Original title: seven highlights of Xiaomi's listing: the company is very profitable, and senior executives like to raise $1 billion
4hw.com.cn news this morning, Xiaomi formally submitted its prospectus, opening the way of listing in Hong Kong, which is considered to be the world's largest IPO this year. According to the prospectus, CITIC CLSA, Goldman Sachs and Morgan Stanley are the joint global coordinators, joint bookkeepers and joint lead managers.
As early as the morning of May 2, Fenghuang technology got reliable news that Xiaomi will apply for IPO in Hong Kong this week, and be listed from June to July, becoming the first company to try 'the same share with different rights'. Although we didn't wait for Xiaomi's prospectus at that time, there were eight highlights in that article:
1. Lei Jun said that the net profit margin of Xiaomi's hardware will never exceed 5%. Will he face up?
2. Does Xiaomi make money or not?
3. How many shares does Lei Jun hold in Xiaomi?
4. Is Xiaomi really an Internet company, as he said?
5. How big is the Xiaomi ecological chain?
6. After Xiaomi goes to Hong Kong stock market, will it go to a stock market?
7. Will Xiaomi's valuation exceed 100 billion?
8. How about Xiaomi's overseas market?
Now that the Prospectus has been announced, although there is no specific financing plan and target share price at present, according to the first financial report, people close to Xiaomi's IPO intermediary disclosed that at present, sponsors, investment banks and potential investors generally accept that the current valuation is at least $70 billion, and Xiaomi's market value is more than $100 billion in the short term after the IPO.
In addition to valuation, we might as well focus on the prospectus to analyze the other seven points.
1. The overall profit of Xiaomi hardware is less than 5%
Last week, Xiaomi held a new product launch at Wuhan University, the alma mater of Lei Jun, the founder, chairman and CEO of Xiaomi. Lei Jun said publicly at the launch: "the comprehensive net profit margin of Xiaomi's mobile phone hardware will never exceed 5%. If there is any excess, it will be returned to users. '
Comprehensive net profit after tax is an overall concept, which is the net profit rate obtained by dividing the operating revenue by the operating revenue after deducting various costs and expenses, including R & D, sales, advertising, etc.
The gross profit margin is 8.8% and 8.3% respectively
According to the prospectus, Xiaomi announced its gross profit margin, of which the latest gross profit margins of mobile phone and ecological chain are 8.8% and 8.3% respectively.
7% in 2017
Although Xiaomi did not announce the comprehensive profit margin of mobile phone and ecological chain, it mentioned the comprehensive profit margin of 4.7% in 2017. That is to say, considering the Internet business with high profit margin, Xiaomi's overall comprehensive profit margin is only 4.7%. So Xiaomi hardware's comprehensive profit margin is less than 5%, Lei Jun has not been beaten in the face.
2. Xiaomi actually makes money
From the first day of Xiaomi's birth, Lei Jun has always said that Xiaomi's mobile phone hardly makes money. The word 'almost' is very subtle. In addition to the fact that the comprehensive profit margin of Xiaomi hardware mentioned above is less than 5%, how much money does Xiaomi make? The answer is given in this prospectus.
According to the prospectus, Xiaomi's revenue from 2015 to 2017 was 66.811 billion yuan, 68.434 billion yuan and 114.625 billion yuan respectively, with a year-on-year growth of 67.5%; its operating profit was 1.373 billion yuan, 3.785 billion yuan and 12.215 billion yuan, with a year-on-year growth of 222.7%.
In terms of net profit, Xiaomi lost 7.63 billion yuan in 2015, made a profit of 490 million yuan in 2016, and lost 43.89 billion yuan again in 2017. From this data alone, Xiaomi only made money in 2016.
However, it is not reasonable to judge that Xiaomi is losing money only from these. To see whether Internet companies are profitable, we should not only look at the net profit, but also the operating profit and the adjusted net profit. These two figures exclude the interference factors such as financial accounting.
This is because Internet technology companies usually issue a lot of preferred shares to investors when they raise funds. If the valuation goes from tens of millions of dollars at the beginning to tens of billions of dollars, the value of these preferred shares will also be magnified many times, and the financial floating profit of shareholders will also be increased n times. But these shareholders have not quit, so the increase of their investment value will be considered as the company's liabilities to these shareholders in the financial statements.
Obviously, Xiaomi is in the same situation. The reason why there is such a big gap between the net profit and the adjusted profit is that on the basis of the adjusted profit, the net profit is also included in the fair value change of convertible redeemable preferred shares, share based compensation, net gain of investment fair value, amortization of intangible assets caused by acquisition and other costs.
In 2017, for example, the change in the fair value of Xiaomi's convertible and redeemable preferred shares was 54 billion yuan, the share based compensation was 900 million yuan, the net gain in fair value of investment was - 5.7 billion yuan, and the amortization of intangible assets caused by acquisition was 02 million yuan. The above four items, especially the changes in the fair value of convertible and redeemable preferred shares, were included in the cost, which led to a loss of RMB 43.9 billion for Xiaomi in 2017.
Consolidated income statement: making money under non International Financial Reporting Standards
Therefore, it is shown in the prospectus that, according to non international financial reporting standards, in 2015, Xiaomi had an adjusted loss of 300 million yuan; in 2016, Xiaomi had an adjusted profit of 1.9 billion yuan; in 2017, Xiaomi had an adjusted profit of 5.4 billion yuan.
The financial statements in Xiaomi's prospectus adopt international financial reporting standards (IFRSs), which is required for listing in Hong Kong, rather than the generally accepted accounting principles (GAAP) commonly used in the financial statements of us listed companies. If, according to GAAP, the fair value loss of convertible redeemable preferred shares will not be calculated, Xiaomi's adjusted profit will be positive.
