Lei Jun said, 'The kind person is not too bad luck.'
Mobile phones and hardware are the most cost-effective products, and the promised comprehensive net profit rate never exceeds 5%. It is an important reason for the rise of millet for consumers.
However, Xiaomi is not so gracious to Hong Kong local and Hong Kong stock investors. It is optimistic to estimate that Xiaomi will be worth between 80 billion and 100 billion US dollars in 2020. If it is listed at half of this expectation, investors will face much less risk. .
Valuation once declined and fell
In January 2010, it was incorporated in the Cayman Islands. The founder subsequently obtained 162.5 million Class A ordinary shares and 57.5 million Class B ordinary shares. Class A had 10 votes to vote.
From September 2010 to August 2017, six rounds of financing were carried out (of which B, C, E, and F included a number of small rounds), and a total of US$1.58 billion was raised (there was a 'one split four' in between). .
After the listing, the preferred shares held by investors will all be converted into Class B ordinary shares. Special rights such as 'preferential dividends', 'redemptions', 'priority investment rights', 'information rights' and 'anti-dilution and veto powers' will be implemented. Failure.
According to the IPO documents, the F-1 round of the first stock purchase agreement was signed on December 23, 2014. The subscription price is US$20.168 per share (the corresponding market value is US$45 billion), and the F-2 round subscription ended on August 24, 2017 The price was $17.927 per share. In the end, F-round investors calculated that they received 2.7% of the shares for $1.134 billion and the market value was $42 billion.
It seems that Xiaomi did not complete the 'pair of gambling' with the F round of investors, but had to issue 8.38 million preference shares at a low price, and the valuation level led by this round was reduced to 42 billion US dollars.
From 2015 to 2017, Xiaomi’s valuation not only failed to rise in one penny, but also pulled back from US$45 billion to US$42 billion. It is widely believed that in 2018, Xiaomi will be listed at a valuation of US$70 billion and rushed to 100 billion US dollars. What has been reversed is not only mobile phone sales, but also TA's valuation #
On April 2, 2018, after issuing 64 million Class B shares to companies controlled by Lei Jun, the total share capital reached 2.094 billion shares.
Before the listing, if the A to F series of preferred shares were all converted into common stock, it would be exactly 50.1% of the total share capital. Since the Series A preferred stock was held by Lei Jun and his team, the founder's team controlled the stock ratio of about 69%. The IPO issued 10% new shares, and the founder team's holdings were diluted to 62%. After listing, it will surely continue to raise funds through additional issuance, and Lei Jun’s control over Xiaomi will be threatened.
Lei Jun and Lin Bin held 31.1% and 13.3% of the shares respectively, which was 44.4% in total. Due to the difference between the voting rights of A and B shares, the voting rights of the two founders were 55.64% and 30.04% respectively. The total was 85.64%. of.
It can be seen that the Exchange's acceptance of different rights in the same shares is a necessary condition for Xiaomi’s choice of Hong Kong.
How to understand the huge losses caused by changes in the fair value of preferred shares?
Due to the change in the fair value of preferred shares, a huge loss of 43.9 billion in 2017 and a net loss of 127.2 billion in net assets caused widespread concern.
Xiaomi is listed on the Hong Kong Main Board and adopts International Accounting Standards (IFRS). The people familiar with the company are using the American Accounting Standards (US GAAP). The two standards deal with preference shares very differently.
There are few people inside Xiaomi who know in advance the details of the prospectus. It is estimated that the public relations department sees the data in a ignorant manner. The argument on the Internet is now chaotic: 'Mill's loss exceeds 400 billion yuan? Nonsense' Millet's net assets are negative 120 billion? 'Changes in fair value losses will disappear as soon as they are listed.' 'The more losses this means, the more millet is getting more cattle'...
First understand the preferred stock. The word 'priority' is for common stock. The main terms of Xiaomi’s issuance of preferred stock include:
Priority for dividends: Same as ordinary dividends (if any) plus an annual interest rate of 8% of the issue price;
Conversion: Conversion to Class B common stock at any time after July 3, 2015;
Redemption: Redemption of Xiaomi at any time from December 23, 2019 (except for F series);
Liquidation priority: In the event of dissolution or liquidation of the company, after the payment of all creditors' rights, the remaining assets will be distributed to other shareholders.
The above-mentioned "priority" is the price to give up the right to vote. Do not worry about the control side, is the most important reason why many start-up technology companies financing through preferred stocks.
Second, look at how international accounting standards deal with preferred stocks. IFRS considers preferred stocks as financial liabilities, owes them to stocks. 'Iraine movie tickets' goes to the cinema and asks 'how much?' owe investors For stocks, the number of 'stocks' is the fair value.
Prior to the conversion of preferred shares into common shares, Xiaomi calculated liabilities based on stock valuations at the end of each financial year: 89.9 billion at the end of 2014, 105.9 billion at the end of 2015, 115.8 billion at the end of 2016, and 161.45 billion at the end of 2017.
Let's use a story to illustrate the situation of Xiaomi:
A North drift went to Beijing in 2013. At that time, the monthly income was 4,000 yuan, and the rent of 20 square meters 'opening room' was 2,500 yuan, which was really unaffordable.
