Xiaomi IPO Preview: Hoping For a Fair Valuation
Xiaomi Corporation (Xiaomi), a Chinese firm best known for making feature-laden but affordable smartphones, has been approved by HKSE and is expected to be the largest-ever tech IPO in Hong Kong.
- Listing Hearing Date: June 7, 2018
- Estimated Listing Date: around July 9, 2018
Aggregate Sentiment from Smartkarma IPs
Smartkarma Insight Providers have been covering Xiaomi Corp since December 13, 2017, and have generally been bearish on the IPO at early proposed valuations. Only one of seven Insights written has held a positive view, and the imminent launch puts great focus on the valuation of Xiaomi.
- Good Reputation & Quality
Xiaomi began making Smartphones in 2011, and has greatly expanded its product line. Xiaomi’s founder Lei Jun has tried to bolster the brand’s reputation alongside this, with claims that Xiaomi will only ever take a 5% profit margin, as the business objective is above all to satisfy customers. Toh Zhen Zhou, a Smartkarma Insight Provider and Xiaomi consumer, supports that claim, saying Xiaomi has “amazing products, honest pricing”. - Concern of Monetisation
Xiaomi currently has three core segments: Smartphones, Internet of Things (IoT), and Internet Services. Xiaomi has native channels to monetise its signature Internet Services (e.g. advertising, gaming platforms, and other internet VAS) domestically, though monetising its hardware is less effective internationally due to the Internet Services’ lack of artificial constraints. - $100B, $50B or $20B? Hoping for an Honestly Priced IPO
The South China Morning Post reported on May 3, 2018 *that the eight-year-old company was shooting to raise $10 billion at a bullish valuation of $100 billion. Most Insights posted on Smartkarma, however, thought that figure high, due to doubts around Xiaomi’s monetisation strategies.
How much should an honestly-priced IPO come out for Xiaomi? Explore key Insight Providers’ sentiments below, or find all relevant Insights here.
Key Contributors
Arun George
Top 5%
IPOs & Technology analyst, Global Equity Research Ltd
Bearish View (December 13, 2017 – May 14, 2018)
Arun has written on Xiaomi Corp for 5 months, and has been overwhelmingly bearish over this time. Arun predicts this IPO will have a negative outlook due to its “rarely honest prices”.
See all Insights from Arun George starting with Xiaomi IPO: Why “Honest Prices” Is Rarely Honest.
David Blennerhassett
Top 5%
Content Strategist, Ballingal Investment Advisors Ltd
Bearish View (May 9, 2018)
David was bearish on this IPO because “a widely-speculated market cap of US$100bn for Xiaomi premised on trailing earnings of US$840mn appears punchy”.
See all Insights from David Blennerhassett starting with Xiaomi The Money!.
Toh Zhen Zhou
Top 5%
IPOs Placements & Holding Companies, Smartkarma
Bullish View (May 22, 2018)
Zhen Zhou held a positive outlook on the company because “Xiaomi lives up to its name of making great products at affordable price points” but believes the final decision on whether to take the IPO will be dependent on the valuation of the company when the pricing details are released.
See all Insights from Toh Zhen Zhou starting with Xiaomi Pre-IPO Review – Hoping for an Honestly Priced IPO.
ANTYA Investments Inc.
Top Quartile
Bearish View (May 25, 2018 – May 29, 2018)
ANTYA Investments Inc. describes the valuation of Xiaomi Corp as “A Wide Gulf” and believes that at $100B it would be severely overvalued.
See all Insights from ANTYA Investments Inc starting with Xiaomi Corporation – Value Is in the Eye of the Beholder – $100 Billion or $20 Billion – A Wide Gulf.
Reference:
[1] http://www.scmp.com/business/companies/article/2144422/xiaomi-applies-raise-funds-hong-kong-giving-city-pole-position
