Xiaomi shares: Price analysis before buying or selling

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ISIN code: KYG9830T1067

Ticker: HKG: 1810

Index or market: HKG

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Elements to consider before selling or buying Xiaomi shares

Analysis N°1

Xiaomi’s market share in the smartphone sector as well as those of its major competitors.

Analysis N°2

The position the company may take in different market sectors and the diversification of its activities in promising markets for the future such as devices related to smart technology.

Analysis N°3

The technological developments of the brand and the launch of new innovative devices over the coming years.

Analysis N°4

The partnerships and alliances of the Xiaomi Company with other companies with the objective of increasing sales, technological developments and advertising.

Analysis N°5

We would also monitor the group’s results and figures relating to sales, turnover and profit.

Analysis N°6

Finally, it is also recommended to follow any expansion of the group on an international level outside the Chinese market.

Analysis before buying or selling Xiaomi shares

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General presentation of Xiaomi

We shall commence our analysis of Xiaomi shares with a reminder relating to this company and its activities. It is in fact important to know this company well including its principal activity sectors to be able to understand the challenges it faces and its growth possibilities.

The Xiaomi Company is a Chinese group, in fact to be more precise it is a holding company. It exercises its activities mainly in the mobile telephone sector, the Internet of Things and related lifestyle products, it is also a provider of internet services and has a number of related investment activities. This group therefore undertakes research and development activities in various sectors.

We can also divide the activities of the Xiaomi Company into four main sectors; the development and sale of smartphones, devices related to the Internet of Things and the related lifestyle sector that develops and sells home based products such as smart televisions, laptops, speakers, smart routers as well as ecosystem products and other smart devices and lifestyle products. There is also the Internet sector which offers advertising and plus value internet services, and finally the fourth sector that provides repair services for hardware products.

Concerning the origin of the Xiaomi Company’s turnover according to its activities we note that the smartphones sector accounts for over 70% of its turnover. The Internet of Things and lifestyle devices account for 20.5% of Xiaomi’s turnover, 8.6% is achieved through internet products and services and the remaining 0.6% is from its other activities.

It can also be advantageous to know the geographical origins of this company’s income, in 2018 Xiaomi achieved over 72% of its turnover in China and only 28% from other countries around the world combined. The Xiaomi Company currently employs over 16,600 people.

The major competitors of Xiaomi

Apart from being familiar with the activities exercised by the Xiaomi Group you should also know about its activity sector and its major competitors on the market. We therefore now offer you the opportunity to learn more about this company’s principal competitors with some useful information on each of them. Of course, these are all related to the smartphone sector which is the main activity sector for Xiaomi and which is therefore the focus of our attention.

Huawei

The principal competitor of Xiaomi is of course at present the Chinese group Huawei which holds a significant market share in China and indeed worldwide. This company, created in 1987, is specialised in the supply of solutions in the communications and information technology sector. Historically speaking, Huawei was originally a company that specialised in the supply of telecommunications networks through various operators with the supply of materials, software and services as well as computer networks for companies. Since then the company has become one of the major suppliers of digital solutions for terminals, networks and the cloud for operators, companies, and consumers. The group markets and sells its products in over 170 countries around the world and is one of the leaders on an international level for smartphones.

Vivo

Another Chinese competitor to Xiaomi that should be followed closely is the Vivo Company which also manufactures and sells smartphones and specialises in those that are top of the range. This company is actually one of the top manufacturers of smartphones worldwide and has been for the last few years. It is also part of the BBK Electronics Group. It is notably due to the success that it has achieved in certain markets including Thailand, India, Malaysia and other Asian countries including Pakistan that this brand has accomplished such strong growth over recent years.

Apple

It is unsurprising that the giant Apple is also one of the major competitors of Xiaomi. This multinational American company is in fact specialised in the design and sale of electronic products for the general public such as personal computers and computer software. Of course, the company is primarily renowned for its Macintosh computers and iPod multimedia players as well as for its iPhone smartphones. This group in fact jostles for the leading position in smartphone sales with other companies including Huawei and Samsung both of which we shall examine later on. The Apple Group currently employs more than 116,000 people around the world and manages around 500 Apple stores in no less than 22 different countries. It also owns an online boutique which sells Apple devices and software as well as those from other manufacturers and producers.

Samsung

To conclude, the last of Xiaomi’s major competitors is the Korean Group Samsung which is also one of the three top smartphone manufacturers and sellers worldwide. It is one of the principal Korean conglomerates. A number of companies fall under its umbrella including Samsung Electronics which is notably responsible for the development and production of smartphones and televisions as well as other technological products such as personal computers.

The major partners of Xiaomi

To continue further in your analyses of the Xiaomi share price you should of course take into account the partners and allies of this group. In fact Xiaomi often enters into strategic alliances with other international companies with the objective of increasing their growth and we will now detail some of the more recent examples of this.

Ikea

The first partnership that we shall examine here was signed in 2018 between Xiaomi and the Swedish home furniture company Ikea. In fact this partnership agreement gives rise to the idea that the Ikea Group is becoming increasingly interested in the Smart Home sector and to establish its presence has allied itself with a specialist in the smart devices sector. Ikea in fact recently launched a range of smart light bulbs and in this particular partnership became associated with Xiaomi with the objective of making its light bulbs compatible with the Smart Home devices range developed by this Chinese manufacturer named Mi Home. Through this alliance the users gained the opportunity of controlling the lighting of their home using a device specially developed by Xiaomi. This was launched onto the market in December 2018.

