On March 23rd, the Torch Center of the Great Wall Strategic Consulting and Technology Ministry and the Zhongguancun Administrative Committee jointly issued the 2017 China Unicorn Enterprise Development Report and the 2107 Zhongguancun Unicorn Enterprise Development Report. Xiaomi’s US$46 billion valuation ranking Third, the ranks of ant gold suits, after the droplets travel.
Prior to this, the millet IPO and its valuation issues have been receiving much attention from the market. Xiaomi’s chairman Lei Jun’s resignation of the management positions of companies such as Cheetah Mobile was seen as a signal to prevent associated transactions and promote the Xiaomi IPO. Earlier, Xiaomi Bracelet manufacturer Huami Technology listed on the US stock market has also been considered outside the market for Xiaomi's overall road map.
There have been multiple versions of millet's valuations, up to a maximum of US$200 billion. In recent days, a referral material about the Xiaomi Pre-IPO has been circulating on the Internet and Xiaomi’s valuation has once again become the focus of debate. According to the data disclosed in the materials, Xiaomi did not comment on the report. However, a number of industry sources told reporters that the market value of millet did not appear to be as good as the market, but the market rebounded and the market value rebounded.
Software and hardware enterprise dispute
According to the above promotion materials, Xiaomi’s 2015 loss was 980 million yuan, 2016 was 913 million yuan, 2017 was expected to reach 7.582 billion yuan, and the profit rate was 6.5%. It is expected to increase to 18.831 billion yuan in 2019. 2016-2019 During the year, the compound annual growth rate of millet net profit reached 174%.
The promotion materials also introduced that in 2016, Xiaomi’s revenue composition, 79% came from hardware and 21% came from internet service business. The net profit margin of hardware business was only 2.8%, while the net profit margin of internet service business exceeded 40. %. Xiaomi is expanding the proportion of revenue from Internet service business. In 2017, it is estimated that the revenue of Internet service business accounted for 68.3%. It is estimated that by 2019, the proportion of revenue of Internet service business will exceed hardware revenue.
According to the above materials, Xiaomi’s main business is still hardware, but hardware equipment does not make much money, and profits mainly come from Internet services. In the industry view, the entrance of Internet companies, the subsequent profit space is often stronger than the hardware company, and the prospects are broader. , Easy to get a higher valuation. Millet is also more willing to advertise itself as an Internet company to get more investment returns. And the industry is still a debate about whether Xiaomi is a hardware company or an Internet company.
A few days ago, a newspaper reporter obtained information from a brokerage institution that Xiaomi claimed to be a global leading high-end smart phone, Internet TV, and a smart home ecosystem technology company.
The trust expert Sun Fei told the reporter that general hardware companies and software companies have an industry average level, and they are different domestically and abroad. In A-shares, Hong Kong stocks, and US stocks are listed differently, Internet companies in the US Nasdaq Valuation will be relatively high. 'Some software companies involve core competitiveness, independent intellectual property rights, and more patents. Valuation will be higher. Some hardware companies will have better growth and valuations may be higher. Each sector will To form an average price-earnings ratio, according to his growth, profits, there is basically a stable level of valuation. 'Fei Fei introduced, Apple's current market value of 900 billion US dollars, it is precisely because it is not only one can get high through the sale of hardware Profit companies can also obtain more profits through core services, patents, and proprietary software services. At present, though Xiaomi is also a hardware company, it also has many ecological chain entrances such as mobile phones, televisions, and computer accessories. Business is not a complete hardware company or Internet company. Xiaomi’s core industry is still a hardware business, and its profitability is comparable to that of the Internet. Services business disparities.
Rebound valuation
According to information obtained by reporters, Xiaomi, which was established in 2010, had previously gone through five rounds of financing. Among them, the valuation of 250 million U.S. dollars after the first round of financing in 2010; the estimated value of 1 billion U.S. dollars after the second round of financing in 2011 was promoted to Unicorn Enterprise; valuation of US$4 billion after financing in 2012; valuation after financing reached US$10 billion in 2013; estimated value of US$46 billion after refinancing in 2014; expected sixth financing in February 2018, Approaching this round of share transfer valuation reached 55 billion U.S. dollars. Later listed in the second half of 2018, the estimated market value can reach 200 billion U.S. dollars. But in fact, the sixth financing has not been finalized yet.
