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Xiaomi's market value breached HK$1 trillion (US$128.4 billion) for the first time after its shares surged to an all-time high, as China's third-biggest smartphone maker reaps the benefits from its diversification into electric-vehicle (EV) manufacturing.
The company's shares rose as much as 5.7 per cent to HK$40.10 in Hong Kong on Tuesday, lifting its underlying capitalisation above the trillion-dollar threshold. They ended at HK$39.55 at the close of trading, trimming its value to HK$992.9 billion. The Hang Seng Index surged 2.8 per cent amid hopes that a trade war could be averted.
Xiaomi had 20.59 billion Class B shares listed on the local stock exchange, according to its latest filing on January 13. The firm separately had 4.52 billion unlisted Class A shares controlled by founder Lei Jun. Each carries 10 votes and which could be converted into Class B shares on a one-for-one basis.
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"The stock price reflects its solid fundamental factors," said Kenny Ng, a strategist at Everbright Securities International. Given the upwards trend and improved investment sentiment, the stock was expected to perform well in the short term, he added.
The rally came amid a bullish view on its car business, unscathed by an escalation in US-China trade tensions as the world's two biggest economies prepare to fight another trade war with tariffs on exports. The company generates most of its revenue at home, with only 3 per cent coming from the US, according to Morningstar.
Xiaomi's revenue jumped by about 31 per cent to 92.5 billion yuan (US$12.8 billion) in the third quarter last year, beating market expectations. Its EV business brought in 9.7 billion yuan on the back of 39,790 deliveries of the SU7 model as showroom traffic increased and its order backlog piled up, analysts said.
Its latest vehicles have spurred demand, which could lead to continued supply shortages in 2025, according to Wang Bin, head of auto research for Asia at Deutsche Bank.
Xiaomi is set to launch new EV models this year, including the SU7 Ultra and YU7, according to Wang. As such, its 2025 delivery volume would be determined by its supply constraints, he added, noting that the firm is building a second production plant in Beijing to cope with demand.
Xiaomi now operates one manufacturing plant with an annual capacity of 150,000 vehicles in Beijing's Yizhuang economic development zone. Its second plant is expected to be completed by June to support the YU7 roll-out. There could be upside surprise to its 2025 delivery guidance of 300,000 units, Wang said.