It seems that Xiaomi has become the first early adopter of A-share CDRs.
Late on the night of June 6, the Securities Regulatory Commission issued nine documents in a row to bring all the rules of the CDR system to the ground. On June 7, some media reported that Xiaomi had submitted an application to the Securities Regulatory Commission and became the first single of the CDR pilot. Then on June 8th, the official website of the China Securities Regulatory Commission confirmed this information.
On May 3, Xiaomi submitted a listing application to the Hong Kong Stock Exchange and passed the listing hearing on June 7, which means Xiaomi is expected to complete the listing of H-shares and CDRs simultaneously. This eye-catching IPO has many groundbreaking significance. Apart from the Hong Kong stock's first share-differentiated company, it will also be the first CDR company. The industry is concerned about when Xiaomi’s CDR prospectus was formally disclosed on the official website of the China Securities Regulatory Commission.
According to various sources, most agencies currently provide Xiaomi with a valuation of between US$75 billion and US$85 billion. The disclosure of this CDR prospectus will help to verify the industry’s most concerned information to a large extent.
As at the beginning of May we placed the same emphasis on Xiaomi's prospectus on the Hong Kong Stock Exchange. Before this, we may wish to draw a few key points on the prospectus. After all, CDR is a new thing. Xiaomi is this year’s most eye-catching unicorn super unicorn. What information it will have in its CDR prospectus? Disclosure makes the industry very curious and may leave a series of paradigms for the future capital market.
Aspect 1: Xiaomi is listed on both ends of the run. How much money should you raise?
Xiaomi submitted a prospectus in Hong Kong a month ago. At that time, the amount of funds to be raised had not yet been disclosed. Since then, this topic has been the most concerned topic in the industry. The recent information circulating in the industry is estimated to be about 10 billion US dollars. This is not a small sum. It was reported that the listing of Xiaomi would tighten the liquidity of the Hong Kong market. Regardless of whether this argument is not reliable, the CDR will somewhat ease the pressure on Hong Kong, because Xiaomi's total fund-raising will inevitably be part of the domestic market.
In this regard, there are also "hedge news" out. A few days ago, the industry’s outflow of information stated that the proportion of fundraising for CDRs and H shares will be 3-7, CDR will raise 3 billion US dollars, and H shares will raise 7 billion US dollars. However, this information does not seem to be reliable. After all, CDR is hot and the industry is highly expected. The corresponding proportion and share can also rise.
Usually the A share prospectus will disclose the total amount of funds raised.
How much will millet finance in total? Do not know, this CDR prospectus can open this suspense?
Aspect 2: How much will the proportion of Xiaomi's CDR distribution account for the total share capital?
CDR is the English abbreviation of Chinese Depository Receipt (Chinese depository receipt), which means that an overseas listed company will custody some of the issued shares to local depository banks, issued by depositary banks in China, listed on the domestic A-share market, and settled in RMB transactions. Investing certificates for domestic investors.
The keyword in the above paragraph is "“section". To put it plainly, Xiaomi took out some of the shares listed in Hong Kong and adopted a series of rules to get domestic A shares to go public. Then what part of this “ part will be?
According to the "Implementation Measures for Pilot Innovative Enterprises' Domestic Issuance of Stocks or Depositary Receipts and Listing Supervision Work" issued by the China Securities Regulatory Commission on June 6, when a pilot company issues shares, the proportion of shares that are publicly issued is implemented in accordance with the relevant provisions of the current stock market; For public listings, domestic and foreign publicly issued shares may be combined.
According to the “Securities Law” of China, one of the conditions that a listed company must meet is that: the number of publicly issued shares exceeds 25% of the total number of shares of the company; the proportion of the company’s total share capital exceeds RMB 400 million, and the proportion of publicly issued shares It is more than 10%.
Based on the above two points, Xiaomi has gone through multiple rounds of financing and is a super unicorn. The total stock capital should exceed RMB 400 million earlier. Therefore, the industry's total issuance ratio may be between 10% and 15%. However, this ratio was calculated in conjunction with the H-shares. The prospectus of the Xiaomi Exchange did not disclose the proportion of shares issued to Hong Kong last month. Therefore, Xiaomi's final CDR will account for the total number of shares, which is also the focus of the prospectus.
A share prospectus generally begins with disclosure of the possible range of the raised shares. And, often referred to as “ not more than X%”, the final issuance ratio is often X%.
The industry’s attention to Xiaomi’s IPO is extremely high at present, and almost all agencies are closely chasing. How much each CDR and Hong Kong stock can compete for is a demonstration of the “Super Unicorn” A-share and Hong Kong stock market competition that is eager to innovate in the economy, and will form a “demonstration effect” that will affect a series of “super” products in the future. Unicorn & rdquo; selection.