In 2014, Xiaomi’s valuation reached US$46 billion, which also made it the world's most valuable private technology company. Lei Jun said that in 2014 Xiaomi sold 61.12 million mobile phones, becoming the top five in the world and the first in the country. In 2015, Xiaomi began to decline, with more than 70 million mobile phone sales, and a market value of US$45 billion. In 2016, Xiaomi’s mobile phone sales declined sharply, and only 41.5 million mobile phones were sold. Shipments fell sharply throughout the year. 36 %, even once fell out of the top five in the world, the market value also decreased accordingly.
In the “2017 Hurun Greater China Unicorn Index” issued by the Hurun Research Institute, Xiaomi’s valuation is only US$30.7 billion. Until the second half of 2017, Xiaomi’s mobile phone will rush through the Indian market, and in 2017, Xiaomi’s mobile phone will The shipment volume is expected to exceed 90 million units. In the same year, Huawei shipped 153 million units. Xiaomi has returned to the top five in the world. According to Sun Yongjie, with the development of the industry, the industry’s requirements for mobile phone manufacturers are also increasing. The intensity of competition in the market has increased. Compared with 2014, Xiaomi only rebounded.
The above promotion materials also disclosed that the current millet's valuation is 68 billion US dollars, if the market is listed in the fourth quarter of 2018, the market value will be in the range of 85.4 billion to 135.1 billion US dollars. It is said that millet's valuation is even as high as 200 billion US dollars However, a number of industry insiders believe that millet's market value is too high and the reasonable valuation is about 50 billion US dollars.
'The reason why this is so, or for capital considerations, this is just a publicity gimmick, under the hype the valuation can be relatively increased, but in fact the current valuation of millet 50 billion to 60 billion US dollars is more reasonable. 'IT industry independence Sun Yongjie, an analyst, said that Lei Jun is a person who is familiar with the operation of capital. Xiaomi's performance shows that he is well aware that more than 100 billion yuan in revenue, the profit is about 1 billion US dollars. If Xiaomi’s valuation is too high, the listing can't get high quickly. With increasing earnings, the stock price may go down.
The first researcher of the mobile phone industry, Sun Yanyi, believes that Xiaomi’s 100 billion US dollar valuation is still possible. As for the valuation of 200 billion US dollars, it cannot be based on the conventional 10-year P/E ratio. It may take 20 years to consider. A 10-year P/E valuation.
How to support profit growth?
Although there are many entrances and future listings, we must also see whether it can obtain more innovations, and whether the ability to realise the entrance can be translated into real business value.' Sun Fei said.
Millet's equipment, applications, and services need to form an ecosystem like Apple's. Software services, the entrance to translate into effective business value may still need a long way to go. Some people in the industry said that the profits of millet now disclosed The compound annual growth rate can reach 174%. This data is too high. As of now, Xiaomi’s main high profit depends on the profits of Internet services, mobile phones, and Mijia ecological hardware. The growth in revenue does not support Xiaomi’s rapid profit growth.
According to public statistics, millet’s 2017 net profit is expected to reach US$1 billion, which is similar to the estimated RMB7.582 billion (approximately US$1.1 billion) in 2017 as disclosed in the above financing materials. Then the compound annual growth rate of 174% can be realized in the future. Sun Yongjie believes that as the base increases, Xiaomi’s difficulty in realizing these results will also increase. It will be relatively unfavorable to maintain this growth rate in the next year or two years, and it will depend on Internet services.
In addition, Sun Yongjie believes that for Internet companies, they have traffic, and the entrance is only the foundation. It is another matter whether traffic can realize real business value. For Xiaomi, the mobile phone business is the core of Xiaomi, TV, computer, etc. The relevant hardware can bring more value to Xiaomi, but the biggest shipment is the mobile phone. Xiaomi's hardware ecology and the Internet portal are interdependent. For this reason, Internet services still need to rely on Xiaomi's own hardware brand support. There is one thing that doesn't work, and the other one is not possible. The opportunity is great and the risk is the same. ' Sun Yongjie said.