offer this much better experience for the users to support their healthy and sportive lifestyle. Internet service. In September, global active user reached new heights to 686 million, up by 10%. Active users in Mainland China reached 168 million, a growth of 10.6%. Segment revenue RMB8.5 billion a record high representing 9.1% growth. Offshore Internet services revenue increased by 18.3% to RMB2.7 billion which takes up 32.5% of total Internet service income. In this quarter, the revenue was RMB9.7 billion for innovative business, including smart vehicles. For Smart Vehicles sales revenue, RMB9.5 billion. Others associated business, RMB200 million. 17.1% for gross margin for the Vehicles segment, an increase of 1.7 percentage points. Xiaomi SU7 Series, total delivery, 39,790 units. Average selling price at [RMB238,650] (ph). For this segment, the performance was satisfactory. We continue to exercise control in terms of expenses. For the third quarter, total expenses on RMB13.7 billion taking out a newly injected expenses of 3.3 for new business, our core business expenses operation was RMB10.3 billion at a ratio of 12.4%, which is a drop of 0.4 points. Net profit in the third quarter after adjustment, the level was RMB6.3 billion, up 4.4%, benefiting from the unexpectedly high gross margin for the vehicle business and high level of delivery for innovative business after adjustment. Net losses, RMB1.5 billion, downward adjustment of 16.6%. Therefore, the core business profit level RMB7.7 billion. And for the first three quarters, the accumulative level has gone beyond RMB24.4 billion already. In terms of cash reserve, up to the end of September the level is RMB151.6 billion, up 18.7%. And a record high in terms of cash flow. After adjustments, the cash flow level is RMB9.6 billion with contribution coming from new business. We have been actively repaying our shareholders and the buyback for our stock has reached more than HKD3.71 billion. We continued to enhance our ESG work in Q3 of the year. Because of our performance in terms of smart manufacturing and sustainability, we have been chosen to join the top ESG 50 in China for 2024. We have also been selected as the best employer in China 2024 and most popular employer in China 2024. In October, because of the progress we have made in corporate governance and management of environmental risk, our rating has been upgraded from BB to BBB on MSCI ESG, and that is enhancement for two consecutive years. In October this year, we have organized a five-year anniversary forum for Xiaomi Foundation, which was set up with Xiaomi's donations in 2019. After five years of exploration and development, it has established three major directions: technological innovation, nurturing talent and also providing assistance to those in need. Surrounding these three major themes up to the end of September, the accumulated -- donated RMB650 million by the foundation. The planned amount has reached RMB1.9 billion. Thank you for your support. That's the content we would like to share with you today, and we can begin the Q&A.
Anita Chan: Thank you, Alain. Let's proceed to Q&A. To allow more people to ask questions. Please do not ask more than two questions.
Operator: Thank you. We will start the Q&A session. [Operator Instructions] First question from Goldman Sachs, Timothy. Please go ahead.
Timothy Zhao: Great. Mr. Lu, Mr. Lam. Thank you for taking my question. Congratulations on the Q3 performance, and many good surprises in the recent months. So about home appliances, can Mr. Lu share the way forward. What is the structure of your channels? What are your future plans? And then IoT gross margin was over 20%. And then about the automobile business, the gross margin continued to improve. What are the reasons? And what about SG&A and R&D expenses for this segment will be the level for 2025? What will be the trend for next year?
