Recently, the founder of Xiaomi and the chairman Lei Jun repeated their enrollment. He first announced at the Xiaomi 6X conference at his university’s Wuhan University that the overall consolidated net profit after tax for the entire hardware business (including mobile phones and IOTs and consumer products) does not exceed 5% per annum. Then he sent a letter to all employees to announce a new round of company executives' adjustments. He appointed CFO Zhou as the senior vice president of the company and took over the business of finance, investment, and HR.
According to reliable information obtained by Phoenix.com, Xiaomi will apply for an IPO in Hong Kong this week and will be listed from June to July. It will be the first company to adopt the “shares with different shares”. Although we haven’t waited for Xiaomi's prospectus, we might as well First draw a focus.
After all, even if you are a 'Super Tech Unicorn', can you run it? Always take it out.
Aspect 1: Lei Jun said that millet hardware net profit rate never exceeds 5%, will face?
This may be the most concern of the entire industry recently. After all, Xiaomi is not just a mobile phone. Lei Jun said that the upper bound of the net profit rate of this hardware is too wide, and the industries affected are really too much. According to Lei Jun’s own words, Xiaomi Ecology The chain has penetrated more than 100 industries.
First of all, let's be clear. What is 'comprehensive net profit rate'?
There have been media analysis before, if you take a single millet phone such as millet MIX2S, multiplied by 5% to calculate, this price of 3299 yuan mobile phone, single product can earn 164.95, but this is not a comprehensive net profit margin.
Comprehensive post-tax net profit is an overall concept. The operating income is deducted from the various cost expenses, including R&D, sales, advertising, etc., divided by the net profit rate after operating income.
According to Sun Yanxi, dean of the first mobile phone industry research institute, the average comprehensive net profit rate of domestic manufacturers is 10%, and Leijun’s 5% is not high. Moreover, according to the pre-IPO financing promotion materials that have been circulated in the industry, Xiaomi The net profit margin of the hardware business in 2016 was only 2.8%.
Of course, the so-called “financing promotion materials” do not come from the millet official, but some of them may come from early investors selling old shares. Therefore, at the moment, if these figures are generally credible, between 2.8% and 5%, they will remain. Quantity.
So, what kind of real data is, you have to look at the prospectus. Therefore, when you look through the prospectus submitted by Xiaomi, you can know if the 5% figure will be hit. This will be the biggest prospect of the prospectus. One of the points.
Aspect 2: Millet does not make money in the end?
From the first day of Xiaomi’s birth, Lei Jun had been saying that Xiaomi’s mobile phone was hardly profitable.
It is wonderful that in this 'almost', in the end how much profit is considered 'nearly profitable'? And Rebs recently announced that the comprehensive net profit rate of hardware does not exceed 5%, which is obviously putting pressure on profitability. According to 5 % speculates that Xiaomi’s hardware earning power is basically a measurable amount of data. So everyone should care more about Xiaomi’s internet income and investment income.
There is one point to pay attention to. The prospectus usually has hundreds of pages. There may be a lot of different data calibers containing the word 'net profit', such as 'unaudited net profit', 'operating profit', 'after adjustment. The net profit' and so on. Moreover, the Hong Kong Stock Exchange and domestic A shares, US stocks also have slightly different accounting standards, and it is easy to look faint.
So what kind of data is reliable? It can be concerned about two data, one is 'operating profit' and the other is 'adjusted net profit'.
This 'adjusted' statement is very common. Everyone must remember the huge loss at the time of the Mito IPO. In fact, there are not many Internet companies listed in Hong Kong. The accounting standards are not the same as in the United States. Meitu has eaten 'great losses' in those years. This is a loss. Explain to everyone.
Internet technology companies usually issue a lot of preferred shares to investors when they raise funds. If the valuation starts from tens of millions of dollars to several ten billion dollars, the value of these preferred shares is also magnified many times. The financial float of shareholders The profit has also increased N times. However, these shareholders have not yet withdrawn, so their investment value will be considered as the company’s liabilities to these shareholders in the financial statements. I don’t know if Xiaomi will encounter similar problems this time. Case.
