U.S. equities on Sept 22: Dow Jones Industrial Average closed down 185.03 points (-0.36%) at 51,863.80; S&P 500 closed up 0.14 points (0.00%) at 7,764.84; Nasdaq Composite closed up 122.18 points (+0.45%) at 27,244.28.

The mobile phone business was dragged down by rising storage costs, leading to a downward revision of shipment forecasts but an increase in ASP. UBS lowered its 2027/2028 smartphone shipment forecasts for Xiaomi by 12%/9% to 110.5 million/119.2 million units, respectively. It expects a 10.2% year-on-year decline in 2027, followed by a 7.9% recovery in 2028. This is mainly due to rising storage costs and potentially continued component supply shortages into 2027. However, UBS expects Xiaomi's ASP to increase by 11% in 2027, partially offsetting the shipment decline, with mobile phone revenue still expected to grow by 2%/8.9% in 2027/2028. Automotive and self-developed chips are long-term bright spots, but upfront investments are suppressing short-term profits. Positive consumer feedback after the launch of Xiaomi's Pengcheng series is expected to accelerate electric vehicle revenue in 2027. Meanwhile, Xiaomi released a new 3nm SoC (Xuanjie O3) and increased investment in MiMo large-scale AI. UBS believes the long-term synergy between chips, AI, and smart devices is promising, but the substantial upfront investment required could drag down near-term profitability. Earnings forecasts have been lowered, and valuations already reflect short-term pressures. UBS has lowered its adjusted net profit forecasts for 2027 and 2028 by 4% and 8% respectively, while keeping the 2026 forecast largely unchanged. The target price has been lowered from HK$32.20 to HK$30.40, maintaining a "Neutral" rating. The current share price corresponds to a 2027 P/E ratio of 19x, approximately 0.6 standard deviations below the historical average of 22x. The share price has already fallen 33% this year, and the market has already priced in short-term pressures from rising memory prices and component shortages. UBS believes the current valuation is reasonable, but short-term catalysts are predominantly negative. (UBS Report, September 22)

Beijing, Sept 22 — China Council for the Promotion of International Trade (CCPIT) vice president Lin Honghong met with Peru–China Chamber of Commerce vice president chairman Tan Yiyong to discuss deepening institutional cooperation, promoting industrial-chain and supply-chain collaboration, and coordinating participation in the China–Latin America Entrepreneurs Summit and APEC business events.