Cdiscount

Another fairly recent interesting partnership you should know of is that implemented between Xiaomi and the Cdiscount Group. This was a one month contract of exclusivity for the sale of the most recent smartphone from this Chinese brand, the Xiaomi Mi9T. The latter was in fact the first product of this type to be available for delivery in less than 30 minutes in Paris, France due to another partnership between Franprix and Cdiscount. It should be remembered that Cdiscount is actually the primary seller of smartphones for the French market and is also the leader in online mobile telephones. Since 2018 Cdiscount has also sold the entire range of this brand’s products on the French market.

Samsung

Finally, the last partnership we shall examine here was implemented again in 2019 with Xiaomi’s competitor, Samsung. The two companies in fact work together to equip all the Xiaomi smartphones with a photographic lens of 108 million pixels developed by Samsung. This offers a record image definition as the other smartphones on the market achieve a far lower image definition. To achieve this objective the Samsung Group notably used the Tetracell technology which unites 4 pixels in one and thereby enables an increase of the surface necessary for light absorption thereby obtaining the reported definition of 27 million pixels.

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The factors in favour of a rise in the Xiaomi share price:

To understand how Xiaomi Group may evolve in the coming years and how its share price is likely to progress in the longer term, you need to look at its advantages and disadvantages, in other words, the strengths that the company has and its main weaknesses. Let's look at these together.
Let's start this analysis by looking at the main strengths that Xiaomi Group has in terms of increasing its market presence and revenues, which are all advantages for investors to buy this stock:

Firstly, we can of course mention among the main strengths of the Xiaomi Group its positioning in the smartphone market. Indeed, the group is currently one of the largest smartphone manufacturers in the world and is ranked fifth in the global ranking of this sector.
Smartphones produced in China are also increasingly popular with consumers. As a result, they are produced in large quantities and are widely accepted around the world.
Another strength of the Xiaomi Group is the quality of its products. Indeed, the company offers very good quality products that it markets at relatively low and very competitive prices. This shows that the company does not really compromise on quality, despite frequent and regular price cuts.
Another advantage that can be discussed here is the manufacturing advantage that Xiaomi enjoys. Indeed, China has a significant manufacturing advantage as it is known for producing and exporting many goods, especially electronic products. China is also one of the largest consumers in the market, which allows Xiaomi to distribute its products locally as well.
Finally, the last asset of the Xiaomi group concerns its innovation and technology. Indeed, the group's smartphones offer advanced technology and the brand offers superior technical specifications, always at a reduced price. Among the undeniable qualities of Xiaomi smartphones, we find the quality of the cameras, which are considered to be among the most powerful on the market and which allow to obtain exceptional images. Thus, the group can easily position itself against the market leaders with products of equally good quality but more accessible.

The factors in favour of a drop in the Xiaomi share price:

Now that we have covered the main strengths of the Xiaomi group in its sector of activity, we will take a closer look at its defects or disadvantages. Indeed, this group also has some weaknesses that may slow down its growth in the years to come or slow down investors to buy this stock. Here are the main ones:

The first disadvantage from which Xiaomi suffers concerns the offline distribution of its products. Indeed, the company still offers its products mainly in the form of flash sales, despite the fact that users sometimes have difficulties in obtaining certain models such as the MI or the REDMI. This is due to the fact that the group's offline distribution is lacking as its devices are mainly marketed through e-commerce.
Another important weakness to note with regard to Xiaomi is its advertising and marketing expenses. Indeed, compared to its main competitors, Xiaomi spends little on advertising and marketing. Indeed, there are only so-called "Above the Line" or ATL marketing launches when new devices and products are launched. Apart from this, the group does not carry out any significant advertising for its products or does so sporadically and inconsistently, which weighs on its popularity in the eyes of the general public.
Finally, the last weak point that we would like to talk about with regard to the Xiaomi group concerns its low skimming price. So while other big companies in the smartphone manufacturing sector base part of their strategy on skimming prices in order to stay afloat, the Xiaomi Group relies on flash sales to launch its own low-priced phones. As such, the group is not able to benefit from a higher selling price of its devices or, if it does, the advantage is not as lucrative as it is for its main competitors like Apple, Samsung and other high-end brands.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

Frequently Asked Questions

Who are the current major shareholders of Xiaomi Group?

Xiaomi Group has some major shareholders in its share capital including Jun Lei who still holds 9.94%, Morningside Group who holds 8.57%, Apoletto Manager with 6.03%, Qiming Venture Partners with 3. 46%, Bin Lin with 1.51%, The Vanguard Group with 1.31%, Beijing Shunwei Venture Capital with 1.29%, BlackRock Fund Advisors with 0.95%, Capital Research & Management World Investors with 0.73% and Capital Research & Management with 0.37%.

Which technical indicators should be used for Xiaomi's charts?

To perform a good chart analysis of the Xiaomi share price, it is best to use several basic technical indicators together, such as moving averages, Bollinger bands, MACD, RSI, stochastic indicators, pivot points or technical support and resistance levels. This will allow you to refine your signals and compare them with the signals from fundamental analysis.

How do you know if Xiaomi's share price will go up or down?

If you want to anticipate future changes in the Xiaomi share price as objectively as possible, you can do so by conducting Xiaomi stock analyses. The two main types of analysis used by traders are technical analysis, which is based on the study of online stock charts, and fundamental analysis, which studies the major news of the stock.

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