To see if the Internet company is profitable, it is not just to look at net profit, but also to see operating profit and adjusted net profit. These two figures exclude interference factors such as financial accounting.
Aspect 3: How many shares did Lei Jun occupy in Xiaomi in the end?
Before the media reported that Lei Jun’s share in Xiaomi’s shares was as high as 77%. But before the prospectus was released, this figure can only be seen. How many stocks does Lei Jun have in Xiaomi in the end? I believe this is what we all want to know. After all, this may be related to the ownership of China's richest man's title this year.
In addition, Xiaomi is expected to become Hong Kong's first batch of 'shares with different rights' listed companies. Different shares of the same rights, that is, some of the shares held by the management of the voting rights are much larger than ordinary shares. Simply put, according to the Hong Kong Stock Exchange New Deal, Lei Jun may There is a group of stocks that have super-voting power. Compared to ordinary stocks, the 'right to talk' has at least 1 top 2 shares, and at most 1 top 10 shares. Theoretically, if Lei Jun owns all stocks with super-voting rights, at least With 9.1% of special equity, you can guarantee that the voting power exceeds 51% and firmly control the company's control.
In addition, the previously networked employees within the millet work number 1000 will achieve different levels of financial returns after the listing of the company. In the latest personnel adjustment, the two co-founders of Xiaomi Zhou Guangping, Huang Jiangji resigned from management for personal reasons. Without the company's position, the restrictions on the liquidity of the listed stocks will be much less.
If the prospectus reveals the proportion of Xiaomi executives’ holdings, and according to a reasonable valuation range, what would these executives become worth after Xiaomi’s listing? This is also a matter of concern to everyone.
Aspect 4: Did Xiaomi really be like an Internet company?
Xiaomi throws a 5% figure on the eve of the listing. In fact, it is more like setting a future goal for Xiaomi and setting a limit on the net profit margin of hardware. Tell everyone: 'We are an Internet company. We are not relying on hardware to make money on traditional hardware. Manufacturers. '
According to the so-called “recommendation” data currently available, Xiaomi’s revenue is 21% from the internet service business, with a gross margin of over 40%.
So, how do you determine whether a company is an Internet company? There are probably so many aspects.
First, there must be a large-scale Internet business. If the basic scale of the Internet service is not available, then there is no way to talk about it. Second, the Internet business is the main source of profit. For example, just look at the Apple App Store, Apple Music and other Internet properties. Businesses earn more money than many Internet companies, but Apple's profits are still mainly from hardware profits, so Apple is still the home hardware company.
Third, the business income of Internet attributes should show rapid growth. Internet companies are all based on massive user bases. The higher the user's stickiness, the better, the longer the use time, the better. The lower the customer cost, the better.
Therefore, Xiaomi is not an Internet company. To find the answer in the prospectus, look at these three groups of data: How much is Xiaomi’s Internet income, how much is Xiaomi’s Internet profitability, and how many live monthly users of Xiaomi’s Internet business, how long it takes, and how much it costs? .
However, from Xiaomi's business model, it is now known that Xiaomi's Internet business should not have the cost of receiving customers. After all, it can be directly converted by mobile phone users.
Aspect 5: How large is Xiaomi's ecological chain?
Xiaomi started to lay out the ecological chain from 2013. It has a mobile phone as the core, and its peripheral products include headphones, small speakers, mobile power, and air purifiers, rice cookers, water purifiers and other small household appliances. There are also some things to play, such as Sweeping robots, there are some necessities of life, such as toothbrushes, mattresses.
Some of these companies have even taken the lead in the world and have taken the lead in the capital market. For example, Millitech, a millet bracelet, was listed in the United States last year.
