China's Xiaomi files for mega Hong Kong IPO ($100bln), lifts lid on financials

[TaiShang]

China's Xiaomi files for mega Hong Kong IPO, lifts lid on financials

CGTN
2018-05-03


Smartphone and connected device maker Xiaomi filed for a Hong Kong initial public offering (IPO) on Thursday, in what is expected to be the largest listing by a Chinese tech company in almost four years.

The listing could value the company at up to 100 billion US dollars and would be the biggest Chinese tech IPO since Alibaba Group Holding Ltd. raised 21.8 billion US dollars in 2014.

The announcement came as the consumer electronics company gave investors the first detailed look at its financial position ahead of the much-hyped IPO.

The company said its revenue was 114.62 billion yuan (18 billion US dollars) in 2017, up 67.5 percent against 2016. It also said it made a net loss of 43.89 billion yuan versus a profit of 491.6 million yuan in 2016.

A Xiaomi store in Beijing, China, March 31, 2018. /Reuters Photo

Operating profit for 2017 was 12.22 billion yuan, up from 3.79 billion yuan a year ago.

Alongside smartphones, Xiaomi makes dozens of Internet-connected home appliances and gadgets, including scooters, air purifiers and rice cookers, although it derives most of its profits from Internet services.

In the smartphone market its relatively cheap handsets pose a rising challenge to market leaders Samsung Electronics Co. Ltd. and Apple Inc.

Xiaomi’s IPO will be one of the first in Hong Kong under new rules which began on Monday in an effort to attract more tech listings, as competition for major tech deals heats up between Hong Kong, New York and the Chinese mainland.

The exchange is eyeing several tech listings that are expected in the coming two years from Chinese firms with a combined market cap of 500 billion US dollars.

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It is wise decision not to get listed in NY. The US regulatory environment is very unstable and open to the whims of politicians' vote concerns.

 

[TaiShang]

Xiaomi submits 'world’s biggest' IPO application since 2014

By Yu Xiaoming | chinadaily.com.cn | Updated: 2018-05-03

The logo of Xiaomi is seen inside the company's office in Bengaluru, India Jan 18, 2018. [Photo/Agencies]

Chinese mainland tech company Xiaomi has submitted its application for an initial public offering in Hong Kong, expected to be the world's biggest IPO since 2014.

According to a file sent to Hong Kong Exchanges & Clearing Limited, Xiaomi has enlisted CLSA, Morgan Stanley and Goldman Sachs as joint sponsors for its listing.

The filing didn't disclose details about the size of its planned offering. However, Xiaomi said the company will use the proceeds received from the IPO to research and develop core products, including smartphones, smart TVs, and laptops, as well as global expansion.

A valuation of at least $70 billion was generally accepted by sponsors, investment banks and potential investors, and it's likely to surpass $100 billion in the short term, sources with direct knowledge of the matter told Chinese business media outlet Yicai.

It could be the biggest IPO since Alibaba's $25 billion debut in 2014, and might be the first IPO when IPO applications under dual-class shares structures were accepted starting April 30.

Xiaomi said its revenue for last year was 114.6 billion yuan, compared with 6.84 billion yuan in 2016 and 6.68 billion yuan in 2015. However, the company posted a net loss of 43.9 billion yuan in 2017, reversing from a profit a year earlier.

 

[ahtan_china]

As a electronic engineer, I don't like Xiaomi because it has no core tech. Just copy

 

[Adam WANG SHANGHAI MEGA]

As a electronic engineer, I don't like Xiaomi because it has no core tech. Just copy

Xiaomi is the winner if Xiaomi can still exist 3 years later. Xiaomi Pengpai chip should be greatly developed.

I respect and appreciate Xiaomi's entrepreneurial spirit.

Xiaomi 's design is also quite comfortable.

Many core technologies do not need to be mastered today, but it is indeed necessary for Xiaomi to master some core technologies such as chips.

The world’s top three mobile phone manufacturers, Samsung, Apple, and Huawei all use their own chips, but not necessarily their own operating systems and screens. But the chip is a must.

 

[TaiShang]

Xiaomi files for IPO in Hong Kong

By Campos Santiago Source:Global Times Published: 2018/5/3

Regulatory change opens city’s exchange to mainland internet companies

Visitors try Xiaomi products in a Xiaomi store in Shanghai on December 21, 2017. Photo: VCG

Chinese smartphone maker Xiaomi filed on Thursday an application for an IPO on the Hong Kong Stock Exchange, the most anticipated public offering by a Chinese technology company since Alibaba's IPO in 2014.