What's more, if the previous point of view of the amount of CDR funds and the ratio of CDR is disclosed, we can calculate Xiaomi's more accurate valuation range. After all, this is the most concerned topic in the industry.According to various sources, most agencies currently provide Xiaomi with a valuation of between US$75 billion and US$85 billion.
What is the answer? We look forward to answering the CDR prospectus.
Aspect 3: Compared with the H-share prospectus disclosed last month, what is the difference between Xiaomi's disclosure information in the CDR prospectus?
Some people might say that Xiaomi had already issued a H share prospectus account a month ago, and CDR has taken part of the H shares to deposit A shares. Generally speaking, the same company and prospectus are not exactly the same? ?
This is not necessarily true. The information about the company's operations is certainly the same, but the specific details of the disclosure may not be the same, given the differences between the Hong Kong stocks and the A shares, and the possibility that the CDR prospectus may be updated after the Hong Kong stocks are disclosed.
Different listing exchanges have their own requirements for information. For example, the H shares of the main board companies only need to publish the semi-annual report and the annual report. The quarterly report is voluntary. The A shares also require the quarterly report to be announced. In addition, differences in the application of accounting standards and disclosure requirements may also occur.
For example, when the Xiaomi Hong Kong stock prospectus was disclosed, the industry also set off a big science popularization on the application of accounting standards brought about by changes in fair value of “convertible redeemable preference shares”.
If you have read our prediction on the Xiaomi Hong Kong stock prospectus one month ago, you will remember that the company’s profitability will be different under different accounting standards.
Previously, due to the existence of preferred stocks in millet, under different accounting standards, there has been a "great loss", but in fact such losses appear only in the "pre-IPO" millet's "books".
Li Kaifu, chairman and chief executive of Innovation Factory, once said that Internet companies usually have multiple rounds of financing to issue convertible redeemable preferred stocks. Under the Hong Kong International Exchange’s International Accounting Standards, such preferred shares will reflect the The increase in fair value of the company's liabilities will be recorded in the losses of the company's books, but in fact the company did not have such losses and has no impact on the actual operation of the company. The greater the value of the company, the higher the value of the loss. After the IPO, the preferred shares are converted into ordinary shares. This part of the loss disappears and is no longer counted in the statement.
This, I believe, we all know that we will not repeat popular science. Because it is included in the "convertible redeemable preferred stock" "net profit margin of fair value changes can not accurately reflect the true business conditions of millet, so in the Hong Kong Stock Exchange prospectus, according to the international prevailing approach, Xiao Non- GAPP's accounting standards disclose the adjusted net profit of Xiaomi in the past three years, of which Xiaomi's adjusted net profit in 2017 was RMB 5.4 billion. The so-called adjustment is to remove non-recurring gains and losses, only reflecting the profit and loss brought about by operating activities.
Whether or not the disclosure criteria used in this CDR prospectus will reflect the adjusted net profit is also a possible difference. However, you know that the principle is good, as long as you turn in a prospectus named “ adjusted net profit ” this data can be
It is also worth noting that Chinese accounting standards and international accounting standards are still somewhat different in detail. Many companies that are listed on the A-shares and H-shares at the same time have some differences in the annual reports disclosed in the Mainland and Hong Kong. This difference may be reflected in some specific details, such as the identification of cost and asset impairment, showing that the company's profitability is different. This also needs to be carefully identified after the issuance of the CDR prospectus.
Xiaomi’s CDR prospectus will establish a template for information disclosure for companies that use CDRs to access A shares in the future. There is even such a claim in the brokerage industry that domestic brokerage firms are even more eagerly awaiting the disclosure of this prospectus book than reporters, so as to prepare follow-up applicants' documents for this sample.
Aspect 4: How was Xiaomi's performance this year?
In the previous H share prospectus, we could only see Xiaomi’s annual financial performance for the past three years, but this year Xiaomi’s performance did not know. Xiaomi went to Hong Kong in May. The preparation of the prospectus may be earlier, and it is not understandable in the first quarterly report of 2018. However, by mid-year, we are likely to see Xiaomi's financial performance in the first quarter of 2018.
According to IDC and Counterpoint data, Xiaomi's mobile phone surged 87.8% year-on-year in the first quarter of 2018, and the market share for the third consecutive quarter in India reached 31.1%. These figures are expected to be reflected in the prospectus. In addition, Xiaomi's new retail and IoT performance estimates will also usher in a wave of updates. How much did Xiaomi earn in the first quarter, did it continue its high growth in the past, and could it provide strong evidence for the $75-80 billion US dollar valuation given by institutional investors? The answer may be in the CDR prospectus.