How much profit does Xiaomi's products make? How about the profitability rate? In the last year, Xiaomi's ecological chain company has exceeded 100. Now how much this number has become, what is the relationship between these companies and Xiaomi?
There should be an answer in the millet prospectus.
Aspect 6: After Xiaomi is listed on the Hong Kong stocks, will he still go for A shares?
Not surprisingly, Xiaomi should be the first listed company after the implementation of the Hong Kong Stock Exchange's New Deal. At the same time, the CDRs of domestic A-shares are also in constant circulation.
CDR is the English abbreviation of Chinese Depository Receipt (Chinese depository receipt). It means that an overseas listed company entrusts some of the issued shares to local custodial banks, is issued by a depositary bank in China, is listed on the domestic A-share market, and is settled in RMB transactions. , Investment certificates for domestic investors.
Internet companies landing A-shares is a “profound” problem because A-shares IPO audit mechanism requires the listed companies to continue to profit for three consecutive years, and there are also restrictions on the ownership structure of the company. So 'BAT' chooses Hong Kong, China, US Capital Markets Listing.
At the beginning of this year, CDR was rumors buzzing. There are a number of Chinese Internet listed companies saying that they will return to A. Xiaomi was also reported to have Hong Kong + CDR achieve Hong Kong stocks and A shares at the same time. Legends have been guessed as an annual suspense drama. .
Now Xiaomi goes to Hong Kong for listing, let the rumors be confirmed first. Will the news of the CDR be received in the near future? This can be seen in the Xiaomi Hong Kong prospectus, which has no mention of this information.
Aspect 7: Will millet's valuation break 100 billion?
Lei Jun can not top China's richest man, in addition to see how many of his millet shares, but also see what the company's valuation is ultimately.
Milly's valuation ranged from 50 billion U.S. dollars, 80 billion U.S. dollars to 100 billion U.S. dollars. Which one is accurate? That's a question of how to look at the valuation model of Internet companies.
Unlike domestic capital markets, we are accustomed to looking at consumer companies and industrial-type companies, nothing less than watching the net profit this year, and then measuring the net profit for the next year, multiplied by an industry average multiple of the price-earnings ratio.
But for Internet companies, this valuation model is difficult. First, the Internet company may not be a positive net profit. Second, even if it is a positive net profit, the company's revenue and gross profit growth rate is as high as 100%, 200%. It's not new, but this kind of growth rate is a figure that we can't complete for a traditional company that we are familiar with.
The valuation of Internet companies is more about the number of users of Chinese companies, the cost of customers, and the growth rate of earnings, which is the growth of the company. The market value of Apple is 840 billion US dollars, and the price-earnings ratio is about 18 times. Tencent's market value is 372 billion yuan, and the price-earnings ratio is about 43 times. Amazon's market capitalization is 750 billion U.S. dollars and its price-to-earnings ratio is about 320 times.
Millet can afford more valuations, depending on whether the data in the prospectus shows sufficient growth. Based on previous public reports, compared to the mobile phone business, the eco-chain products with a greater profitability contribution imagination space, the Internet service camp The changes in the level of revenue and gross profit over the years are more worthy of attention.
Aspect 8: What about Xiaomi's overseas market?
Xiaomi has been tossing overseas in recent years. According to the latest news, India has consistently won 31% of this exaggerated market share. In addition, Xiaomi himself advertised that he performed well in Indonesia, Eastern Europe and other places. Now the beginning of the Western European market has also gone smoothly.
So, does the overseas market account for more than a small plate of millet? Does millet really rely on overseas markets to maintain its growth? After all, China’s domestic market is already a zero-sum competitive market. Xiaomi’s high valuation must rely on the long-term high growth rate to support it. , it must look overseas.
Xiaomi’s recent overseas market performance of special books, especially in the Indian market, can be seen in Xiaomi’s overseas market change data for the past three years in the prospectus.
Of course, the above is merely a forecast. What is the actual prospectus? We will pay close attention to it and read it at the earliest time after the publication of the prospectus.