Xiaomi (SEHK:1810) Q4 EPS Slowdown Tests Bullish Margin Expansion Narrative

Fresh off its FY 2025 results, Xiaomi (SEHK:1810) reported fourth quarter revenue of about CN¥116.9b and basic EPS of CN¥0.25, setting the tone for a year where trailing 12 month revenue reached roughly CN¥457.3b and basic EPS came in at CN¥1.62. Over that period, net income excluding extra items totaled about CN¥41.6b, giving investors a clear read on how headline earnings are translating into underlying profitability and where margins are holding up through the latest quarter.

See our full analysis for Xiaomi.

With the numbers on the table, the next step is to see how this earnings profile lines up against the main Xiaomi narratives investors follow and where those stories might need an update.

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Margins Lifted by 9.1% Net Profit Level

• On a trailing 12 month view, Xiaomi earned CNY 41.6b of net income excluding extra items on CNY 457.3b of revenue, which translates to a 9.1% net margin compared with 6.5% a year earlier.
• Consensus narrative expects higher margin contributions from premium products and services over time, and the move from a 6.5% to 9.1% net margin sits alongside that. However:
  • Part of the reported profitability includes a CNY 13.8b one off gain, so the underlying margin is lower than the headline suggests.
  • Trailing EPS rose 76% over the year to CNY 1.62, which is strong on paper, but investors need to separate recurring earnings power from that one time boost.

Quarterly Profit Soft Patch in Q4 FY 2025

• Within FY 2025, Q4 net income excluding extra items was CNY 6.5b on revenue of CNY 116.9b, which is below the CNY 10.9b to CNY 12.3b range seen in each of the first three quarters of the year even though revenue stayed above CNY 111b each quarter.
• Bears argue that rising research and expansion costs could weigh on future profitability, and the Q4 profile gives that argument some footing because:
  • Basic EPS in Q4 was CNY 0.25, compared with CNY 0.44 to CNY 0.47 in the prior three quarters, so earnings per share were meaningfully lower even as quarterly revenue remained above CNY 113b in Q3 and CNY 115.9b in Q2.
  • The trailing 5 year earnings compound growth rate of 17.6% a year shows Xiaomi has grown profits over time, so a softer quarter like Q4 can matter for bears mainly if similar pressure shows up again in later periods.

Skeptics point to the Q4 profit dip and heavy investment as red flags, and the detailed bear case sets out how that view plays out over several years 🐻 Xiaomi Bear Case.

P/E of 17.8x Versus Higher Growth Forecasts

• Xiaomi trades on a trailing P/E of 17.8x against forecasts that earnings could grow at about 14.4% a year and revenue at about 13.1% a year, while the DCF fair value is cited at HK$43.42 compared with the current share price of HK$32.52.
• Bulls highlight that the P/E sits below both the peer average of 35.4x and the Asian tech industry at 22.3x, and the current metrics give that view some support because:
  • The stock price is about 25% below the DCF fair value of HK$43.42, which investors who agree with the inputs behind that model may see as a valuation gap.
  • Forecast growth rates that are described as being above the Hong Kong market, combined with a lower P/E than many peers, are the core numbers bulls use to argue that the current multiple may not fully reflect the growth and margin profile outlined in the narratives.

Supporters point to the forecast growth and lower P/E to build a bullish case, and the full bull narrative connects those figures to potential long term outcomes 🐂 Xiaomi Bull Case.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Xiaomi on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With both optimism and concern running through these numbers, it makes sense to move quickly, look through the details yourself, and weigh the 4 key rewards and 1 important warning sign.

See What Else Is Out There

The softer Q4 profit, lower basic EPS and reliance on a one off gain highlight that Xiaomi's earnings quality and consistency may not be as robust as headline figures suggest.

If you want steadier fundamentals and less earnings noise, jump into the 283 resilient stocks with low risk scores today and quickly compare companies with profiles built around resilience and lower risk.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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