Xiaomi to Go Public in the Hong Kong Bourse in July
Xiaomi is on course to its initial public offer, intending to convince the investors from the USA and the EU that its value levels at US$70 billion
The number four smartphone manufacturer is putting the icing on the cake of its groundbreaking initial public offer of US$10 billion, intending to present the largest stock offer of 2018 to the global investors through the Hong Kong stock market in the first half of July. Xiaomi’s decision to go public is a favorable deal for Hong Kong, too, considering that the city lost a step last year, falling into the fourth position in the global IPO stakes after Shanghai and Shenzhen.
At the end of June, the Chinese giant is going to convince investors from the USA and the EU that it is capable of translating the sky-high smartphone sales into huge profits from associated services. The aim is to get Xiaomi business valued at least at US$70 billion, people familiar with the matter say. The evaluation is based on the prospects of 50 percent annual growth over the next three years, they add.
The investors have reservations about how to value the world’s top four smartphone manufacturer. According to the official accounts, in 2017, its total sales skyrocketed to 114.6 billion yuan (US$16 billion), up to 70 per cent of which the company gained from smartphones. But Xiaomi’s interest levels at US$2 per a smartphone sale — a commitment enshrined in the company’s charter by the manufacturer’s founder Lei Jun (in comparison, Apple gets between US$151 and US$250 on each iPhone).
As for the remaining 30 per cent of 2017 revenue, about 20 are to be attributed to smart device sales, such as air cleaners, neck pillows, ballpoint pens, and multiple wearables — 300 titles in total paved a way for Xiaomi to surpass Fitbit as the largest global supplier. The last 10 per cent were gained through internet services, including children’s education, entertainment, and other services provided to users of Mi devices. That said, internet services were the main driving factor of operating profit growth during 2017, which by the end of the year tripled to 12.2 billion yuan, with internet services contribution of 60.2 per cent gross. Adjusted profit with non-recurrent items excluded mounted to 5.4 billion yuan.
According to bankers familiar with the matter, in negotiations with investors Xiaomi will put emphasis on its long-term perspectives, the rise of earnings, and its cash flow.
As for the overseas shipments, in 2017, Xiaomi sold 27 million items, tripling the revenue to 32.1 billion yuan.
Aiming to bolster its European business, the company opened its first outlet in Paris not far from the Pompidou Centre and is now arranging for opening other Mi stores in France, Italy, and Spain before the end of this year. According to the report of Counterpoint analysis firm issued on May 1, Xiaomi scored fourth in the global rankings of the first quarter, trailing only to Samsung, Apple, and Huawei.
As stated by IDC, the technology industry revenue is expected to pop up every year approximately by 13.3 per cent and reach US$6.2 billion by 2021. Xiaomi has now all the potential to continue its impressive growth, focusing on the development of smart devices that belong to the extremely promising category of the Internet of Things (IoT).