On the domestically-made smart phone's super-brand table, there are four such 'top players': Huawei's Ren Zhengfei, Xiaomi's Lei Jun, OPPO's Chen Mingyong, and vivo's Shen Wei. Of course, the hottest player now is Lei Jun.
Over the past week, the entire capital circle, the financial circle, and the technology circle have been shaken by Xiaomi’s application for listing. All sorts of speculations on the listing have always made these 'number one players' feel in conflict. Ren Zhengfei once said that Huawei is not listed in 50 years, and Chen Mingyong also said that he Without paying attention to the financial statements, he fears that staring at profits will easily distort the decision. Lei Jun also said that he would not go public for five years, but he rose and took the lead in submitting a listing application to the Hong Kong Stock Exchange.
With the exposure of Xiaomi's IPO prospectus, the outside world has also been able to take a glimpse of the financial structure of the corporate structure of this giant Internet company that has created many miracles in the history of Chinese business development. Xiaomi’s various details are also just a few days. During the period of time, I was 'pulled over and over' inside and out.
In the absence of surprises, Lei Jun and Xiaomi will be the first group to knock on the door of the Hong Kong Stock Exchange after the implementation of the 'same shares' different rights' new policy. Although Lei Jun holds only 31.41% of shares, but under the system of AB shares, Lei Jun’s voting rights More than 50% have complete voting rights. For the Hong Kong Stock Exchange, which previously missed the IPO of Alibaba, it is naturally unwilling to miss the Internet company that will become the largest new share in this year's Hong Kong fundraising.
Interestingly, with the unicorns, CDRs, and different rights of the same stocks rushed to the ground, the trial policy in 2018 ushered in a remarkable year. Some people commented that it is now the best time for Xiaomi to market, with the best The listing of financial data, a large amount of money before the wind stopped, waiting for the next wave of wind, will be a wise choice for Lei Jun.
As one of the most well-known domestic investors, Lei Jun has already achieved fame and achieved financial freedom. Xiaomi’s listing will be his fourth time rather than the first time. At this moment, Lei Jun wants to tell the outside world: Who is Xiaomi? Xiaomi. Why fight?
It is worth noting that within a short span of ten days before submitting the IPO, Lei Jun made two consecutive decisions that were extremely important in the history of Xiaomi. First, the company announced that it would never make more than 5% of its net profit on hardware. Rate, the other is the 'move' two original veterans in the original eight-dimensional diamond Xiaomi.
Lei Jun said that millet is the last venture of its "complete success in one battle," and it is also a matter that he can't lose. What kind of new story is Xiaomi on the market threshold?
Why do you say IPO?
Since mid-September last year, after the news of Xiaomi’s IPO went bust, there have been news reports from time to time. Why Xiaomi, who is not bad, and Lei Jun, who claimed that he has not listed for 5 years, changed his mind and made the outside world quite curious.
In fact, in March 2016, Lei Jun spoke in detail about interviewing Wu Xiaoli, the famous host.
In Lei Jun’s view, although he has not been reluctant to go public for years, he does not reject it. Before this, many companies including Leishan, Jinshan, YY, and Cheetah were listed. Their understanding of the disadvantages of listing is very clear. Lei Jun is not simple. Think of IPO as a symbol of business success and victory. Your goal is to make a long-term, great company.
Lei Jun admits: 'A great innovation may take three to five years or even ten years. You allow me to submit a financial report every three months, but also to meet the expectations of analysts and the market if the capital market can not complete the analyst The goal is that penalties are very serious and stocks are going to fall. I don't want short-term market factors to interfere with long-term strategies.'
Within four to five years after the birth of Xiaomi, Xiaomi’s annual growth rate is about 100% and about 150%. When a company grows at a very high speed, various kinds of accidents may occur. This situation will be faced if it is listed. Heavier burdens, such as shareholders' desire to maintain 100% ultra-fast growth forever, but this is impossible.
Lei Jun said frankly, only when the company is relatively stable and comfortable to start the listing. Listing for employees who have worked together for many years, which means the realization of past incentives, in terms of shareholders is the cash of the past investment.
Some analysts also pointed out to Times Weekly reporters that with the expansion of Xiaomi's new retail sales, the pace of internationalization is accelerating, and the layout of IoT and the upstream industry chain such as chips, relying on current cash flow and previous financing are not enough. Millet needs to start listing when the valuation is good.
