With Xiaomi outgunning Apple, Samsung in valuation, rare ‘sell’ rating, earnings in focus after stock’s 168 per cent rally
- Shares of Chinese smartphone maker have almost tripled from March on tech rebound, index inclusion and Huawei’s sanction misery
- Morningstar argues Xiaomi’s fundamentals haven’t changed much, Citigroup says market underestimates risks from Huawei’s Honor deal
The shares of the Chinese smartphone maker almost tripled to HK$25.55 on Friday from a low of HK$9.50 on March 23, briefly setting a record of HK$26.95 on September 2. An announcement on August 14 to include Xiaomi as a Hang Seng Index constituent has since rewarded its faithful with a HK$246.8 billion (US$31.8 billion) increment in market value.
Investors could get burned chasing the rally, according to Dan Baker, the analyst who goes against his 48 industry peers by recommending a sell on the stock, according to data compiled by Bloomberg.
Baker, a senior equity analyst at Morningstar in Hong Kong, has seen it before. He correctly predicted that Xiaomi’s shares would almost halve when it first listed in July 2018 at HK$17 apiece. On November 4, he pegged its fair value at HK$12.50, some 51 per cent below the current market price.
“Most of what’s driven up the value for the company is just a far more bullish sentiment in the stock market that’s driven all values in terms of Chinese tech stocks,” he said in a phone interview on Friday. “There just has not been that much change in the company in the last year.”