UBS Global Research raised its target price for Xiaomi Corporation (01810) to HK$15.5 from HK$15 and downgraded its rating to "neutral" from "buy", given the share price's recent re-rating.
The research house likes Xiaomi's aggressive 5G smartphone push and an internet services monetisation strategy that few other Chinese smartphone vendors can offer.
UBS believes investors, in the past six months, have shifted focus from India to Europe given Xiaomi's recently strong smartphone momentum in Europe and its potentially greater internet service monetisation opportunity than in India.
If Xiaomi can replicate this model in Europe (or India), UBS believes its valuation could return to listing levels and once again be comparable to internet companies (ie, 30x PE).
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