CLSA Parts Ways With Bullish Consensus on Xiaomi as Buyback Fails to Stem 24% YTD Drop

Xiaomi ramps up share repurchases, but the stock remains 24% below its 200-day average amid smartphone margin squeeze and heavy EV investment costs. Upcoming product launches and earnings may provide catalysts.

Xiaomi has stepped up its stock repurchase programme, acquiring another 3.256 million shares for roughly 100 million Hong Kong dollars in a series of trades last week. The buyback, executed in a tight band between HK$30.62 and HK$30.82, underscores management’s conviction that the stock is undervalued — yet the market remains unconvinced. The shares closed at €3.40 in Frankfurt on Monday, nursing a 24.29% loss since January and trading below their 50-day moving average of €3.52.

Since the mandate was approved on 5 June 2025, the company has bought back 383 million shares, or about 1.48% of its issued capital. That is a visible return of cash to shareholders, but it has not arrested the slide. With the stock now 24% below its 200-day average, analysts say the next catalyst lies in operations, not buybacks.

The smartphone business is being refocused. In the first quarter, Xiaomi shipped 3.7 million handsets in Southeast Asia — a 12% decline year-on-year — but the average selling price in the region rose sharply. Industry-wide, the sector average climbed to US$349. Xiaomi has deliberately raised prices on its volume models to offset soaring costs for memory chips, a strategy that prioritises margins over market share.

That margin push is critical because the smartphone profits must bankroll Xiaomi’s ambitious foray into electric vehicles, where the target is 550,000 deliveries this year. The twin pressures of component cost inflation and EV investment have made analysts cautious. CLSA trimmed its price target on 18 May from HK$45 to HK$41, citing higher memory chip costs that could squeeze smartphone profitability. The rating remains a buy, but the revision stands in contrast to the broader analyst consensus.

Across 30 experts covering the stock, the average recommendation is “Buy” with a median target of HK$43.13 — well above current levels. The buyback aligns with that bullish view, but CLSA’s move serves as a reminder that the margin story is not yet proven.

Investors now face a packed calendar. On 21 May, Xiaomi will host a major launch event featuring the YU7 GT SUV and the flagship 17 Max smartphone, both central to its “Human x Car x Home” strategy. Six days later, on 27 May, the first-quarter earnings report will put the spotlight squarely on profitability in the auto division and the impact of higher component costs. A shareholder meeting on 2 June will vote on new capital mandates, potentially paving the way for further buybacks or investment.

The stock repurchase provides short-term support for sentiment, but the next moves — product reception, margin trends and the EV unit’s financial contribution — will determine whether the market’s scepticism is warranted. For now, Xiaomi is sending a clear signal with its cash, but it needs the numbers to do the talking.