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Xiaomi (SEHK:1810) Following Weaker Results, Is The Valuation Case Still Intact?

Simply Wall St · 1d ago

Xiaomi (SEHK:1810) drew attention after releasing second quarter 2026 results, with sales and net income lower than a year earlier. The company also announced changes to its joint company secretaries on the same date.

Following the August 18 earnings release, Xiaomi’s share price has seen a short burst of strength, with a 1-day share price return of 2.52% and a 7-day share price return of 3.72%. However, momentum has faded over the year, with the year-to-date share price return down 29.34% and the 1-year total shareholder return down 46.50%, although the 3-year total shareholder return of 128.41% still reflects a much stronger earlier period.

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After the brief rebound following weaker second quarter figures, the question for Xiaomi now is whether the recent share price reset and current valuation leave more upside than downside. How does the current price stack up against the fundamentals?

Most Popular Narrative: 30.9% Undervalued

The most followed narrative on Xiaomi values the stock at HK$41.16, well above the recent close of HK$28.46, which points to a sizable valuation gap in that framework.

Xiaomi should be viewed as a hybrid multiple business model:

• Hardware (smartphones, IoT): lower-margin, high scale

• Services (internet): high-margin recurring

• EV + AI: high-growth optionality

This creates a sum-of-the-parts valuation profile, with EV and AI acting as long-term re-rating drivers.

Read the complete narrative. Read the complete narrative.

Want to see how that HK$41.16 figure is built. The narrative leans heavily on Xiaomi’s EV ramp, higher margin internet services and assumed uplift in overall profitability. Curious which cash flow and margin paths have the biggest impact on that fair value line.

Result: Fair Value of HK$41.16 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Xiaomi’s heavy EV and AI investment, along with the long list of execution and regulatory risks in the memo, could still undermine that HK$41.16 narrative.

Find out about the key risks to this Xiaomi narrative.

Another View Using Xiaomi’s P/E Ratio

The first Xiaomi narrative leans on a fair value of HK$41.16, yet the current P/E of 19x tells a more cautious story. It is higher than the Asian tech average of 18.5x and above a fair ratio of 17.3x, which points to some valuation risk if sentiment cools.

Compared with direct peers on 60.3x, Xiaomi still trades on a much lower multiple. This suggests the market is pricing in less optimism for its mix of smartphones, EVs and services. The question for investors is whether that discount reflects real execution risks or an opportunity that patience could reward.

See what the numbers say about this price — find out in our valuation breakdown.

SEHK:1810 P/E Ratio as at Aug 2026
SEHK:1810 P/E Ratio as at Aug 2026

Next Steps

With sentiment on Xiaomi clearly split between concern and optimism, it makes sense to move fast and review the data yourself, including the 2 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Xiaomi?

If Xiaomi has you thinking more carefully about risk, return and valuation, do not stop here. Broaden your watchlist now so your capital is not stuck on the sidelines.

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.