wnol.info May 23 2018

Xiaomi: Chinese smartphone giant files for Hong Kong IPO

May 23 2018, 01:27 | Alonzo Simpson

Smartphone Maker Xiaomi Files For World's Biggest IPO Since 2014

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Electronics company Xiaomi, best known for their affordable smartphone business, filed for an IPO on the Hong Kong Stock Exchange Thursday morning following the release of financial figures for 2017.

The Beijing-based company did not disclose the amount it is seeking to raise or its projected valuation. The IPO is expected to value the company at up to United States dollars 100 billion.

As Reuters reports, the listing could value Xiaomi at $100 billion, nearly five times what fellow Chinese tech firm Alibaba raised in 2014.

The company said its revenue was 114.62 billion yuan (USD 18 billion) in 2017, up 67.5 percent against 2016. Domestic rivals Huawei, Oppo and Vivo surpassed Xiaomi in 2016 but the company bounced back to become the world's fourth largest smartphone maker after Samsung, Apple and Huawei. For smartphones alone, it had a revenue of 80.56 billion yuan, up 65 percent from the previous year. The company reported a net loss of 43.9 billion yuan in 2017, reversing from a profit a year earlier largely due to its issuance of preferred shares to investors and staff, a common pre-IPO financing option. Its operating profit also surged to 12.2bn yuan (US$1.9bn), more than three times higher than the year before.

First-quarter shipments more than doubled to 27 million units, giving Xiaomi 7.5 per cent share of the global market, according to Counterpoint Research data. Xiaomi's business also includes also partnering with "Internet of Things" companies to develop hundreds of connected lifestyle devices like rice cookers, robot vacuum cleaners and coffee makers.

The company said it would have a "weighted voting rights structure", where class A share holders exercise 10 votes while holders of class B shares exercise one vote.

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Xiaomi also said it has sold over 100 million connected devices, including smartwatches, air purifiers and wearable devices, worldwide.

"We are building an open global ecosystem, and not a walled garden", said Lei, who with co-founder Lin Bin will continue to control the post-IPO company through a special class of shares. Each Class A share will entitle the holder to exercise 10 votes, while each Class B share will give the holder one vote.

If confirmed, a share offering in the former British colony would be a coup for Hong Kong, which was said to be vying with NY and Shanghai for Xiaomi's listing.

In particular, the city attracted 16.1 per cent more visitors from Mainland China but the number of visitors from Hong Kong and Taiwan dropped 24.1 per cent and 19.5 per cent, respectively.

CITIC Securities' CLSA, Goldman Sachs Group Inc. and Morgan Stanley are joint sponsors of the offering.

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