Then he signed a long-term rental agreement with the landlord: he did not pay the rent for the first five years; he retire from January 2018 and gave half his income to the landlord.
When signing the agreement in January 2013, he converted his current income from January 2018 to December 2049 to a current value of approximately 2 million yuan (a discount rate of 5%), half of which was 1 million, and spread to 37. For each month of the year, the current value of rent in 2013 is 2,250 yuan.
As a financial lover, he made a balance sheet for himself when he signed the contract in 2013. There is one item in the book: 'Our Landlord 1 Million'.
At the end of 2014, given that income growth exceeded expectations, he believed that the discounted value of total income from 2018 to pre-retirement was 2.4 million yuan, and the debt to the landlord was 1.2 million yuan.
At the end of 2015, the end of 2016, and the end of 2017, he revised the expectations for revenue respectively. By the end of 2017, the debt to the landlord will have become 1.8 million.
In fact, lowering income expectations can reduce debts. Unfortunately, he too wanted to prove to his girlfriend that he had a lot of money.
Since 2018, he has changed the method of accounting: Half of the money he has made to the landlord, is it not my shareholder? Then he came to a 'debt to equity'.
The situation of the participating millet IPO investors is basically the same as that of the heroine's girlfriend: The boyfriend has no debt, but half of the income will be taken away.
The decline and reversal of mobile phone sales prompted Lei Jun to 'lose'
Xiaomi has three main businesses: Mobile phones, oT and consumer products and Internet services. In 2017, mobile phone sales revenue was 80.6 billion yuan, accounting for 70.3% of total revenue; IoT and consumer products sales revenue was 23.4 billion yuan, accounting for the total number of camps. 20.5% of revenue received; the above two hardware businesses accounted for 90.7% of revenue.
In 2017, Xiaomi sold 91.41 million mobile phones, up 64.9% year-on-year; mobile phone sales revenue was 80.6 billion yuan, up 65.2% year-on-year; in 2016 and 2017, Xiaomi's mobile phone sales price was 880 yuan and 881 yuan, respectively, with little change.
In 2017, 28% of Xiaomi’s revenue comes from overseas markets. Especially in India, Xiaomi's smartphone market share exceeds 30%. However, due to market and non-market factors, it is very difficult to further increase market share. If India is to protect Local brands slightly increase tariffs and non-tariff barriers, and millet mobile phone sales will fluctuate.
Although there are three main businesses, IoT and consumer products and Internet services are fundamentally based on the mobile phone sales business. It can be said that all Xiaomi's sales are based on mobile phone sales. This is the same as Apple, if the iPhone is sold in a slump, any other business Can not be spared.
It is worth noting that in 2016, Xiaomi's handset shipments dropped by 9.2% year-on-year. Lei Jun boasted of 'bad things have become better'. After no sales decline in any mobile phone company in the world, they could be successfully reversed except for millet!' #Users Point out that both OPPO and VIVO have experienced sales declines#
Similar to Wang Xing, Lei Jun also wanted to swim in the Pacific Ocean and couldn't wait to land ashore. Until 2015, he declared that he would not be listed within five years. Although A-E preferred stock holders have the right to demand redemption after December 23, 2019. , Lei Jun expects that as long as Xiaomi’s performance is flourishing, no investor is silly to quit.
Mobile phone sales actually fell in 2016. The valuation in August 2017 was still $3 billion less than in December 2014.
'I wouldn’t be too bad luck'. I'm afraid that mobile phone sales in 2017 will miraculously reverse.
If there is a decline again, will the god of luck still come?
Taking advantage of reversal to seize the time of 'goingshore', this should be Lei Jun's mentality. It can be said that the decline in mobile phone sales in 2016 and the 2017 reversal are the key factors that prompted Lei Jun to 'lose'.
How much is the value of millet?
Tiger sniffed on May 3th article that "the most optimistic estimate, Xiaomi is not worth 100 billion US dollars by 2020."
The article assumes that millet revenue will increase by 70% every year for the next three years and reach 563 billion by 2020. Xiaomi would not dare to make such optimistic forecasts. It is necessary to know that in 2016, the year-on-year growth of millet revenue was 2.4% and 67.5% respectively. .
The article assumes that millet's net profit rate will reach 5%, and its net profit will reach 28.2 billion in 2020. It is necessary to know that Xiaomi did not achieve stable profit under International Accounting Standards until 2017.
The article is based on a valuation of 20 times P/E for millet in 2020. The conclusion is 564 billion yuan, or about 90 billion US dollars. It is necessary to know that the Hang Seng Index P/E is only about 15 times.
Some readers believe that it should not take the Hang Seng Index's P/E as the millet's valuation. Then use Coolpad, or use Apple's? When Cool Scenery, the sales rate is only 0.5 times, and Apple's P/E ratio is only 18 times.
