Sihai network

Can Xiaomi successfully apply for listing?

4hw.com.cn, Xiaomi group (hereinafter referred to as Xiaomi) submitted an application for listing to the Hong Kong Stock Exchange on the morning of May 3, Beijing time, which is believed to be the largest IPO in the world this year. According to the prospectus, CITIC Lyon securities, Goldman Sachs and Morgan Stanley are the joint global coordinators, joint bookrunners and joint lead managers.

It is disclosed that Xiaomi company's revenue in 2017 was 114.6 billion yuan, including 80.56 billion yuan of smart phone revenue, accounting for 70.3%, 23.44 billion yuan of IOT and consumer products revenue, accounting for 20.5%, and 8.89 billion yuan of Internet service revenue, accounting for 8.6%.

In addition, in the business record period, in 2015, 2016 and 2017, Xiaomi group generated losses of RMB 7.6 billion, profits of RMB 491.6 million and losses of RMB 43.9 billion, respectively.

According to the prospectus, Xiaomi is an Internet company with mobile phones, smart hardware and IOT platform as the core, adopting the original "Triathlon" business model: Hardware + new retail + Internet services. Xiaomi attaches great importance to the cost pricing of hardware and delivers products with excellent design and performance quality to global users through efficient online and offline retail channels, and continues to provide rich Internet services.

Lei Jun, chairman and CEO of Xiaomi, promised all existing and potential users in the open letter of the prospectus: 'starting from 2018, the comprehensive net interest rate of Xiaomi's overall hardware business (including smart phones, IOT and consumer products) will not exceed 5% every year. If there is any excess, we will give it back to the users. 'according to the public information, in 2017, Apple's overall business net interest rate was 21.1%, while Huawei's overall business net interest rate was 7.9%. Even in the home appliance industry, which has a generally recognized low net interest rate, Haier's is 6.6%, while Midea's is 7.7%, both of which are higher than 5%.

Xiaomi's financial data in the past three years reflects the rapid growth of its business. 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% in 2017; 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 2017.

According to iResearch, in terms of revenue growth, among the large Internet companies with global revenue of more than 100 billion yuan and profits, Xiaomi increased by 67.5% year-on-year, surpassing Alibaba, Tencent and Facebook, ranking first in the world. According to the latest data released by IDC, in the first quarter of 2018, the global sales volume of smart phones dropped by 2.9% overall, and Xiaomi ranked fourth in the world, with a year-on-year growth of 87.8%.

It is worth noting that Millet's growth in the overseas market is very strong. According to the prospectus, in 2015, 2016 and 2017, Xiaomi's overseas market revenue was 4.05 billion yuan, 9.15 billion yuan and 32.08 billion yuan respectively. In 2017, the overseas market revenue soared 250% year on year, which fully verified the universality of millet model in the global market.

According to the prospectus, Xiaomi has also built the world's largest consumption level IOT platform, connecting more than 100 million smart devices (excluding mobile phones and laptops). In 2017, according to the number of connections, Xiaomi's global market share of consumer IOT hardware was 1.7%, followed by Apple 0.9%, Amazon 0.9%, Samsung 0.7% and Google 0.6%.

According to the prospectus, Xiaomi has a large and highly active global user. As of March 2018, the average time for users to use Xiaomi's mobile phone every day was about 4.5 hours, and the monthly live users of MIUI exceeded 190 million. The user scale, activity, and use duration all reached the level of the world-class Internet companies. Internet service has become an important source of Xiaomi's profit. 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, with a compound annual growth rate of 74.7%. In 2015, 2016 and 2017, the gross profit of Xiaomi Internet service was 2.08 billion yuan, 4.21 billion yuan and 5.96 billion yuan respectively, with a compound annual growth rate of 69.3%.

As of the signing date of the prospectus, Lei Jun, the executive director, chairman of the board of directors and chief executive officer, holds 31.4% of the shares. If it is included in the option pool of ESOP employee stock ownership plan, Lei Jun holds 28% of the shares.