It is said that Xiaomi will initially set prices in Hong Kong at a forecast profit level and a 60-fold price-earnings ratio growth model. Its IPO target is estimated to be between US$70-80 billion.
According to intermediaries close to Xiaomi's IPO project, investors, especially cornerstone investors, are currently under intense competition, and their valuations are generally between 75 billion and 85 billion US dollars. It has been alleged that a number of institutions have already given over $80 billion worth of valuations, but no cornerstone investors have yet been finalized. In the Internet Trends Report released by the “Internet Queen” in 2018, Xiaomi ranked 14th among the world’s top 20 Internet companies with a valuation of US$75 billion.
What is CDR?
CDR is the abbreviation of Chinese Depository Receipt. Refers to overseas listed companies (including Hong Kong, China) who have deposited some of their issued shares in local depository banks, issued by depositary banks in China, listed on the domestic A-share market, settled in RMB transactions, and traded for domestic investors. Investment vouchers to realize the trading of shares in different places.
On June 6, with the issuance of regulations and regulatory documents such as the Measures for the Administration of Depositary Receipts Issuance and Transaction (Trial), overseas listed companies that meet the CDR policy have a basis for listing in China.
According to the newly issued policy requirements, companies are in line with national strategies, master core technologies and recognized by the market, and belong to the high-tech industries and strategic emerging industries such as the Internet, big data, cloud computing, artificial intelligence, software and integrated circuits, high-end equipment manufacturing, and bio-pharmaceuticals. Industry can apply.
In addition, the size of the company must meet the requirements. The specific requirements are: large-scale red-chip companies that have been listed overseas (companies with overseas registration and major business activities in the territory), market value of not less than 200 billion yuan; innovative companies (including red chip companies) that are not listed overseas Domestically registered companies), operating income in the most recent year of not less than 3 billion yuan and a valuation of not less than 20 billion yuan; or rapid growth in operating income, with independent research and development, leading international technology, and a comparative advantage in the competition with the industry .
At present, among listed companies with market capitalization of not less than 200 billion yuan, BAT, JD.com, and NetEase are eligible to issue CDRs in China.
Xiaomi's performance increased significantly in the first quarter
The CDR prospectus disclosed Miller’s latest financial data for the first quarter of 2018.
From the first quarter of 2015 to 2018, the net profit attributable to ordinary shareholders of the parent company after deducting non-recurring gains and losses was negative 2.248 billion yuan, 233 million yuan, 3.945 billion yuan, and 1.038 billion yuan, respectively. The CDR prospectus disclosed in the chapter “Disparities in Disclosure of Domestic and Foreign Information” that Xiaomi’s adjusted operating net profit was 303 million yuan, 1.895 billion yuan, 5.362 billion yuan, and 1.699 billion yuan, with good profitability and profitability. Continuously enhanced.
It is understood that the "net profit attributable to ordinary shareholders of the parent company after deducting non-recurring gains and losses" and "adjusted operating net profit" announced by the Hong Kong stock prospectus announced in the CDR prospectus are: Do not count non-recurring gains and losses, whether to deduct the investment income of financial products and government subsidies.
Xiaomi CDR prospectus disclosed that Xiaomi’s smartphone revenue was 53.715 billion yuan, 48.764 billion yuan, 80.564 billion yuan, and 23.239 billion yuan, respectively. According to IDC data, in the first quarter of 2018, Xiaomi's mobile phone increased by 87.8% year-on-year, when the global smartphone market fell 2.9% year-on-year.
It should be noted that the first quarter of each year is the off-season sales of the mobile phone industry. Xiaomi's mobile phone increased significantly in the first quarter, indicating to a certain extent that Xiaomi's mobile phone performance may be better than the first quarter.
There is still a gap between the income model and mainstream Internet companies
During the reporting period, Xiaomi’s Internet service revenue was 3.239 billion yuan, 6.537 billion yuan, 9.896 billion yuan, and 3.231 billion yuan, respectively, and gross profit was 2.09 billion yuan, 4.285 billion yuan, 6.334 billion yuan, and 2.191 billion yuan respectively. Both figures are about one-third of the whole year of 2017.
At the same time, the proportion of Internet service revenue and gross profit in the main business increased from 8.65% and 34.75% in 2017 to 9.43% and 40.18% in the first quarter of 2018 respectively. The proportion of Internet services is increasing.
"Millet is an Internet company with mobile phones, smart hardware and IoT platforms as its core." Lei Jun has emphasized this on several occasions. At the same time, this sentence is also written in Xiaomi's prospectus.
However, many people are questioning Xiaomi as an "Internet company."
The reason for questioning is very simple. According to the financial data disclosed by Xiaomi, sales of mobile phones, smart hardware, etc. account for nearly 90% of Xiaomi’s revenue. The proportion of Internet revenue does not exceed 10%. According to Xiaomi's citation of iResearch, in terms of realizing internet services, the average monthly income of the millet in 2017 is approximately US$9.1. Compared with the world's leading Internet service companies, there is still a big gap.
However, judging from the current pattern of Internet companies, because the oligopolistic competition has taken shape, it has become impossible to realize the mere realization of Internet services. Millet's model is to obtain user groups mainly through hardware, and then realize through the form of value-added services.
At the end of April, Lei Jun announced that from 2018 onwards, Xiaomi's annual comprehensive net interest rate for its hardware business will not exceed 5%. If there is an excess, Xiaomi will give back to the user. The maintenance of lower profit margins for hardware products and the increase in the proportion of Internet services in company profits are exactly what Xiaomi is going to do next.
Currently Xiaomi’s consumer IoT platform has connected more than 100 million smart devices, accounting for 1.9% of the global consumer Internet of Things market, far more than Apple,AmazonAnd other giants. The number of MIUI monthly active users has also exceeded 190 million. The average per-user Internet service revenue also increased from 28.9 yuan in 2015 to 57.9 yuan in 2017, and revenue doubled.
According to data from iResearch, in 2017, Xiaomi artificial intelligence speaker shipments ranked first in China. As of March 31, 2018, "Little Love" installed more than 23 million units and had 13 million active users. It was able to control the 118 models of the Xiaomi platform. The application scenarios cover content, productivity tools, and other forms of interaction, which provide Xiaomi with greater advantages in the areas of big data and artificial intelligence.
In the prospectus, Xiaomi said that in 2018, the average time Xiaomi users use Xiaomi’s mobile phones every day is about 4.5 hours. Compared with other Internet platforms that have high cost of receiving customers, Xiaomi’s process of acquiring users through hardware sales is profitable.
According to sources close to Xiaomi, the initial version hoped that the comprehensive net interest rate of the hardware would not exceed 3%, but at the strong request of investors, this figure was finally raised to 5%. Although in the highly competitive mobile phone industry, the net rate of pure hardware is generally very low, but before the millet IPO announced such a low net rate of hardware, the impact of raising the millet's listing valuation is undoubtedly negative.
From the perspective of the proportion of business operations, smartphones accounted for Xiaomi’s revenue share decline. The proportion of IoT and consumer products and Internet services accounted for Xiaomi’s revenue increased.
It is understood that Xiaomi is actively promoting the process of listing on A-shares and Hong Kong stocks. However, the U.S. conference members are currently urging the investigation of data sharing between Google and Twitter and domestic companies, including Huawei and Xiaomi.TencentAnd other companies. Affected by this, Tencent dropped 3.3% last Friday. As Xiaomi and Google also have relatively close cooperation, this incident may affect the valuation of Xiaomi’s IPO in Hong Kong and the interest of US investors in Xiaomi’s investment.
Sohu Technology / Tintin