Lu Weibing: The first question is about home appliances, the growth this year very good more than 50%. But such growth is just the beginning. In recent years, we have done a number of things. For example the ODM format. I think you see our new air-cons and dry washer products. They are highly innovative. They bring very good premium. So we offer the best products. And in the next step, we need to strengthen on the -- along the upstream. We have sophisticated technologies for our handsets. And then sales channels. Actually, as you know, we have followed up on our original relationships with our customers to further develop into the home appliance arena. But I think this year, we have achieved new breakthroughs, and we have very clear objectives. You can see our air-con offering, we have different models and also washing machines and refrigerated and they are all very energy conserving well aligned with our green image. When you purchase Xiaomi products, you can purchase the entire collection. Many people face the issues of installation. For example, it is difficult to dismantle and install aircons. So we combine all three steps together. We are the only one providing the whole chain of services to our buyers. That explains partially the good results. This is a traditional business essentially. If you look at our washing machines, they are taking up less space. If you're in Beijing and Shanghai, sometimes, we are sacrificing too much space to washing machines. And very often in a flat, you only have one source of the water for each machine. So now we are combining dryer and washer together, which is conserving a lot of energy and resources for you. That is why we are so popular. And then the newly launched air-con, the air is coming from the top. So we are remodeling, reinventing the concept for special family needs. And we focus on energy conservation. And we only need two space of 2 meters from your floor to your ceiling to accommodate our air-cons. We have identified pain points and inefficiencies in our models, and our innovation work. Some companies the same product, they will change the name 5 times. It's basically the same product. When it is sold online or outlined, they have different names. We do not do anything like that. We object to that practice. I think we have a lot of room for further optimization. We have about slightly over 10% profit for such home appliances. Other people sell something at RMB20,000 when it's only worth RMB3,000. So I think in this industry, there is plenty of room for reform and restructuring. So Xiaomi experience is just taking off now. Our growth will continue to be very fast in 2025. You also talked about automobile business. It is growing very fast. And Q4 is expected to outperform Q3. The reasons are economies of scale. If and when you have scale, it doesn't mean you have economies of scale. You need a high level of efficiency to enjoy the economies of scale. If you are selling 20,000 of your sedan model, you're already Number #1 in the market. If we are operating at full capacity in our factory, we are highest level of efficiency so we can enhance the GP margin. We have many technological capabilities being established. So if it's necessary, we will make the investments. We are moving forward so quickly because we have reliable professionals who have high-level of capabilities. For example, we have the small cases, technology. I understand that you want us to make a good profit as quickly as possible. We do appreciate that, but we must establish a very strong foundation so that we can continue to move forward. Thank you. I want to provide some figures. Home appliances, we have more than 50% growth in September, more than 45% year-on-year. Very substantial. At the same time, GP margin also improved by a few points. Compared to IoT, GP margin, home appliances will perform better therefore making very good contribution to our overall GP margin. Secondly for new business. In previous three quarters, we've invested RMB8.8 billion, most going into R&D expenses. Therefore, this year for new business, we have heavy investment again with higher GP margin. We will divert more resources into future R&D projects because GP margin has gone beyond expectations. So we will spend more on our R&D capabilities. So next year, the expenses will be even at a higher level, and we expect better results. I want to -- I just wanted to add these two points.
Operator: Next (LON:NXT) question. Andy from Morgan Stanley (NYSE:MS).
Andy Meng: Thank you moderator. Good evening [ladies and] (ph) gentlemen. Congratulations on a good performance. Two questions. First, on handset, for 13 and 14 series after gaining success. This year, we see many competitors are trying to copy by launching small screen models, so more fierce competition for the small screen products, but Xiaomi 15 still sustained very good sales. So can you tell us what is the logic behind that? What is the competitive layout? Second question about automobile business. While growing very rapidly, you need to identify points of sales and develop the network. So IoT and handset of line retail has been successful in recent years. We can see offline shops maybe expand a new development stage. So can you share with us, Mr. Lu, about the network of sales and offline business expansion, what kind of synergy can be achieved? Thank you.