According to a person close to the Lei Jun told the Times Weekly reporter that although the current pricing and valuation of the stock market have not yet been finalized, the reasonable market value is at the level of 70 billion U.S. dollars. It can only be said that there is hope to sprint 100 billion U.S. dollars.
Xiaomi's prospectus shows that millet’s net profit for 2017 is 5.36 billion yuan (equivalent to 846 million US dollars). If the valuation is based on the PE method of the investment bank with a valuation of 70 billion US dollars, Xiaomi’s valuation is as high as 83 times. There are many Internet companies of the same type. According to Hong Jun, managing director and head of research at Bank of Communications International, this valuation is a bit high. Under the current macro liquidity crunch, the market may not be easy to digest.
For Xiaomi's listing, another point of concern to the outside world is Xiaomi's 'making-rich effect.' With the exposure of the prospectus, the 'head' brothers who worked with Lei Jun have become highly wealthy.
Lei Jun, Lin Bin, Li Wanqiang, Huang Jiangji, Hong Feng, Xu Dalai, Liu De, Zhou Guangping, Wang Chuan, hold 31.4%, 13.33%, 3.24%, 3.22%, 2.93%, 1.55%, 1.43%, 1.11%, respectively. If Xiaomi’s final valuation can reach 100 billion yuan, then these co-founders will all have a super-little unicorn company.
According to the Xiaomi IPO prospectus, there are currently 14,513 employees. By the end of March this year, Xiaomi had conducted stock incentives to more than 5,500 employees, which accounted for as high as 38%. The scope and magnitude of such an equity incentive can also be considered as The feat of Internet company equity incentives.
'Actually, if the per capita remuneration of Xiaomi's 280,000 yuan is not a high-paying Internet company, why is it not so high that it can motivate employees? In fact, it is kind to employees. 'According to the internal staff of Lei Jun told the times Weekly reporter, as early as 2014, on the occasion of the third anniversary of the chairmanship of Kingsoft, Lei Jun decided to give the entire 4 million shares of Kingsoft shares to Jinshan employees. Each employee of Jinshan Software Group can get an estimated value of RMB 20,000. .
'For the richest man's title, it can be said that Lei Jun himself does not have any desire for this. He is very low-key, and he is not interested in this. He has also made many internal recommendations. Don't say that he is the richest man. 'The above sources told reporters.
Why adjust senior management?
It is worth mentioning that in the ten days before Xiaomi’s IPO, Xiaomi made two consecutive “very abrupt” decisions for the outside world, triggering a series of reflections.
On April 27th, Lei Jun announced two important appointments and dismissals in his internal letter to Xiaomi: First, he was appointed as the CFO and Senior Vice President of the company for CFO Zhou, and Zhou Guangping and Huang Jiangji, both members of the same millet as the “eight Great Diamonds” of Xiaomi. Resigned from the corresponding position.
It is understood that the eight millenium founders in the millet system belong to the 'Eight Immortals Crossing the Sea and have their own magical powers.' The above-mentioned Zhou Guangping, a well-known expert in the mobile phone industry, previously supervised the Xiaomi mobile phone supply chain business. Huang Jiangji was previously responsible for the Xiaomi cloud service, Xiaomi routers. , Millet Exploration Lab and other projects.
It can be said that the organizational structure adjustment and personnel changes were originally a company's normal actions. However, the above three senior executives were behind Xiaomi's internal roles and visits. More stories are left unsaid, including those that Xiaomi once encountered. Crisis and adjustment of 'rebound'.
Today, Xiaomi, who is standing at the gate of the market, has experienced a period of decline in the market in 2016. He is anxious and has a history of self-doubt. This year, Xiaomi believes that the Internet outlets are hit by ceilings, and the rise of online channels such as OV is also increasing. Giving millet a lot of pressure.
Therefore, Lei Jun realized that there were many unfounded foundations behind the rapid development of the previous years. They needed to take the initiative to slow down and actively make up their classes. Lei Jun conducted a round of executive exchanges, quickly regained the supply chain, and restored the supply chain of Xiaomi. Completed the three tasks of “Innovation + Quality + Delivery” and at the same time made new retail efforts, and actively released production capacity at sea. A year later, in 2017, Xiaomi quickly returned to the forefront of the world.
Xiaomi bluntly stated in the prospectus that there was not yet a mobile phone company that could be successfully reversed after sales fell.
