Author: Li Jing selection
On May 3 of this year, Xiaomi, which was established for eight years, formally submitted the IPO application. Xiaomi is expected to become the first share of the “shares with different rights” of the Hong Kong Stock Exchange and will also be the world’s largest IPO since 2014.
In the Summer Davos Forum in 2016, Lei Jun once mentioned: 'In fact, from the start of the millet model, it was known that it would take 15 years and Xiaomi would not be listed within five years.'
By the end of last year, his tone had loosened: 'It will be more comfortable when the business is IPO.'
For two years, Lei Jun (xiaomi) survived the difficulties and achieved a strong reversal last year.
A week ago, Lei Jun publicly promised at the new conference of Wuhan University that the overall profit of Xiaomi hardware will never exceed 5%. This public appearance was also interpreted as a foreign declaration before the IPO.
From the last official (2014) disclosure of the US$45 billion valuation, to the myth of the estimated $200 billion valuation outside this year, why did Xiaomi choose to list at this time? How much can the final valuation be achieved?
A profitable company
In the past year, Xiaomi’s revenue mainly comes from three major segments: Smartphone revenue was approximately RMB 80.56 billion, accounting for 70.3%; IoT and consumer products revenue was RMB 23.44 billion, accounting for 20.5%; Internet Service Camp 9.89 billion yuan was received, accounting for 8.6%.
According to the prospectus, Xiaomi is essentially an Internet company with mobile phones, smart hardware and IoT platforms as its core.
1, mobile phone
Millet mobile phone as the main source of revenue, sales in 2017 reached 91.4 million units, an increase of 64.9% compared to 2016; revenue increased by 65.21% from 2016.
The prospectus also mentioned that Xiaomi’s revenue in 2017 increased by 67.5% year-on-year, and operating profit increased by 222.7% year-on-year. In 2015, 2016 and 2017, the net operating profit after adjustment of international standard profit or loss was negative by RMB 300 million, respectively 19 Billion yuan and 5.4 billion yuan, a year-on-year increase of 184.2% in 2017. As of March 31, 2018, millet accounted for cash and cash equivalents of 14.22 billion yuan, financial health.
It is no exaggeration to say that Xiaomi had long started making money.
2, Internet service
Although the cell phone is the backbone of Xiaomi, it is not enough to support Xiaomi's overall strategy.
According to the data in the prospectus, the gross profit rate of Xiaomi's Internet services was as high as 60.2%, and the cost of receiving customers was negative. In 2015, 2016 and 2017, Xiaomi's Internet service revenue was 3.24 billion yuan, 6.54 billion yuan and 9.89 billion yuan respectively, which was a compound annual growth. The rate was 74.7%; gross profit was 2.08 billion yuan, 4.21 billion yuan, 5.96 billion yuan, and the compound annual growth rate was 69.3%.
It is worth noting that in 2017, the gross profit rate of Xiaomi's Internet services reached 60.2%, which contributed a lot to Xiaomi's overall gross profit. From the prospectus, it can be found that as of March 2018, the average daily time for users to use Xiaomi’s mobile phones was about 4.5 hours. MIUI monthly active users exceeded 190 million.
3, ecological chain
Look at the ecological chain that began to be laid out as early as 2013 and has inherent advantages. The data is still bright.
As of now, Xiaomi has invested or hatched more than 90 ecological chain companies. The revenue of smart hardware and consumer goods has accelerated in the past three years, which was 8.69 billion yuan, 12.41 billion yuan, 23.44 billion yuan, and rose by 89% year-on-year in 2017. , a compound annual growth of 64.4%.
New battlefield
According to IDC’s global sales report for smart phones in the first quarter of 2018, even with the overall global decline of 2.9%, Xiaomi took over OPPO and Vivo ranked fourth in the world with an increase of 87.8%.
Only from the perspective of shipments, Xiaomi is the world's fourth-largest smartphone manufacturer.
In 2017, Xiaomi's mobile phone sales reached 91.4 million units, a substantial increase of 64.9% compared to 2016, and revenue reached 80.56 billion yuan, a substantial increase of 65.21% from 2016.
It is worth mentioning that according to the data in the prospectus, Xiaomi has entered 74 countries in the world. In the past three years, the income of overseas markets was 4.05 billion yuan, 9.15 billion yuan, and 32.08 billion yuan respectively. The year-on-year increase in overseas revenue in 2017 250%.
