Xiaomi submits the IPO application or the first share of “shares with different rights” of Chenggang Stock Exchange

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Xiaomi submits the IPO application or the first share of “shares with different rights” of Chenggang Stock Exchange

2018-05-03 10:25:01 237 ℃

From the official website of the Hong Kong Stock Exchange, Xiaomi has officially submitted the IPO application documents. Xiaomi is expected to become the first share of "different shares in the same stocks" of the Hong Kong Stock Exchange. It will be the world's largest IPO in 2014.

A little more news

Missing Alibaba four years ago, the Hong Kong Stock Exchange is not willing to miss the world's largest technology class this year. Venture company IPO - Xiaomi.

On May 2, the first working day after Hong Kong's public holiday, the "first batch of new shares of Hong Kong stocks" attracted people's attention. It is reported that Xiaomi is expected to submit a listing application in the near future, from the end of June to the beginning of July, and then consider the listing of CDRs (China ADRs) in the Mainland. This will be the largest IPO in Hong Kong's history. It is also expected to be the world's largest new technology stock this year.

According to a person close to the Xiaomi IPO intermediary exclusive to a financial science and technology reporter, the current sponsors, investment banks, potential investors generally accept the current valuation of at least 70 billion US dollars, after a short period of time, the millet market value over the IPO 100 billion US dollars hold a great deal.

The official millet did not respond to the IPO. On April 30, the newly formulated "Consulting Summary of Listing System for Emerging and Innovative Industries Companies" entered into force, which was regarded as the biggest change in HKEx's 25-year history.

Li Kaifu, founder of Innovation Workshop, commented that the new rules of Hong Kong Stock Exchange are good news for investors, entrepreneurs and investment institutions. If the CDR is settled, it will be a good thing. TMT and biotechnology companies have better access to markets and more choices. Entrepreneurs can focus more on innovation and choose a capital market that better understands the value of the company.

"No matter who will be the first stock of the new rules of Hong Kong stocks, their success will inspire more entrepreneurs to succeed," said Li Kaifu.

$70 billion, what does Xiaomi rely on?

“Millet will not consider IPO in the next five years.” In 2012, Xiao Jun, the founder of Xiaomi, who flaunted the concept of “rural dream” valuation, disclosed for the first time on the IPO. According to the plan, Xiaomi had a valuation of 4 billion U.S. dollars.

Millet’s round of financing is almost always “triple jump”. At the end of 2010, Xiaomi Company completed a Series A financing of US$41 million with a valuation of US$250 million; 201In December of the year, Xiaomi Company obtained financing of US$90 million with a valuation of US$1 billion; at the end of June 2012, Xiaomi Corporation financed US$216 million with a valuation of US$4 billion; after the financing was completed in 2013, Xiaomi’s overall valuation reached US$10 billion. . Its latest public financing information was 2014, with a total financing amount of 1.1 billion U.S. dollars and an estimated value of 45 billion U.S. dollars.

In the end, Xiaomi is worth a lot of money, and the previous version of the rumors of high credibility has ranged from 60 billion US dollars to 100 billion US dollars. In the recent Hurun release of China's Q1 Unicorn list, Xiaomi and Didi are tied for second place with a valuation of more than RMB300 billion, and Ant Financial is ranked first with a valuation of over RMB400 billion.

A person close to the Xiaomi IPO intermediary revealed to Yi Cai Technology reporter that the sponsors, investment banks, and potential investors now generally accept the current valuation of at least 70 billion US dollars, and the market value will exceed 100 billion yuan in the short term after the IPO. The dollar holds a lot.

"Lei Jun and his team have very rich experience and have reservations when pricing, which makes everyone have money to make, but also left a lot of room for the management of market value," the source said.

How to value millet? We must first see its business model.

At the end of April this year, probably the last mobile phone release before Xiaomi's IPO, Lei Jun announced an important message: the comprehensive taxation of the overall hardware business (including mobile phones and IoT and consumer products) per year. The net rate does not exceed 5%.