At the same time, on April 25, when he returned to his alma mater at Wuhan University, Lei Jun also made a major decision, promising to 'always insist that the comprehensive net rate of hardware does not exceed 5%'.
Lei Jun said that after making this decision, it has gone through many games. First, there are shareholders who worry that this will affect the value of the company in the future. Second, some industry analysts even use moral suspicion to question how close millet approaching cost pricing will disrupt business. Order, killing opponents; In addition, there are others who questioned how such a low profit rate can ensure Xiaomi's continued competitiveness?
Xiaochuan co-founder Wang Chuan disclosed to the Times Weekly reporter that 'Actually Lei (Lei Jun)'s original statement on the April 29 board meeting was that Xiaomi did not make more than 3% of the hardware profit, and later investors felt that 3% was too low. Even if the exchange rate fluctuates, it will cause the company to enter into a loss, and then it needs to change to 5%'.
Wang Chuan also said that investors believe that Xiaomi might have become China’s apple. If he promises that the profit will not exceed 5%, he will lose this possibility. The underwriter also agreed that the announcement of this decision would be detrimental to the listing. However, Lei Jun believes that. Pre-listing announcement is the final opportunity. Despite the pressure to make this decision, Lei Jun insists on 'fair prices and moving people' as its creed for business development.
What kind of new story to tell?
The prospectus disclosed that Xiaomi’s 2015-2017 revenue was RMB 66.811 billion, RMB 68.34 billion and RMB 11.625 billion. In 2015-2017, Xiaomi’s operating profit was RMB 1.373 billion, RMB 3.875 billion and RMB 12.215 billion, respectively. Annual millet operating net profit increased by 221% year-on-year.
According to iResearch's data, in terms of revenue growth, out of the large Internet companies with revenues of more than 100 billion yuan in 2017, Xiaomi increased 67.5% year-on-year, surpassing Alibaba, Tencent and Facebook, ranking first in the world.
Xiaomi emphasized in the prospectus: Xiaomi is not a pure hardware company, but an innovation-driven Internet company. Specifically, Xiaomi is an Internet company with mobile phones, smart hardware and IoT platforms as the core.
The logic behind Xiaomi's '5% goal' is based on the fact that although hardware is an important user portal, Xiaomi does not expect it to become a major source of profits.
Xiaomi must put its well-designed, high-quality products close to hardware cost pricing, deliver it directly to users through efficient online or offline direct sales channels, and then continue to provide users with rich Internet services. This is its Original 'Triathlon' business model: hardware + new retail + internet service.
In fact, Xiaomi's high-growth space is based on smartphone hardware, but it is not limited to this. In the past three years, Xiaomi’s hardware business revenue accounted for 80.4%, 71.3%, and 70.3% of its total revenue, respectively, and it is an absolute source of income.
At the same time, Xiaomi’s second-largest main business Internet service is developing rapidly. The prospectus disclosed that as of March 2018, MIUI had more than 190 million monthly active users, and the average time for users to use Xiaomi’s mobile phones was about 4.5 hours per day. In 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 rate of 74.7%. In 2017, Xiaomi's Internet service gross margin reached 60.2%, contributing to Xiaomi’s overall gross profit. Larger.
Xiaomi said that compared to other internet platforms with high cost of ownership, Xiaomi’s process of acquiring users through hardware sales is profitable, and has strong cost advantages and liquidity.
At the same time, Lei Jun also invested a large number of excellent companies in addition to the millet system, allowing Xiaomi's values to infiltrate the entire industry chain and creating a magnificent millet ecosystem. In the upcoming 5G era, it has the largest IOT in the world. The platform’s millet is another reason for pushing up Xiaomi’s valuation. The prospectus reveals that as of March 31, 2018, Xiaomi invested and managed 210 eco-chain companies, of which 90 were concentrated in hardware and consumer products. More than 100 million units of equipment.
In addition, behind the soaring overseas income of 250%, it also means the successful verification and rapid replication of the millet model in the world. The prospectus disclosed that Xiaomi’s mobile phone has entered 74 countries and entered smartphones in 15 countries around the world. The top five sales volume. In 2015, 2016, and 2017, Xiaomi’s overseas revenue was 4.05 billion yuan, 9.15 billion yuan, and 32.08 billion yuan. In 2017, overseas revenue increased by 250% year-on-year, and the compound annual growth rate was approximately 181%. .