Lu Weibing: All right. I will talk about Xiaomi 15, as small screen model, is not just about shrinking the screen, that is a huge misunderstanding. Some competitors have rushed to create small screen devices, it’s actually when you shrink or downsize certain devices, is even more difficult compared to enlarging the components. You really need very good techniques. And we understand what needs to be done in the creation of such small screens. If you look at our products, the address of the screens are very good. Battery storage capability is outstanding. So our product, we also have IPT. There are no shortcomings. Thirdly, we care about the feel to your touch compared to iPhone, our product is obviously superior. Sometimes when you hold a handset in your hand, you feel that the edges are scratching on your skin. If you hold a Xiaomi phone, you will feel very different is particularly comfortable. And we focus a lot of our energy on the details. And things are very refined. So it's not just about downsizing the screen, it is about enhancing at the same time user experience. And Xiaomi Pro is selling so well. Why? Because they have bigger screens. And it is similarly not just about enlarging things. And for the battery storage capability is very outstanding. The Pro version is very popular. People continue to upgrade the handsets. For example, they start from 3,000-something and then upgrade it to 5,000 something. And we are accumulating more users inside the range of 3,000 to 4,000 so that later on they will be able to upgrade to more premium offerings. We attract different customer groups. We retain them with the outstanding performance of our products, and then they will upgrade the products ultimately. And about synergy. Today, if you have Xiaomi vehicle, perhaps the pacing of development will be slower compared to home appliances. We have 130 shops. And let's say [doing the math] (ph), that is per shop we're talking about 150 vehicles. And that's a very high level of productivity. There is another brand, each shop is only selling like 30 vehicles. So our synergy is well achieved. And you can go to 4S vehicle cities to purchase our products. And our delivery capability remains more or less the same and affected. And we also have physical shops. We started from 50 square meters with the 4 vehicles at the moment. We have been expanding very quickly. In traditional shopping malls, car brands are withdrawing, they are leaving shopping malls. This trend is very obvious. And location of our shops are very premium, and we are offering bigger and bigger shops. So in shopping mall, you can see who is the winner. We take at least 50 square meters of space. We bring traffic to the malls. So our rental enjoys a very good concession. So our cost is actually much lower compared to traditional vehicle brands, so our model. Other brands want to copy us, but they can't because we have multiple products driving sales in all directions. We are still very differentiated, and you can all be our witnesses. There will be more and more shops. We have examined many different locations. Our shopping in [huangdao] (ph), it will be the biggest one when you enter the shopping mall next year, people will be pleasantly surprised.
Andy Meng: Thank you Mr. Lu.
Operator: Next question [indiscernible] from Citi.
Unidentified Analyst: Thank you Mr. Lu, Mr. Lam. Thank you for this opportunity. Congratulations on our good performance. I have a follow-up question. For automobile business, we can see Q3 ASP improvement year-on-year. Is it because of product structure change or other reasons? Looking forward for automobiles, the ASP will be the momentum of improvement because you have fridges and chairs the options have been enhanced over time. So your product structure should continue to improve. And what about the construction momentum for the production lines for automobiles? When will they start contributing to the company? Any room for advancing the dates?
Lu Weibing: Concerning ASP, I think ultimately, it is about product mix. And we are looking at delivery date. On the PPT, we are presenting figures excluding Q3. So for example, the ASP has been growing because of different ratios in terms of contributions from different versions of our products I think with the launch of new products, our ASP will further increase. We'll continue to release more capacity at our factories, so that we can shorten the delivery cycle for our customers. Moderator.
Operator: Next question from Huatai. Leping. You may start.
Leping Huang: I want to ask you about handsets. We can see market share continuously improving. So the difference is about 10,000. If we want to enhance productivity around the world, where would be your focus?
Lu Weibing: Well, this year for the full year, last year was 146 million. This year, 170 million or so. If you look at the difference or the growth, growth have been growing for any region, I think there was room for growth. For the Chinese market, I know it's very well. Every year, we want to sustain growth of 1 percentage point. I think, there is still good room for further improvement. For example in the African market, 11 points, Latin America 16 or 17 points. With our brand influence we want to have improvement of 20% in all these markets. I think that is achievable. Other than sales, we also look at the growth in premium offering in our product structure. We believe we will continue to enjoy growth in the future. Thank you.
Operator: Next question, Wen Hansing. Please go ahead.
Hanjing Wen: Thank you for taking my question. I would like to ask about Chinese handset market. I can see in the third quarter very good delivery growth, especially because of premiumization, performance. So combining our automobile business, can you say in the future for the whole chain operation, do you think there will be benefits created to the handset side?
