Saturday, 2024 May 25

China’s Xiaomi on track for July listing on the Hong Kong bourse, potentially the biggest global stock offer of 2018

The Hong Kong bourse is readying itself for Chinese #4 smartphone maker, Xiaomi Corp’s US$10 billion listing this July, even as recent popular IPOs such as Razer Inc and Yixin Group started to fail, with share price declining by more than 40% from their peaks.

Despite the growing uncanny feeling over mispriced IPO offer prices, the Chinese smart gadgets maker, Xiaomi is unfazed and is preparing to launch in July, this year.

The company will organize a roadshow at the end of June – with the sole aim to convince institutional investors in the United States and Europe that its business is worth at no less than US$70 billion, according to a person familiar with the matter told Hong Kong’s South China Morning Post.

This is already lower than the previously rumored 100 billion valuation at a time when the company was first found to have filed with HKEX in early May.

Ever since then, every once in a while there would be a new round of heard-on-the-grapevine that Xiaomi IPO size gets shrunk.

The person also revealed that the foundational metric to value Xiaomi is based on a projected annual profit growth rate topping 50% in the next 3 years.

Yet again, the conundrum – Lei Jun, Xiaomi’s founder, commitment to affordable high quality smartphones, with razor-thin profits, even as smartphone revenues make up to 70% of the company’s revenue in 2017 is still baffling investors. Per bankers familiar with Xiaomi’s pitch, the company is urging investors to think long-term, focus on future development than short-term dismal margins.

A tiny caveat to the doubts casted against the smartphone giant – this week saw Xiaomi’s successful launch in Paris, partnering with their local carriers, with another successive launch in Italy tomorrow, further solidifying its dominance in the European market, following successes in India, Indonesia & Spain.

Nevertheless, if Xiaomi’s IPO succeed, it will catapult the Hong Kong Bourse to the pole position in the race to be a global market leader – the prized destination to raise capital, affirming the efforts made for its controversial reform.

Editor: Ben Jiang


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