Tencent! Tencent! Tencent P/E ratio of five to sixty times ... Tencent is a pure Internet company! Besides, Xiaomi's position in China's mobile phone manufacturers can be compared with WeChat's status in the social field (according to 2017's share in the Chinese mobile phone market) , Xiaomi just barely among the frontline)
Lei Jun said that Xiaomi is an "innovation-driven Internet company." But how can a pure Internet company rely on hardware to drive business? At the very least, it pays attention to the pre-installation of Android app and app store. Apple is no exception. Investors highly value each generation of iPhone. Shipment data. So, Apple is not a pure internet company, and it is less than 20 times PE.
Investors should learn from veterinarians and listen to or listen to what the company says. They only look at how the company does it. From the point of view of 'veterinary', Xiaomi is a hardware company that focuses on cost-effectiveness, and 20 times PE is not grievous.
You can also use millet summation (SOTP) to value millet.
The mobile phone business PS (market sales ratio) should be between Cool and Apple. When the cool shipment was squeezed into the fourth place in the world, it only got 0.5 times PS in the Hong Kong main board. Apple's current market value is about 40% of 2017 revenue. Times. Considering that Apple's net profit rate exceeds 20%, Xiaomi promised that the net profit rate should not exceed 5%. Therefore, Xiaomi's mobile phone business has a maximum PS value of 2 times (four for Cool, and one for Apple). With 80.6 billion sales revenue, Xiaomi's mobile phone business valued at 161.2 billion yuan, or about 25 billion US dollars.
IoT and consumer products business can refer to Gree (000651.SZ). Gree revenue in 2017 was 148.3 billion; gross profit, net profit were 48.7 billion and 22.4 billion, respectively, and the latest market value was 276 billion. In 2017, Xiaomi IoT and consumer products Sales revenue is equivalent to Gree's 16%, gross profit is 4/1000th of Gree's net profit. Xiaomi's business is worth a quarter of Gree, 69 billion, or about 11 billion US dollars.
Internet services refer to Kingsoft (03888.HK). Jinshan Software revenue in 2017 was 5.18 billion, gross profit was 3 billion, and latest market value was 33.2 billion. Millet Internet service revenue was 9.9 billion, gross profit was 6 billion, and valuation should be one of Jinshan's Times, that is 66.4 billion Hong Kong dollars, about 8.5 billion US dollars.
The merger of the three major industries, millet's overall valuation of about 44.5 billion US dollars.
Some people may say that there are 'eco-reversals' between the three main industries of millet, and the valuations are simply underestimated.
You must know that the capital market believes in physics and hates chemistry.
The ready-made example is BYD, with the latest market value of US$21 billion. The business of BYD is divided into four parts: new energy vehicles, power batteries, fuel vehicles, mobile phone parts and assembly:
In 2017, BYD's new energy vehicles delivered 110,000 units. It is estimated that Weilai Motors, which will be listed in the United States this year, will not deliver one. The IPO target valuation is US$36 billion. BYD's new energy vehicle business should not be lower than Weilai.
The Ningde era will have an estimated IPO of 130 billion yuan. After a few daily limit, the market value will not be lower than 200 billion yuan. Even though BYD's power battery is half the value of the Ningde era, there are also 100 billion yuan, or about 16 billion US dollars;
The battery, mobile phone parts and other services were incorporated into the market value of BYD Electronic (001211.HK) of HK$65 billion, approximately RMB 52 billion;
The automobile business in 2017 had a revenue of 56.6 billion yuan. Assume that the number of fuel vehicles and electric vehicles is 40 billion yuan and 16.6 billion yuan respectively. Then, the partial sales rate of the fuel truck at 1 times can be valued at 40 billion yuan.
Four businesses totaled, excluding rechargeable batteries, cloud tracks, with an overall valuation of more than $66 billion.
Fuel tankers and new energy vehicles have more than 80% of the same components. Talent, technology, production facilities, and sales channels can be shared everywhere. Power batteries are used to support new energy vehicles. At least these three businesses are 'reverse'. how about it?
There are many similar examples. For example, iQiyi has a separate valuation of A, and Baidu has a valuation of B. Before splitting iQiyi, Baidu had a market value of 'BA' instead of 'B+A'. Another example is the ratio of shares held by Baidu. , Sohu holds Changyou, Sogou’s equity market reached US$2.8 billion, while Sogou’s market value was only US$1.7 billion.
Under normal circumstances, the valuation method calculated by the classification summation method is higher than the actual market value.
However, Mito's 'stunt' is not 'adding' but 'lighting': Most of the revenue comes from mobile phone sales, but it leads the market to value itself as an internet company.
In the three fiscal years disclosed in the IPO documents, one of the three financial year saw a decline. It can be seen that Xiaomi’s mobile phone sales are not steadily increasing, and the decline rate is not small.
In 2017, Xiaomi’s mobile phone market share in China was 11%, compared with Huawei (23%), OPPO (17%), and Vivo (16%). There was a considerable distance and it was only able to barely reach the front line.
With Xiaomi's market position, who would dare to ensure that the volume of mobile phones will continue to grow, and if it declines again, what will be the reasons for the purchase of millet stocks at a valuation of 100 billion US dollars?
When the market value is decoupled from the shipment of mobile phones, Xiaomi can count as a real Internet company. The valuation of IPO is high, and the kindness of Xiaomi is learning from Mito, which is not very kind to investors.