Xiaomi Group's net profit increased by 35% in 2019, and production capacity returned to normal levels of 80%-90%

Following the disclosure of Xiaomi Group’s third quarter 2019 financial report, which brought certain benefits to its stock price, whether its full-year performance in 2019 can exceed expectations and thus boost its stock price again has also become a focus of expectations and attention in the industry.

On March 31, Xiaomi Group released its 2019 fourth quarter and full-year performance announcement. Xiaomi Group's full-year revenue was RMB 205.84 billion, a year-on-year increase of 17.7%; the full-year adjusted net profit was RMB 11.53 billion, a year-on-year increase of 34.8%.

Among them, Xiaomi Group's revenue in the fourth quarter of 2019 reached 56.5 billion yuan, a year-on-year increase of 27.1%; adjusted net profit reached 2.3 billion yuan, a year-on-year increase of 26.5%.

Looking at the smartphone segment, the smartphone revenue in 2019 reached RMB 122.1 billion, a year-on-year increase of 7.3%. In the fourth quarter of 2019, the smartphone revenue reached RMB 30.8 billion, a year-on-year increase of 22.8%. Among them, the sales volume of smartphones reached 124.6 million units, and the sales volume of smartphones in the fourth quarter reached 32.6 million units, a year-on-year increase of 30.5%.

Throughout 2019, the Xiaomi brand continued to explore wireless fast charging, imaging technology, 5G research and development, and future mobile phone forms through products such as Xiaomi 9 Pro 5G, Xiaomi CC9 Pro, and Xiaomi MIX Alpha surround screen concept phone, making full technical preparations for the market opportunities brought by 5G in 2020. In February 2020, Xiaomi Group released Xiaomi's 5G flagship mobile phones Xiaomi 10 and Xiaomi 10 Pro. The Xiaomi 10 series is equipped with industry-leading processors, screens, cameras, audio, fast charging and other functions, providing users with the ultimate user experience.

In the field of IoT and consumer products, in 2019, the revenue of IoT and consumer products was RMB 62.1 billion, a year-on-year increase of 41.7%. In the fourth quarter of 2019, the revenue of IoT and consumer products was RMB 19.5 billion, a year-on-year increase of 30.5%.

In 2019, Xiaomi TV shipped 12.8 million units worldwide, a year-on-year increase of 51.9%. Shipments in mainland China exceeded 10 million units, which we believe set a record for the Chinese TV industry. According to statistics from Aowei Cloud Network, Xiaomi TV ranked first in the mainland Chinese market and fifth in the world in terms of shipments in 2019. According to data from IDC (International Data Corporation), in the fourth quarter of 2019, Xiaomi TV shipments ranked first in the Indian smart TV market for the seventh consecutive quarter.

In addition, in the investment field, as of December 31, 2019, Xiaomi has invested in more than 290 companies with a total book value of approximately RMB 30 billion.

Xiaomi Group stated that it will expand its investment to supply chain companies to support innovative technologies and applications, empower materials, chip and component companies in the fields of 5G, Internet of Things and artificial intelligence, provide support for software and hardware technologies related to advanced manufacturing and industrial Internet, bring about coordinated development of the industry, and build a mutually beneficial ecosystem.

It is worth noting that Xiaomi Group stated in its financial report that due to the impact of the new coronavirus epidemic, it encountered temporary production interruptions in February and March due to the closure of factories in China, but most of the production has now resumed and production capacity has returned to 80% to 90% of normal levels.

In the Chinese mainland market, during the peak of the epidemic, most stores were closed or had shortened business hours, and customer traffic dropped significantly, affecting offline sales. However, due to Xiaomi Group's online channel advantages, the overall impact was relatively small. In late March 2020, Xiaomi Group's mobile phone shipments had rebounded rapidly, reflecting consumers' strong rigid demand for mobile phones.

"In terms of overseas markets, the current spread of the epidemic in many countries and regions may cause deferred demand." Xiaomi Group said that it is currently paying close attention and evaluating the situation. Although overseas demand will be affected to a certain extent, especially in the second quarter of 2020, based on the current situation, it is believed that the overall impact is controllable.