The IPO aims to raise up to $10 billion, and may be finalized by July this year, according to media reports.

In its filing, Xiaomi provided its first detailed financial statements. The Beijing-based company posted revenue of 115 billion yuan ($18 billion) in 2017, up 67 percent year-on-year, and operating profit of 12 billion yuan, a whopping 134 percent increase.

The document was prefaced by a letter to investors by Xiaomi founder and CEO Lei Jun, who reaffirmed his recent commitment to cap profit margins on Xiaomi's hardware at 5 percent.

Lei also promised to maintain the business model of selling hardware at low prices to strengthen the user base and make the bulk of profits through sales of internet services.

The IPO comes after a year of strong growth for the company, which has rebounded from a lackluster 2016 and is betting on further growth. Neil Shah, research director at Counterpoint Research, said in an interview with the Global Times that Xiaomi must raise capital to scale up its services ecosystem and invest more in intellectual property and technical research.

Xiaomi has also been investing heavily in overseas expansion, especially in India where it's the smartphone market leader with a 31 percent share, according to Counterpoint's research.

"India is the bright spot for Xiaomi, its biggest contributor to revenue and shipment growth," said Shah. "We believe Xiaomi will continue its 'India first' strategy and use the momentum of its smartphone sales to build up its services ecosystem and other Xiaomi hardware, which should sell well in the price-sensitive Indian market."

Xiaomi's IPO is important not only for its size but also for its location. Xiaomi will be the first large technology company based in the Chinese mainland to choose Hong Kong for its IPO.

Baidu in 2005 and Alibaba in 2014 chose New York to hold IPOs. The move by Xiaomi follows a change of listing rules in Hong Kong that were announced on April 24.

Hong Kong "missed Alibaba because it wouldn't allow companies with weighted voting rights (WVR)," said a Chinese investor who deals in Hong Kong shares. Companies with WVR structures issue two or more classes of stock, with different categories having different voting rights and thus differing abilities to influence management.

"WVRs are a very mature structure across the world, and among internet companies it is almost universal," Sean Song, head of research at Hina Group, an investment bank in China, told the Global Times.

"Since the Hong Kong Stock Exchange opened up and the new rules took effect on Monday, we expect that Hong Kong, with its geographical advantage, will become the place of choice for most internet companies from Chinese mainland to go public," Song said.

Some observers said the Xiaomi IPO would be a symbol of progressing financial reform in China, following other regulatory changes to attract Chinese companies to list their shares domestically, such as the recently approved Chinese Depository Receipts (CDRs).

Lei called CDRs "a great policy innovation" in a recent interview with Bloomberg. "Thanks to these reforms, investors can help fast-growing new-economy companies succeed in their local environment and share the fruits of their success with their users and shareholders in China," said Song.

 

[TaiShang]

Media: Xiaomi comes closer to IPO
chinadaily.com.cn, June 4, 2018

Chinese technology giant Xiaomi is expected to stand at a listing hearing for formal approval of initial public offering on the Hong Kong stock exchange Thursday, a step closer to a listing for the company in the city in early July, according to a report from Hong Kong Economic Times on Monday.

Bloomberg reported the same hearing date late last month by citing people with knowledge of the matter, though a source told Bloomberg the timing could change depending on the volume of questions from the exchange ahead of the meeting.

According to HKET, Xiaomi could raise more than $7 billion as soon as the end of this month if its application is approved by the bourse's listing committee.

The Beijing-based smartphone maker first filed with the Hong Kong bourse on May 3, while the city's new listing rules took effect at the end of April, giving a go-ahead to those with weighted voting rights structure. The company's IPO launch isn’t the sole source of media attention — Xiaomi's CDR issuance has also long been expected amid pending Chinese depository receipt regulations.

CDRs, similar to American depositary receipts, are certificates that allow investors to hold shares listed across borders.

The China Securities Depository and Clearing Corporation released a draft with specific focus on CDR registration, depository and clearing operations on May 21. The public had until June 1 to comment on the draft rules. Earlier this month, China Securities Regulatory Commission sought public opinion until June 3 for draft rules on CDRs, with detailed procedures and information disclosure requirements.

However, Xiaomi's final plan for first share offering and CDR issuing has not been certified by the company.

Financial news outlet Yicai cited a source familiar with Xiaomi's IPO, saying the report about July 16 for CDR issuance and July 17 for IPO launching was not accurate, and the plan was just one of those predicted by regulator and market.