Xiaomi IPO Will Be Huge

Javier Stokes
May 3, 2018

With the listing, the value of the company can go up to $100 billion and could be the biggest Chinese tech IPO since Alibaba Group Holding Ltd raised about $21.8 billion in the year 2014.

The documents Xiaomi filed Thursday shed some light on its finances, showing revenue soared almost 70% a year ago to around 115 billion yuan ($18 billion).

Xiaomi also indicates it is looking to make money from internet services, which includes advertising, games and music/video streaming services like Mi Music and Mi Video - which the company launched in India on Wednesday.

The company said 28 percent of its revenue came from global operations in 2017, compared to 13.4 percent in 2016 and 6.1 percent in 2015.

Founded in 2010, Xiaomi was the fifth biggest smartphone maker in the world past year, shipping more than 92 million devices, according to research firm IDC. In December 2017, Xiaomi counted 170.8 million active users on its custom Android platform, MIUI, with each user paying an average of 57.90 yuan or about $9.10 for the company's internet services, totalling a $1.6 billion revenue for that month alone. Xiaomi's decision, four years after Alibaba Group Holding Ltd. chose NY, signals a new phase for the city's ambitions to rival the USA market.

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Xiaomi is taking advantage of a recent change in the Hong Kong stock exchange's rules that allows companies to issue more powerful voting shares to insiders and lesser shares to the public. The company remains in fourth place in its home market, where Xiaomi generated 58 percent of phone sales in 2017, according to Canalys. The company has a strong presence in China, Europe and other APAC countries, but it aspires to prevail in the U.S market where it struggles. The exclusive tie-ups with online stores held Xiaomi back from reaching many less tech-savvy customers in China.

The company bounced back through its retail strategy.

Apart from smartphones, Xiaomi has backed dozens of startups producing a wide spectrum of products from wearables to rice cookers.

Xiaomi said its gross profit margin for smartphones was 8.8 percent previous year, which is much lower than the estimated profit margin of around 60 percent that Apple has for its flagship iPhone devices.

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