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<Research>M Stanley: XIAOMI-W Smartphone GPM Still Expandable Despite DRAM Price Hikes
Recommend 31 Positive 58 Negative 26 |
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While the market generally expects memory cost hikes to heap downside pressure on smartphone gross margins, Morgan Stanley cited historical data in its research report showing that XIAOMI-W (01810.HK) actually recorded an expansion in smartphone gross margins when DRAM prices were on an uptrend during the cycles of 2016-17, 2019-21, and 2022-23. The broker attributed these results to XIAOMI-W's effective cost transfer mechanism and product price hikes as a result of tremendous cost increases. If the trend reverses, high product prices combined with low costs can also trigger a recovery in corporate profit margins. Looking ahead, if memory cost growth enters a prolonged super cycle, smartphone gross margins are predicted to face sustained downward pressure, though it is likely that they will recover should the cycle reverse ahead of expectations. Morgan Stanley gave XIAOMI-W an Overweight rating and a target price of HKD62. AAStocks Financial News |
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