In India, Xiaomi (red rice) took the lead in the market with cost-effective advantages. At the end of April, Lei Jun said on Weibo: 'In the first quarter of 2018, Xiaomi’s smartphone market share in India reached a record high of 31%. In the same period last year, 13.1%, Xiaomi’s share in the smart phone market in India has doubled.
In addition to India, Xiaomi also actively expands in markets such as Indonesia, Vietnam, the Philippines, Thailand and Malaysia. From the changes in income composition in the prospectus, one can see the progress of its internationalization: In 2015, overseas income accounted for only Xiaomi’s total income. 6.1%; The following year rose to 13.4%; and in 2017, this share has reached 28%.
Last year, Xiaomi just completed a $1 billion revenue target in India. Not long ago, Lei Jun set a 2018 revenue target of $2 billion for Xiaomi’s vice president, Indian general manager Manu, and Xiaomi India team.
An Indian Internet practitioner told the Interfax News: 'In India, there are still more than 50% of the population (about 700 million people) in the use of feature machines, millet and other domestic mobile phone manufacturers have great opportunities for growth here.
In other words, in the overseas market, Xiaomi is achieving more than double the annual growth, and there is still huge room for imagination in the future.
More lethal, may be based on the ecological chain to build a new retail system.
According to the prospectus, Xiaomi has connected more than 100 million smart devices (excluding mobile phones and laptops). In 2017, according to the number of connections, consumer-grade IoT hardware market share, Xiaomi’s global market share was 1.7%, behind Apple 0.9. %, Amazon 0.9%, Samsung 0.7% and Google 0.6%.
In addition, Xiaomi invested or hatched more than 90 companies that specialize in the development of smart hardware and consumer products. The prospectus shows that Xiaomi’s income from smart hardware and consumer goods has accelerated over the past three years, at 8.69 billion yuan and 12.41 billion yuan respectively. , 23.44 billion yuan, an increase of 89% year-on-year in 2017, a compound annual growth of 64.4%.
Relying on the ecological chain, Xiaomi has transformed into a large-scale e-commerce company. The sales system around the line (Xiao Miwang, Youpin, etc.) and offline (Millet's House, Xiaomi Shop) will achieve what Lei Jun wants to build. 'Chinese Costco'.
According to millet official data: Xiaomi's home (years) Pingyi has reached 270,000 yuan per square meter, second only to the Apple Store's 400,000 yuan per square meter.
As of January 13 this year, Xiaomi House's number of stores nationwide exceeded 300. Lei Jun said at the opening of the flagship store of Shenzhen Xiaomizhizhi that it is expected to open to 500 by the end of 2018 and reach 1,000 by 2019 to form a sales scale. .
Estimated geometry
On May 3rd, the interface news reporter learned from the investment bankers close to the Xiaomi IPO that the Xiaomi Hong Kong IPO plans to raise US$10 billion and the latest valuation is US$100 billion. If this number is reliable, Xiaomi is expected to become Hong Kong’s largest ever. IPO, will also become the world's largest new technology stocks this year.
However, this person's statement also shows that this valuation is not the final result, the bank doing the transaction will be adjusted according to demand.
Normally, at this stage, investment banks and companies are still negotiating valuations, and investment banks will deliberately release some news to test market sentiment. In other words, the current valuation of Xiaomi may change.
But what will not change is the market's enthusiasm for Xiaomi.
A number of analysts told the interface news reporter that Xiaomi’s current valuation is too high, but at the same time, she said that 'someone buys it’.
'As investors, of course, the cheaper the better, but look at the current market response is so enthusiastic, high pricing is no problem. 'An analyst said.
On the morning of May 3rd, Xiaomi officially submitted the prospectus to the Hong Kong Stock Exchange. The sponsors were CITIC Lyon Securities, Goldman Sachs, and Morgan Stanley.
For this "Macro" listing will lead to market funding concerns, analysts told the interface news reporter that in the short term may extract some of the funds, but the impact is negligible and has no impact in the long term.
Some market analysts have stated that the core value of Xiaomi's IPO is to show whether it can achieve higher ROE than that of Gree. Gree is a traditional manufacturer with high profit margin but heavy assets. Xiaomi is light asset and large. Single product, so the core competitiveness is the contrast between the entire organizational model and traditional manufacturers. It is incomparable to extract one or two aspects, so the final result is ROE.
At the same time, according to the latest news, Xiaomi will give priority to the listing of H shares because China Securities Regulatory Commission has not yet announced the details of the implementation of the CDR (China Depository Receipts), and as the regulators will introduce more detailed implementation rules, Xiaomi is likely to choose to list in Hong Kong and then go back to A's listing in CDR form.