Li_DanLi_Dan ・ Apr. 3, 2024
Xiaomi Shares Soar 9% as Wall Street Bullish on SU7 in EV Market following Booming Preorder
Goldman Sachs analysts believe SU7 has shown the potential to become one of the best-selling premium electric sedans in China, which may put it on par with Tesla's Model 3.

TMTPost -- Hong Kong-listed shares of Xiaomi Corporation soared as mush as 16.1%, the biggest intraday gain in two years, and settled nearly 9 % higher to HK$16.28, the highest close since December 28. The stocks rallied on Tuesday as Wall Street is bullish on SU7, Xiaomi’s first electric vehicle (EV) model, to establish a foot hold in the EV market under cutthroat competition.

Credit:Xiaomi

Credit:Xiaomi

Analysts noted orders for Xiaomi SU7 came in stronger than expected. Goldman Sachs Group Inc. expected that orders may reach 100,000 this year, while Citigroup Inc. estimated sales in a year to be at around 55,000-70,000 units. In their note on Monday, Goldman Sachs analysts raised their price target for Xiaomi to HK$20.0 from HK$18.9, representing a gain of 34% from the stock price last Thursday. With its industry-leading intelligent system and ecosystem advantages, SU7 has shown the potential to become one of the best-selling premium electric sedans in China, which may put it on par with  Tesla Inc.’s Model 3, according to the note.

Goldman Sachs projected Xiaomi's annual revenue will increase by 2%-6% from 2024 to 2026, reaching 100,000, 170,000 and 326,000 units, respectively, boosted by EV sales, and account for 1.0%, 1.5% and 2.5% of China's new energy vehicle  (NEV) sales these years. By 2030, EV sales are expected to make up 30% of Xiaomi's total revenue.

What made analysts curious is that how quickly Xiaomi will be able to manufacture and deliver the vehicles. “Manufacturing capability ramp-up, on the other hand, will likely become the top focus over the next couple of months,” Goldman Sachs analysts wrote in a note. “The average waiting time for the SU7 has extended to 18-21 weeks as of late compared to 5-8 weeks initially.”

JPMorgan Chase & Co. Analysts reiterated their overweight rating on shares of Xiaomi. They believes Xiaomi's EV business has had a strong start since SU7 pricing is very attractive and has scale advantages. The business may exceed the  analysts’ expected shipment of approximately 50,000 units in the first 12 months, triggering a strong positive reaction in the stock price in the short to medium term.

Xiaomi officially launched SU7 last Thursday, with starting price cheaper than its major competitor: Tesla’s affordable Model 3. Xiaomi co-founder and CEO Lei Jun presented that day SU7 has a layered pricing since it has three variants. The standard SU7 will cost RMB215,900 (US$29,872), and the Pro and Max version will be priced at RMB245,900 and RMB299,000, respectively. Lei said the SU7 is RMB30,000 cheaper than Model 3, which starts at RMB245,900 in China.

The Max version enables the driver back onto the road with a 510 km of range in just 15 minutes of charging. Even the standard version isn't far behind, offering a 350-kilometer range boost in the same timeframe. Xiaomi, at the presentation, compares Max version to the electric Porsche Taycan. Lei said SU7 beat Tesla's and Porsche's vehicles by many capabilities, such as its minimum range of 700 km exceeds Model 3’s 567km.

Xiaomi started presales on Thursday for SU7, and offered a hand of freebies worth of up to RMB22,000, such as Nappa leather seats and a built-in fridge, to anyone who place the order of the Standard and the Pro version by April 30. The company disclosed at Chinese social media Weibo that it received more than 10,000 preorders in just four minutes since the launch, and preorders topped 50,000 within 27 minutes. These preorders come from customers who had paid a deposit of RMB5,000 that is refundable within seven days since the order is effective. Xiaomi said it will commence delivery of the Standard and Max version at the end of April, while delivery of the Pro version will begin a month later.

Xiaomi last weekend announced it accumulated  SU7 preorders of  88,898 units within first 24 hours. The company initiated the second round of additional preorders for the Standard version on Monday, requiring non-refundable deposit of RMB20,000, and all the new preorders sold out in seconds that day. Xiaomi said Tuesday it gets ready for formal delivery of SU7 across China a day later.

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