Initially, the company counted on a mark of one and a half to two times higher.
The Chinese manufacturer of smartphones, household appliances and applications Xiaomi held an IPO on the Hong Kong Stock Exchange. Trades began with a mark of 17 Hong Kong dollars (about $ 2.17) per share,. In the first minutes after the start, the value of securities fell by about 3% – to a level of 16.5-16.6 Hong Kong dollars per share.
Three days before the IPO in the gray market, there were applications to buy shares of the company with a discount of 5-10% to the original selling price, which could mean a lack of investor interest in Xiaomi against the backdrop of the China-US trade war , and against the chase of the company for a high estimate, Reuters points out . In early trading, the company raised $ 4.72 billion.
Chapter Xiaomi Lei Jun in a letter to the staff noted that, given the fluctuations in the markets, the very fact of the company’s exit on the stock exchange is already considered a significant success. Xiaomi also planned to enter the stock exchange in Shanghai, but postponed the placement because of additional issues regulators.
The company’s valuation at the beginning of trading was $ 54.3 billion, although in 2017, when preparing an IPO, some top managers of Xiaomi were counting on a mark of $ 100 billion. By June 2018, the company lowered expectations to $ 75 billion, sources said Bloomberg.
According to the estimation of banks Goldman Sachs, JP Morgan and Morgan Stanley, the future of the company’s capitalization could rise to $ 92 billion.
Founded in 2010, Xiaomi last attracted funds in 2014, when the company’s valuation was $ 45 billion. Among its investors are DST fund Yuri Milner, Qualcomm Ventures and other companies.
When we started, Apple and Samsung were market giants, and Huawei and Lenovo were leading in China. It took us three years to become leaders in China and 3.5 years to become the number one in India.
For eight years, the market of terrible Chinese telephones-copies has been completely destroyed, largely due to the efforts of Xiaomi. The quality of smartphones and other devices from China is constantly growing, and prices are falling.
Plans Xiaomi after the IPO
In 2016, Xiaomi experienced a decline in sales of smartphones, and then decided to actively engage in expansion into other areas of business and the development of mobile services, recalls Bloomberg.
The funds raised during the IPO will be used for development in three areas: the growth of the business of selling smartphones, global expansion and the seizure of new equipment markets, Xiaomi Jun told Xiaomi in a letter to the IPO.Founder Xiaomi Lei Jun
In early 2018, international business brought Xiaomi 36% of total revenue. The company intends to overcome the 50% mark, Jun said.
Xiaomi plans to enter the top three of the largest smartphone vendors “as soon as possible,” Jun said. According to IDC, in the first quarter of 2018 the company was on the fourth place in terms of smartphone shipments in the world with a market share of 8.4%. In the first three are Samsung, Apple and Huawei.
In the first quarter of 2018, Xiaomi posted a quarterly net loss of $ 1.09 billion, despite revenue growth of 85.7%. The company was assured that if you remove unnamed “one-time waste” from the account, the profit for this period could reach $ 162 million.
Sales of smartphones in the first three months of 2018 increased, but the share of this business in the revenue of Xiaomi declined to 67.5%. In 2017 this figure was 70%. Approximately 31.8% of Xiaomi’s revenues in early 2018 brought online services (only they brought 9.4%), as well as sales of household appliances and other devices – such as electric cars. In 2017, they accounted for 29% of revenue in 2017.