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Media evaluation of millet Valuation: should Lenovo, Tencent or apple?

via:每日经济新闻     time:2018/5/8 9:07:24     readed:286

(Original title: Lao Tie: Xiaomi should sign association,TencentOr apple? )


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In my opinion, the comparison of Xiaomi with Lenovo or Tencent is inaccurate and the reference should be set to Apple.

At the very beginning of his creation, Xiaomi was a firm apple powder. Lei Jun himself also had the name of “Reebs”. Therefore, we will find that there is certain commonality between these two companies.

According to Apple's first quarter financial report, the author sorted out Apple’s revenue ratio, of which,iPhoneSales of hardware products such as iPads, Macs, Apple Watch, and AirPods accounted for nearly 90% of revenues. It is no exaggeration to say that Apple is a hardware sales-driven company. According to Xiaomi's prospectus, we found that its hardware sales accounted for more than 90%. Hardware sales are the lifeblood of the two companies.

However, there are also differences. Apple’s profit in the first quarter reached US$13.82 billion, the profit rate was 22.6%, and net profit increased by 25% compared with the previous year. Apple’s hardware sales still maintained a high gross margin.

Xiaomi is completely different, net profit is only 12.2 billion yuan, accounting for 10.6% of total revenue. Considering Xiaomi’s consistent low-price strategy and the previous “hardware comprehensive net margin of no more than 5%”, Xiaomi’s attitude towards hardware is obvious: Contribution Sales have maintained low profit margins.

The difference between the two sides in their treatment of hardware attitudes lies in the difference in brand premium ability. The average selling price of iPhone X is more than 1,000 US dollars, pushing the average price of the iPhone from 640 US dollars to 700 US dollars, but it still brings 14% increase in revenue for the iPhone. Quantity; millet is stuck in the initial stage of the brand premium, by the millet MIX to increase the pace to enter the high-end market, but in a short time millet is difficult to have Apple's brand premium ability. On the other hand, we also believe that this is the beginning of the "Rebs" to get rid of the "Jobs" label.

In the prospectus, Xiaomi divided the business into three categories: "Hardware, New Retail, and Internet Services." Among them, the hardware maintains low profit margins. Then Xiaomi's growth is placed on the other two categories, especially Internet services.

Considering that the application distribution and Internet advertisements have been referenced by Tencent and Ali, and some articles have estimated that this model can support a market value of up to 50 billion U.S. dollars, to support Xiaomi’s 100 billion U.S. dollar market value, it is necessary to reanalyze Apple.

Although Cook has high hopes for the future of the iPhone on the grounds of “the sales of global functional machines up to 500 million units”, it has already started to use “Internet services” as the main growth point in the actual operations.

According to Apple’s financial report, a total of 1.3 billion devices including the iPhone are used, and the service income of a single device is US$30. Apple’s Internet service revenue in 2017 is about US$30 billion, which is an increase of 23%, which is an increase in iPhone sales. Twice as fast.

And Apple said that the total revenue of Internet services in 2020 will reach 50 billion U.S. dollars, and will contribute 60% of the revenue increase in the next five years.

Obviously, Apple hopes that Internet services can dilute the pressure of iPhone sales on revenue, especially under the stimulation of the poor sales of iPhone X.

According to the disclosure of the prospectus, the average Internet service income per user for Xiaomi in 2017 was US$9.1, which is far lower than the income capacity of Apple’s single device of US$30.

About this issue, mainly due to Apple's closed-loop ecosystem, Apple's advantages in application and distribution in the music field make it a relatively strong profitable gene. By contrast, Xiaomi is based on Android's open ecological disadvantage.

However, we found that Xiaomi is building its own closed-loop system, the Mijia.

The prospectus disclosed that Xiaomi’s loT business has a total of 100 million device connections (except mobile phones and laptops), mainly in the home environment. Representative products are rice cookers, water purifiers, air purifiers, etc. Make a connection.

According to the information of iResearch, IoT is the area where Xiaomi’s main business has experienced the largest increment in the next five years (the growth of smart phones from 2017 to 2022 was only 2.6%).

Judging from the size of the Mi family today, Xiaomi is very likely to become an important eco-provider of the Internet of Things. Mi JiaweiDevelopmentThe user is provided and has already brought more than 100 million device usage to Xiaomi.

When we discuss the contribution of Xiaomi's single-user account of US$9.1, which is far below the standard of US$30 for single-device equipment, it actually ignores the driving force of the Mijia project for Internet services. The value-added services of the equipment are expected to become an important source of income increase.

At this point, in the comparison between Xiaomi and Apple, we can basically draw the following conclusions: 1. Both parties use hardware as the main driving force; 2. Both parties want to benefit from Internet services, but Apple is building rice based on its own ecological environment. Home ecology, this is an important symbol of Lei Jun's return to Lei Jun from Reebs; 3. Xiaomi’s advantage lies in its large number of equipments. Mijia has 100 million devices and Xiaomi’s mobile phone has shipped 200 million units in 3 years, plus notebooks and other products. It is estimated that the use of millet equipment should be more than 300 million, which is a quarter of Apple's.

Apple's market value of 900 billion US dollars, millet is 100 billion US dollars, but the comparison of revenue, less than one-tenth of millet, if calculated, millet valuation is indeed too high.

However, from Xiaomi's business model and current operational data, both parties will have many similarities in the next five years. In the low price of millet and the expansion of overseas markets, the gap between the total amount of equipment operations will be reduced. Xiaomi’s Internet service revenue totaled RMB 9.9 billion in 2017, which was mainly contributed by advertising and game revenue. Currently, the advantages of Mijia are mainly reflected in the sales promotion of IoT products. However, with the increase of the scale effect, the income potential of the Internet service of the Mijia Ecology will continue to show.

Because Apple has a strong hardware premium, Xiaomi should do the following things well if it is to maintain rapid development momentum: First, the product's rapid iteration and multi-level user coverage, such as the main screen full of MIX brought to the millet is not only The sales volume also has a brand premium that drives the growth of the entire product line. Second, the low price strategy is continued. The comprehensive net rate of hardware does not exceed 5%, which is to basically abandon the hardware revenue. This is not only to hardware manufacturers represented by Lenovo and Samsung. Do a good job of capital allocation, make a good story of Xiaomi's ecology, and we must also maintain the use of hardware and improve the ability to realize ecological transformation.

However, Xiaomi has almost no chance for iPhone X's trial and error. On the one hand, domestic mobile phone manufacturers are “powerful”, and it is difficult for Xiaomi to look for opportunities to shift the crisis in India as in 2016. On the other hand, the goal of low-margin operation of hardware is hard. It's fast selling, and if you make a mistake and get stuck, hardware becomes a burden.

Even Apple is pricing high pricing for the iPhone X. Prior to this, some media reported that Apple intends to hand over the OLED screen order share to LG, hoping to force Samsung to lower the screen cost and ultimately lower the price of the iPhone. The industry generally believes that the new iPhone in 2018 There should be some convergence in the high price strategy.

In any case, Xiaomi's valuation is one-ninth of Apple's, and it is reasonable. Both of them look at mobile phones in the short term and look at the ecosystem in the long term.

(The author is a financial columnist)

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