This means that Xiaomi actually makes money.
How many shares does Lei Jun hold in Xiaomi?
Before the prospectus was released, some media reported that Lei Jun's share in Xiaomi was as high as 77%. The reason why people pay special attention to this figure is that it may be related to the title of China's rich this year.
According to the latest data from Forbes, Lei Jun is worth $7 billion, or 44.748 billion yuan. Ranked 38th in China's richest list and 254th in the world's richest list.
As of the signing date of the prospectus, the shareholding ratio of Lei Jun, executive director, chairman of the board of directors and chief executive officer, is 31.4%. If included in the option pool of ESOP, Lei Jun's shareholding ratio is 28%.
In other words, even if Xiaomi's post IPO valuation exceeds $100 billion, Lei Jun will not be able to replace Ma Huateng, who now has $45.3 billion in assets, to become the richest man in China in the short term.
In addition, the prospectus also disclosed that Lin bin, President of Xiaomi, holds 13.3286%, Li Wanqiang, brand strategy officer, 3.2375%, Hong Feng, senior vice president, 3.2207%, Liu De, senior vice president, 1.5494%, Wang Chuan, senior vice president, 1.1149%, Xu Dalai, CEO of Shunwei capital, 2.9312%, Huang Jiangji, former vice president of strategy who left Xiaomi before listing, 3.2375%, and Zhou Guang, former chief scientist Ping holds 1.43%.
Lei Jun and Lin bin hold class A shares with 10 votes each, while others hold class B shares with 1 vote each.
If calculated according to the valuation of $100 billion, even Wang Chuan, who holds the least shares, will be worth more than $1 billion.
In addition, the prospectus also shows that as of March 31, 2018, more than 5500 Xiaomi employees held share based awards.
Highlight 4: Xiaomi is an innovation driven Internet company
Even now, Xiaomi department store sells almost everything, such as TV, air purifier, water purifier, etc., but in the eyes of the outside world, Xiaomi is still a complete mobile phone company. According to the prospectus, Xiaomi's global smartphone shipments in 2017 were 91.41 million.
Three year shipment volume and average price of Xiaomi mobile phone
According to the latest data from IDC, an international research company, in the first quarter of 2018, the shipment volume of Xiaomi smart phones reached 27.6 million, ranking fourth in the world, with a market share of 8.2% and a year-on-year growth of 86.4%.
But in the prospectus, Lei Jun said: Xiaomi is an innovation driven Internet company. According to the prospectus, Xiaomi's revenue is divided into four business segments, namely smart phones, IOT and consumer products, Internet services and others.
Among them, it mainly comes from smart phones. In 2017, the revenue from the smart phone industry was 80.563 billion yuan, accounting for 70.3% of the total revenue. The revenue from IOT and consumer products was 23.447 billion yuan, accounting for 20.5%; the revenue from Internet services was 9.896 billion yuan, accounting for 8.6%.
Proportion of four major business income
In addition, according to the data, Xiaomi's revenue from Internet services accounted for 4.9%, 9.6% and 8.6% in the past three years.
Although Internet revenue has not become the mainstream revenue of Xiaomi, its business model is indeed different from that of traditional mobile phone manufacturers. Specifically, Xiaomi is an Internet company with mobile phones, intelligent hardware and IOT platform as its core.
In terms of specific figures, in addition to being the fourth largest smartphone manufacturer in the world, Xiaomi has also built the world's largest consumer IOT platform, connecting more than 100 million smart devices (excluding smartphones and smart TVS). At the same time, Xiaomi also has 190 million MIUI monthly active users and provides them with a series of innovative Internet services.
From this point of view, Lei Jun's "Xiaomi is an innovation driven Internet company" is understandable.
5. How big is the Xiaomi ecological chain?
Xiaomi started to lay out the ecological chain in 2013, with mobile phones as the core. Its peripheral products include earphones, small speakers, mobile power supply, and then the air purifier, rice cooker, water purifier and other small household appliances. There are also some things to play with, such as sweeping robots, and some necessities of life, such as toothbrushes and mattresses.
Before Xiaomi submitted its prospectus, Xiaomi officially announced that the annual sales of Xiaomi ecological chain exceeded 20 billion yuan, with a year-on-year increase of 100%. There is little difference between the actual data and that disclosed in the prospectus.
According to the prospectus, the income of Xiaomi ecological chain reached 23.447 billion yuan in 2017, accounting for 20.5% of the total income of the group. As of March 31, 2018, 210 ecological chain companies have been invested, and more than 90 companies focus on the development of intelligent hardware and consumer products.
It is not difficult to see that the ecological chain has become a force that can not be ignored in Xiaomi company.
Look at point 6, whether back to a, no further information
At the beginning of this year, there were a lot of rumors about CDR. A number of Chinese Internet listed companies have stated that they will return to a, and Xiaomi is also said to be listing Hong Kong shares and a shares at the same time through Hong Kong + CDR. There are various legends, which have been guessed as the suspense drama of the year.
But this time in the prospectus, it does not seem to reveal further information.
CDR is the abbreviation of Chinese depository receipt (CDR). It refers to the investment certificate that the overseas listed companies trust some of the issued and listed stocks in the local depository bank, which is issued by the domestic depository bank, listed in the domestic A-share market, settled in RMB transactions, and sold by domestic investors.
It's a long-standing problem for Internet companies to land on A-shares, because the IPO issuance mechanism of A-shares requires that the enterprises to be listed need to make profits for three consecutive years, and it also limits the ownership structure of enterprises. Judging from the current operating data disclosed in Xiaomi's prospectus, Xiaomi should not return to a in the short term.
7. Stable growth of Xiaomi's overseas market
Xiaomi said in the prospectus that Xiaomi has entered the markets of 74 countries and regions. In India, Myanmar