Lu Weibing: Well, I think this year, we have good growth for handsets in the Chinese market. First, we enhance competitiveness, brand influence and organic growth of Xiaomi. I think Xiaomi vehicle are making good contribution to branding influence and also new retail trends, creating very positive impact on our performance and development. Our customer base are also benefiting. We attract customers at a more fundamental level and then slowly convert them. So I think we are very effective in creating for traffic. And in contrast, our handsets customers may be converted to purchase other items. Someone who starts from Xiaomi handset may end up with buying Xiaomi vehicle. So such cross-influence is really showing its impact and it's getting stronger and stronger.
Hanjing Wen: Thank you Mr. Lu.
Operator: Next question. Next question, UBS, Zoe.
Zoe Xu: Thank you management for taking my question. Very quickly, I want to ask about premiumization. This year, you have achieved more than 1 million sales figure even with a higher ASP. So do you think the market will continue to be able to show the highest ASP? And what about overseas premiumization? How is that going to be realized? Are you going to launch overseas or in terms of your markets, you will be more selective?
Lu Weibing: Well, if you look at different brands, some brands are not increasing the price, some increasing by 100, some 200, some 300 in terms of competitiveness, and the sales projection upon price increase will be very different. For Xiaomi 15, after price increase is still selling very fast or even faster because they are so popular. They understand, why we're selling for more? So they find it more acceptable. We have the best offering, but the chips prices have gone up, affecting our overall price as well. Overseas premiumization, I think at MWC annually, we make announcements -- we also do some introduction overseas. Although in terms of timing, they do lag behind slightly compared to the launch domestically. At the moment, for Xiaomi 14 series, it did very well, but the latest series is doing even better. So global influence is still quite significant. We want to focus on Europe Southeast Asia, Middle East and Latin America and also Africa. But of course, there will be more pressure on higher-end handsets. I hope I have answered your questions.
Zoe Xu: It’s very clear. Thank you.
Operator: Next question, Huang Yayuan from CITIC.
Yayuan Huang: Thank you to leaders. I am concerned about Xiaomi Home. In Shandong, you have set up many shops and you have enhanced the target to 15,000, and you want to open 500 extra-large shops. So I'm wondering, in terms of strategy update and also the target for the coming year and enhancement of off-stream, do you have higher, more ambitious targets?
Lu Weibing: At the beginning of the year, we set some new targets. We wanted to add 3,000 shops. And then we started to expedite the progress before the market could shoulder more shops. So by the end of the year, 15,000 shops. By 2026, 20,000 shops. By 2025, 20,000 shops. I've gone to please the slide. [Foreign Language]. And then with a population of just slightly more than 1 million, they are quite lower-tier places. But the profit level of all these lower-tier shops have been very strong. So we don't come in waves. If you look at Xiaomi, that we have products on the bestseller list for the whole year. Can you really sell them for a long-time and sell well for a long time. Ultimately, it depends on how good your products are, and that is what ultimately supporting your GP margin. You don't aim at selling well for one month or two months, but around the year. And 40% is coming from home appliances. For other brands, they launched something new and things will go up and then it will come down very quickly. There are major fluctuations. But for Xiaomi, we don't see such ups and downs. We are. Very stable -- this year, we will open really big shops, covering more than 50,000 square meters, selling our cars. And we will have 120 such ultra large shops by the end of this year, and they will be in the best locations inside shopping malls. But at the same time, we get concessionary rental. Shopping malls love us. They want us to divert traffic to their mall in a city than maybe 100 Xiaomi homes. And for one single Xiaomi shop, we can attract 5,000 per day. And that is a very shocking number for some much bigger shopping malls, they don't have that number for their visitors on a daily basis. So we have big growth for all our shops. Xiaomi Homes in major cities, they are doing very well. In Beijing, Shanghai, our market shares are very high. And we have already started penetrating into more rural places. So I'm not worried about our performance in major cities at all. Apple (NASDAQ:AAPL) Xiaomi, Huawei are basically the three main brands. But we have to handle the next tier. But I think, our direction is very clear, and we will continue to expand our network. We will have very positive development in 2025 at the prefecture level. And in '26, '27 in prefectural level, large malls and good malls, you will find Xiaomi's ultra-large shops. We have unlimited potential. Thank you.
Anita Chan: Due to time constraints, this is the end of today's conference. Thank you for your time, and thank you for your future support.
Lu Weibing: Thank you.
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