Xiaomi Affected by External and Macro Forces, and Honor; FVE Decreased to HKD 19

Xiaomi’s first-quarter result was negatively affected by some factors largely outside of its control and which will likely normalize in the mid to long term including component shortages, increased logistics and transportation costs, COVID-19 lockdowns in China, global economic concerns, and falling market prices for investments. However, Xiaomi’s smartphone business was also negatively affected by a resurgent Honor (ex-Huawei brand) which we believe could well be more long-lasting. First-quarter revenue fell 4.6% year on year with operating profit (ex-investment gains and losses) down 53% year on year. The company’s global smartphone unit market share fell to 12.7% in first-quarter 2022 from 14.1% in the full-year 2021 in an overall smartphone market that fell by 9%.