On May 31st, according to news from the China Securities Regulatory Commission and the Investment Bank, Xiaomi is scheduled to issue CDR on the Shanghai Stock Exchange on July 16. That is, Xiaomi will pass the form of the Mainland CDR and Hong Kong IPO in the Mainland and Hong Kong achieved simultaneous listing. It is worth noting that the launch of the Xiaomi 8 series product at the same time held the largest conference in history at the time. This was also seen by the industry as a 'roadshow' in the market before Xiaomi’s listing in order to enhance investor confidence. The intention is obvious. For Xiaomi, it is currently in a critical period. Chairman Lei Jun hopes to appear in the public's view as an Internet company because it is related to the trend of Xiaomi's IPO valuation. However, it seems to the industry insiders. Even if it already has the Internet gene, Xiaomi needs to prove itself in the future market performance.
'Hardware' conference
On May 31, after Xiaomi Mobile 6, Xiaomi skipped 7 of this number and released Xiaomi 8 directly, in order to highlight the 8th anniversary of Xiaomi's mobile phone.
Xiaomi released a total of seven new products involving mobile phones, mobile operating systems, TVs and VR all-in-ones and wristbands. As a commemorative product, Xiaomi 8 has naturally become the top priority of this conference. Xiaomi 8 series targets The middle and high-end market launches three different products: Xiaomi 8, Xiaomi 8 Exploration Edition and Xiaomi SE.
There was speculation that the conference was just on the eve of Xiaomi's listing. The company may raise the price of Xiaomi 8's product line and transform into a high-end market. However, Lei Jun is still the 'spokesperson' of cost performance in terms of performance, configuration and price. .
It is worth noting that Xiaomi’s social product 'miao chat’ did not make its debut in this conference and made 'rice' people hopeless. Before the conference, the rice chatter that had been silenced on Weibo for more than half a year suddenly sounded. In response to the appearance of a suspected reunification, she gave a speech to the soon-to-be-hosted Xiaomi conference, which was interpreted by the industry as the return of rice.
Lei Jun emphasized that Xiaomi is an 'Internet company' in the Xiaomi's prospectus. This has caused controversy. The rice chat that was born before WeChat but was marginalized by WeChat is Xiaomi's well-deserved Internet product. At this point, Miao chat sounded a bit intriguing. Because Xiaomi is an Internet company or a hardware company, this is related to the trend of Xiaomi's IPO valuation.
It is understood that on May 3, Xiaomi officially submitted a listing application to the Hong Kong Stock Exchange. It is reported that the company will issue an IPO on the Hong Kong Stock Exchange on July 17, 2018.
Expected to be listed at the same time in both places
It can be understood that this time the press conference was a 'roadshow' on Xiaomi Hong Kong's listing and it was also reported on this day that Xiaomi will achieve simultaneous in the Mainland and Hong Kong in the form of the Mainland CDR and the Hong Kong IPO. Listing.
According to sources, in order to coordinate with the CDR's issuance progress, Xiaomi has postponed its time to market by 1-2 weeks, will conduct CDR and Hong Kong IPO pricing on July 9, 2018, and trade in Shanghai Securities on July 16, 2018. The CDR issued, and the IPO was issued on the Hong Kong Stock Exchange on July 17, 2018. In response, Xiaomi did not respond.
According to statistics, after the CDR is the international board and strategic emerging board, the Chinese government and regulatory authorities hope to keep excellent Chinese companies in the country again. The Chinese name of the CDR is the 'Chinese depositary receipt', which is actually the overseas company in China. One way to go public is to put it simply. CDRs allow mainland individual investors to directly participate in Xiaomi's investment in the simplest way. Generally speaking, the valuation of A shares is higher than that of Hong Kong stocks, and US stocks are higher; A shares lack the Internet and new economic standards, CDR helps Xiaomi's listing price and market performance.
In the CDR pilot standards previously disclosed by the China Securities Regulatory Commission, the market value of large-scale red-chip companies that have been listed overseas is not less than 200 billion yuan. At present, only 7 of US-listed and Hong Kong-listed companies meet the CDR pilot requirement of 200 billion yuan, of which, There are only four companies listed on the US-listed Chinese Internet companies that can exceed 200 billion yuan in market value, namely Alibaba, Baidu, Jingdong, and Netease. Among the Chinese technology companies listed on the Hong Kong stock market, Tencent Holdings, China Mobile and China can meet the criteria. telecommunications.
Millet that issued CDR, the valuation is far more than the minimum requirement of 200 billion yuan. According to the 'Internet Queen' Mary Meeker's 2018 Internet Trends Report, Xiaomi's valuation is 75 billion US dollars. Estimated between 70 billion -100 billion US dollars.
Financial professionals believe that if Xiaomi is the same company, even if there is a certain degree of difference in the valuation between the Mainland and Hong Kong, it will not maintain a long-term difference, so this will also drive up Xiaomi’s valuation in Hong Kong stocks. .
The difference between 'soft' and 'hard'
One of the hot topics discussed in the industry around Xiaomi’s listing is: “Is Xiaomi a hardware company or an Internet company?” Lei Jun’s idea of passing out these years has been the latter.
First, Xiaomi’s Internet service has a high gross profit margin. 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 rate of 74.7%; gross profit was 2.08 billion yuan. 4.21 billion yuan, 5.96 billion yuan, a compound annual growth rate of 69.3%. In 2017, Xiaomi's Internet service gross margin reached 60.2%. According to Xiaomi's prospectus, the company’s Internet services currently receive revenue in two ways: One is advertising services, the other is internet value-added services (mainly games).
On the other hand, in the prospectus, Xiaomi said that 30% of IPO raised funds will be used for R&D and development of core products such as smart phones and TVs; 30% will be used to expand investment and strengthen the consumer goods and mobile Internet industry chain; 30% For global expansion; 10% for general business use. In other words, hardware products are not the main direction of the future of millet.
At present, Xiaomi’s main revenue still comes from the hardware business, but its proportion has been decreasing year by year. According to the prospectus submitted by Xiaomi, as of 2015, 2016 and December 31, 2017, the smartphone part contributes to the total revenue respectively. 80.4%, 71.3% and 70.3%, Xiaomi Internet service revenue accounted for 4.9% of total revenue, 9.6% and 8.6%.
Kang Ye, chief editor of the operator World Net, pointed out that many companies on the Xiaomi ecological chain are profitable. Xiaomi’s mobile phone business is not profitable, but Xiaomi’s mobile phone makes money through drainage. By installing the App client, the built-in application, Xiaomi can obtain no money. With less profit, this model is the traditional method of the Internet.
'Millet's business model is to make new retail while doing e-commerce, and a large part of profit comes from Internet services.' Lei Jun said.
IDC data shows that as of March 31, 2018, Xiaomi had 190 million MIUI monthly active users, and the average daily usage of Xiaomi mobile phones by users was 4.5 hours. This user group provided support for Xiaomi's Internet business and integrated business ecosystem.
According to Wu Chunyong, editor of the China Internet industry, Wu Xiaoyong, editor-in-chief of Fusion, thinks that Xiaomi’s ecological gameplay is a feature of Internet companies. He uses low-cost strategies to turn the traditional home appliances and mobile phone industries upside down through smart TVs and mobile phones. One of the main goals It is the rapid occupation of the market and the growing number of users in its own ecosystem. 'Overall, the current millet still needs 'remedial classes' in the transition to the Internet, including increasing the proportion of Internet service revenue, expanding the scale of Internet services, etc. .' Analysts inside the industry said.