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Xiaomi's CDR pilot application documents will be disclosed in the near future

via:CnBeta     time:2018/6/8 22:31:37     readed:102

Stimulated by this news, the Xiaomi stocks quickly pulled up. As of the close of the 8th, Yuhuan NC daily limit, Tongyi shares rose 5.01%, Jingda shares rose 4.29%, Pu Lutong rose 4.59%, a total of up 2.21% electric sound, Jiuan medical rose 2.89%.

Investment bankers pointed out that after Xiaomi, companies such as Baidu, Ali, Jingdong and Netease are also expected to submit CDR applications one after another.

What's different is that Xiaomi used the model that the Hong Kong IPO and the domestic CDR are in synch at the same time, so the God-level operation is worth “Double-click 666”.

However, some people may ask, in the "three sets of standards" of the innovative enterprise pilot, Xiaomi applies which set? Below, Xiao Bian will take you one by one analysis.

Early adopters share the same rights

Although the China Securities Regulatory Commission has not disclosed the full text of the Xiaomi Red Chip pilot application, we can get a lot of useful information from Xiaomi’s listing application in Hong Kong.

Previously, Xiaomi Group had submitted a listing application in Hong Kong on May 3. The IPO joint sponsors include CLSA, Goldman Sachs, and Morgan Stanley, and will become the early adopters of “shares with different shares” in Hong Kong stocks.

Market participants predict that once Xiaomi is listed, it will become Hong Kong’s largest IPO ever, and it is expected to become the world's largest new technology stock this year.

From April 30 onwards, companies that have implemented “shares with different shares” will be able to apply for listing on the Hong Kong Stock Exchange. This is how the Hong Kong Stock Exchange restarted the mechanism after almost 30 years. And this change happened to be caught by Xiaomi.

From the perspective of equity structure, Xiaomi's stock is divided into Class A shares and Class B shares. Class A share holders have 10 votes per share and Class B shares holders have 1 vote per share.

Specifically, Xiaomi Group A shares are all owned by founder Lei Jun (429 million shares) and another co-founder Lin Bin (240 million shares), while Lei Jun also holds 228 million B shares.

Based on this calculation, Lei Jun holds a 31.4% stake in Xiaomi Group, and has a 55.7% proportion of voting rights.

For CDRs issued by red-chip companies with different rights of the same shares, the "Implementation Measures for Piloting Innovative Companies to Issue Stock or Depositary Receipts within China and Listing Regulations" stipulates that if there is a difference in voting rights, the relevant arrangements shall comply with the relevant provisions of the stock exchange to be listed. , and should clearly maintain the preconditions for special voting rights, special voting rights may not be transferred with the transfer of related shares, and in addition to domestic publicDevelopmentBefore the pre-departure company’s articles of association have reasonable provisions, the number of special voting rights and the proportion of voting rights for voting rights of the special voting rights may not be increased in any way after the public issuance in the country.

Over 100 billion revenues have not yet been made profitable

In terms of performance, the Hong Kong stock prospectus disclosed that Xiaomi’s income from 2015 to 2017 was 66.811 billion yuan, 68.434 billion yuan and 114.625 billion yuan; operating profit was 1.373 billion yuan, 3.785 billion yuan, and 12.215 billion yuan.

In 2017, Xiaomi’s revenue increased by 67.5% year-on-year. However, judging from the net profit, Xiaomi’s 2017 loss was RMB 43889 million; if measured by non-IFRS, Xiaomi’s adjusted net profit was RMB 5,362 million.

The prospectus shows that Xiaomi is an Internet company with mobile phones, smart hardware and IOT platforms as the core.

Currently, Xiaomi is the world’s fourth-largest smartphone manufacturer and has created a number of smart hardware products, many of which sell first. Xiaomi also built the world's largest consumer IOT platform, connecting more than 100 million smart devices.

At the same time, Xiaomi also owns 190 million MIUI monthly active users and provides them with innovative Internet services. Xiaomi said that it has an original "triathlon" business model: hardware + new retail + Internet services. During the seven-year venture, the company's annual revenue exceeded 100 billion yuan.

The company also promised in the Hong Kong stock prospectus that, since 2018, Xiaomi’s overall net profit rate for the entire hardware business (including smartphones, IOTs, and consumer products) will not exceed 5% per year.

It is worth noting that the millet supply chain contains a number of A-share companies:

Wentai Technology is Xiaomi’s largest ODM manufacturer; Ouffy Technology is the main supplier of Xiaomi’s camera module;

Deep Pegasus and BOE supply panels for millet mobile phones;

Tricyclic Group supplies ceramic back cover for Xiaomi’s flagship model;

The number of lithium batteries supplied to Xiaomi by Xinwangda is close to 30% of Xiaomi's mobile phone shipments; Xiaomi's models are equipped with Huiding’s fingerprint chips.

Last round of financing valuation of 45 billion US dollars

In terms of valuation, previous reports said that Xiaomi hopes the IPO valuation will reach 900-1100 billion US dollars. The most exciting thing about Xiaomi's listing information is that according to estimates, after Xiaomi is listed, Lei Jun is expected to become the new richest man and the company’s 1,000 employees are expected to achieve financial freedom.

According to media reports on the 7th, according to an intermediary who is close to Xiaomi’s IPO project, investors, especially cornerstone investors, are currently under intense competition. The valuations given are generally between 75 billion and 80 billion US dollars. There are also a number of them. The agency gave a valuation of more than $80 billion, but no cornerstone investors have yet been finalized.

Looking back at the financing history of Xiaomi, the prospectus shows that before IPO, Xiaomi completed a total of nine rounds of financing with a total financing scale of US$1.502 billion. The last round of financing was the F round at the end of 2014. The financing amount was approximately US$1 billion and the valuation was approximately US$45 billion.

Accord with the threshold of "20 billion valuation/3 billion revenue"

See here, you may already have the answer.

The "Implementation Measures for Pilot-Innovated Enterprises Offering Domestic Shares or Depositary Receipts and Listing Supervision" implemented on the 6th (hereinafter referred to as the "Implementation Measures") set three sets of criteria for short-listed companies. The first set of red chip companies that have been piloted overseas has a market value of no less than 200 billion yuan. Obviously, millet not yet listed in Hong Kong does not apply this set.

At present, it seems that Xiaomi should apply the second set of standards: For pilot enterprises that have not yet been listed overseas, the audited main business income in the most recent year is not less than 3 billion yuan, and the company’s valuation is not less than 20 billion yuan. The valuation of a company should refer to the valuation of the last three rounds of financing and the proportion of the corresponding investor, investment amount, investment shares in the total share capital, and a combination of valuation methods such as the income method, cost method, and market multiplier method. If there are less than three rounds of financing, refer to the full financing valuation decision.

What is Xiaomi's situation?

As mentioned earlier, Xiaomi’s audited operating income in the most recent year (2017) exceeded 100 billion yuan, far exceeding the standard of 3 billion yuan.

In the valuation, we should refer to the latest three rounds of financing valuation. According to public information, Xiaomi’s latest F round of financing was valued at US$45 billion, and the penultimate valuation amount was not disclosed. The third round of the last round of FY 2016 June’s valuation was US$4.0 billion, according to the latest The exchange rate conversion exceeds RMB 25 billion, which is also higher than the valuation threshold of RMB 20 billion. Then, the second set of standards just applies.

According to the reporter’s understanding, Xiaomi’s CDR pilot application documents will be disclosed in the near future, and the detailed arrangements regarding CDR issuance and fundraising will be worth continuing attention.

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