Key Takeaways
Xiaomi Group spent HK$100 million to repurchase 3.3 million of its shares on May 19, doubling down on its buyback program even as the stock has slumped more than 24% this year.
The move comes just a day after CLSA trimmed its price target on the company from HK$45 to HK$41, citing higher memory chip costs that could squeeze smartphone profitability. The firm maintained its buy rating, but the revision highlights the operational pressures facing the electronics giant.
This latest transaction follows a similar HK$100 million purchase of 3.26 million shares last week. Since a mandate was approved in June 2025, Xiaomi has now bought back 383 million shares, returning significant cash to shareholders and shrinking its issued capital by about 1.48%. Despite this, the stock continues to trade below its 50-day and 200-day moving averages.
While the buybacks signal management’s conviction that the stock is undervalued, the market remains focused on the twin pressures of rising component costs and heavy investment in its new electric vehicle division. Investors are now looking ahead to the company’s Q1 earnings report on May 27 for the first clear look at automotive profitability.
Xiaomi's strategy involves a delicate balancing act. In its core smartphone business, the company is deliberately raising prices to prioritize margins over market share, a move designed to offset soaring memory chip costs. The trade-off was visible in Q1 data from Southeast Asia, where shipments fell 12% year-on-year to 3.7 million units, but the average selling price rose.
The profits from this higher-margin smartphone strategy are critical for funding the company's ambitious push into electric vehicles. Xiaomi has set a target of 550,000 EV deliveries for the current year, a capital-intensive goal that has made some analysts cautious. While 30 experts maintain an average "Buy" recommendation with a median price target of HK$43.13, CLSA's note serves as a reminder of the execution risks.
The stock repurchase provides a floor for sentiment, but the company’s ability to reverse its 24% year-to-date slide now depends on operational execution. The next major catalysts include a launch event on May 21 for its YU7 GT SUV and flagship 17 Max smartphone, followed by the crucial Q1 earnings report six days later.
This article is for informational purposes only and does not constitute investment advice.