In the wake of this news, there has been no small shock in the industry. According to public information, the overall business net profit rate of Apple in 2017 was 21.1%, and the overall business net profit rate of Huawei was 7.9%. Even the home appliance industry, which has a low net profit rate, is 6.6% for Haier and 7.7% for Midea, which is also higher than 5%.

Why Xiaomi announced this information before the IPO, the head of the first mobile phone industry research institute Sun Yanxi analyzed it to a financial science and technology reporter. This is actually Xiaomi's indication of its future development direction to the outside world. It is not a hardware. The company, instead of relying solely on hardware to obtain major profits, is an Internet company. This also helps the capital market to see Xiaomi’s business model.

Lei Jun has explained that Xiaomi is essentially an Internet company with mobile phones, smart hardware, and IOT platforms as the core, which is the “triathlon” business model: hardware + Internet services + new retail.

In fact, from the beginning of Xiaomi’s founding, Lei Jun has always emphasized that Xiaomi’s hardware is sold at close to cost, and it hardly makes money. But only talking about hardware is not necessarily a good “story”. Whether the global smartphone shipments or the Chinese smart phone industry continue to negative growth, domestic Q1 handset shipments are only 87.370 million units, down 26.1% year-on-year, among which domestic brands Shipment volume of mobile phones dropped by 27.8% year-on-year. However, the good news is that the 5G commercial is approaching, as well as greater opportunities for overseas markets.

From the hardware point of view, after making up classes in 2016 and reversing in 2017, Xiaomi’s handset shipments reached 92.4 million units last year, and it has returned to the top four in the world from the third quarter to the first of this year. In the quarter, only Huawei and Xiaomi achieved year-on-year growth. In the Indian market, Xiaomi’s mobile phone market ranked first in the third quarter of last year.

But if Xiaomi is seen as a company with Internet properties, it needs a massive user base. Hardware is just an entry point. Actively controlling the cost-effectiveness of hardware profits will help Xiaomi quickly accumulate, expand its user base, and bring to the Internet users groups with high activity, high conversion, and high retention rate.

From a pre-IPO financing promotion material previously received by Ichiba Technology, Xiaomi Daily reached 132 million, monthly live 165 million, and daily user usage time was 312 minutes (5.2 hours). . Xiaomi’s 2016 earnings totaled nearly 1 billion yuan. In revenue, 79% came from hardware and 21% came from internet service business. The net profit rate of the hardware business is only 2.8%, while the net profit rate of the Internet service business exceeds 40%, which mainly consists of games, advertisements, and application distribution.

This model is similar to Rayco's frequent mention of Costco. The company's commodity gross profit margin is far lower than its peers, but high-quality, low-cost strategy has brought a large number of loyal customers, the main source of profit It is an annual membership fee.

“There is also room for the imagination of Xiaomi's home, especially at the point of new retailing nowadays, including Xiaomi and its competition are all in the layout.” Sun Yanxi said that this is also an outsider's valuation of floating space for Xiaomi. One of the reasons for this is that “the way to prop up its valuation is to value according to internet companies (games, advertisements, members, etc.) and secondly, from mobile phones, televisions, boxes, to the whole industry of intelligent hardware. The method of valuation of the chain, the third is the valuation of the new retail company under the online and offline, it can be said that the model of XiaomiThere is not much reference to the formula in the country.

Listening of mainland companies to Hong Kong to broaden “channels”

“ Xiaomi would be surprised if he did not come to Hong Kong. “The Hong Kong Stock Exchange president Li Xiaojia once publicly stated this.

The new rules of the HKEx allow companies with different voting rights structure to list, permit the listing of biotech companies that fail to pass the financial qualification test of the motherboard, and Seeking to establish a new convenient secondary listing channel for the Greater China and International Companies listed in Hong Kong as a second listing.The three listing rules will be implemented on April 30.

This means that Xiaomi Chairman Lei Jun The special equity held will be subject to the upper limit of voting rights for shares with different shares, that is, each special share is equal to the voting rights of 10 ordinary shares. In other words, Lei Jun only needs to hold at least 9.1% after listing. With special equity, you can own a controlling stake in Xiaomi.

