The person familiar with the matter said that under the recent global stock market downturn, Xiaomi’s previous target valuation was too aggressive.
For Xiaomi’s previous valuation of US$100 billion, Hong Wei, the managing director and head of research at Bank of Communications International, had previously stated thatThis valuation is too high, much higher than many companies of the same type.
According to the millet's net profit data shown in the prospectus, according to the investment bank's P/E method, Xiaomi's valuation is as high as 83 times. Hong Hao said that the same type of Apple's valuation is only about 13 times.
In Hong Hao’s view,Under the current situation of macro liquidity tightening, it may be difficult for the market to digest such a giant IPO as Xiaomi..
Wall Street News Today's Editor-in-Chief Featured article "Look at the market | New stocks in Hong Kong stocks" will die, will Xiaomi escape? Mentioned inThe recent breaks and losses of new stocks have also brought tremendous pressure on Xiaomi.. Ping An Hao doctor broke 10% in intraday trading on the second day of listing.
This is no longer a case in point: In the past six months, 73 new Hong Kong IPOs have broken 52 shares, accounting for more than three-quarters of the total.
After achieving the best start in the past 30 years at the beginning of the year, the Hang Seng Index is currently struggling around 30,000 points. In the past a period of time the hot companies, reading text, Yi Xin, Zhong An Online, Razer, etc., have all dropped from the high point by more than 40%. Even if some of the company's financial reports exceeded expectations, they still could not stop falling to digest too high valuations. This further exacerbated the enthusiasm and cooling of investors on the hot new shares of Internet companies and the decline in market confidence.
In addition, according to Xiaomi’s current operating profit disclosure of RMB 12.2 billion, the valuation of the company’s $70 billion valuation is 36.7 times; based on Xiaomi’s repricing of the increase in preferred stocks based on the 2017 loss, RMB 910 million is based on shares. The impact of compensation costs, and subtracting the fair value gains of the investment of RMB 5.73 billion, yielded an adjusted non-IFRS profit of RMB 5.36 billion, corresponding to a PE of 83.5 times.
In contrast, the current TTM P/E of smart phone leader Apple is 17.07 times. The only similarity between the two is only 3.9 times the market rate of valuation method - but Xiaomi's gross margin and net profit are significantly lower than Apple.
On May 3, Xiaomi Group formally submitted the IPO prospectus to the Hong Kong Stock Exchange, announcing its forthcoming listing in Hong Kong, which is expected to become the first share of “different shares in the same stock” of the Hong Kong Stock Exchange. The IPO is expected to become the largest IPO of this year's global technology company.