Not only Xiaomi, Ant Financial may choose A+H (Shanghai, Hong Kong) to be listed at the same time in the future.Ma Yun has expressed his wish for Ants. The future of serving in the A-share market and giving back to Chinese investors will be viewed in terms of its existing volume, and there is at least a theoretical possibility that the two markets will be listed, while Li Xiaojia also claims to come to Xiaomi, Saudi Aramco and Ant Financial Services. There is confidence in the listing.

Port According to Zhang Xiaoxia, representative of the representative office in Beijing, the IPO in Hong Kong does not need to line up and is in the process of immediate report. The total listing process is controlled in about 6-9 months, including about 3-4 months from submission to hearing. It takes 1-2 months for roadshows and distributions, and she also stated that "companies that are listed in Hong Kong do not have a priority system, and they will be audited according to the timing of their submissions.

However, judging from the industry structure of Hong Kong's new stocks in 2017, the share of technology, media, and telecommunications industries in Hong Kong in 2017 was 18%, down from 19% in 2016. The proportion of the financial services industry and the consumer industry also declined, while the increase was mainly due to traditional industries such as real estate and manufacturing. New real estate stocks accounted for 28% of Hong Kong's new stock market in 2017, ranking first.

< p> Data from Deloitte at the end of 2017, Hong Kong will increase 161 new shares in 2017, with a total financing amount of HK$128.2 billion, and the number of new shares will increase by 34% compared with 120 last year, but the amount of financing will be higher.Last year's HK$195.3 billion fell by 34%. The increase in the number and the decrease in the total amount are mainly due to the lack of super-large IPOs.

But it is worth noting that Zhong An Online (06060.HK), Yue Wen (00772.HK) and Yi Xin (02858.HK), which were called “New Economy Sambo” by the Hong Kong market last year There has been no small concern when it comes to listing. Among them, the public offering of private equity subscriptions by Zhong An Online was over 392 times over-subscribed. The Group's share price has already doubled in less than half an hour after the opening of the first day of listing, and the market value has approached 100 billion Hong Kong dollars.

With the new regulations of the Hong Kong Stock Exchange, the Hong Kong market is becoming more attractive to overseas technology companies. Due to the advantages of IPO cost, cultural similarity, familiarity with the market, convenient communication of investors, etc., many unicorn companies in the Mainland tend to be IPOs in Hong Kong. The rise of Chinese unicorns and the thirst for funds can inject a very considerable amount into the Hong Kong market. The increase and activity.

In January of this year, Tong Shihao, one of the Xiaomi investors and a managing partner of GGV, said in an interview with a financial technology company that U.S. investors can understand that the number of Chinese Internet companies is limited. It is difficult for them to bet on China or all bets on Chinese Internet companies to diversify risks. “Compared to the U.S. market, we will see a large number of Chinese companies choosing to list in Asia in the future, and the IPOs in Mainland China and Hong Kong will increase.”

Kai Kaifu also said that this is for investors, entrepreneurs and investment institutions. The good news is that if the CDR is settled, it will be a good thing. TMT and biotechnology companies have better access to markets and more choices. Entrepreneurs can focus more on innovation and choose a capital market that better understands the value of the company.

He also pointed out that there are challenges behind the opportunities. It is whether these companies' business models and true values ​​can be fully understood. Unlike traditional industry companies, the value of these new economic companies depends on their growth.

He cited, for example, the pre-listed company’s preference shares issued to shareholders at the time of financing, because accounting standards are often recorded as “losses”, but such a “loss” process does not result in actual losses to the company. On the contrary, it is a proof of the growth of the company's value. After the IPO, the preferred shares are converted into ordinary shares. This portion of the loss disappears and is no longer counted in the statement. This phenomenon that will bring shock to investors, Mito has experienced superThe loss of 6 billion yuan still requires market understanding and digestion.

Source: Yicai.com

Editor: Wang Haocheng

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