In what is potentially the biggest public listing for a Chinese technology company in almost the last four years, Xiaomi., the Chinese smartphone and connected device maker, filed for its Initial Public Offering at the Hong Kong stock exchange earlier in the week.
According to analysts, this listing of the company at the Hong Kong exchange would potentially set a market value of $100 billion for the company which is arguably the highest for a Chinese technology company ever since another Chinese company Alibaba Group Holding Ltd managed to raise $21.8 billion in 2014 through its IPO.
News about the company launching the IPO has been making the rounds for quite some time now. A detailed look at its financial position was allowed by the company to its investors before the launch of the IPO for the first time before the announcement was made by the Chinese consumer electronics firm. It financial details showed that the revenue generated by the company in 2017 was 114.62 billion yuan ($18 billion) which was a 67.5 per cent jump compared to the figure for the 2016 financial year. however, the company also declared that it had made a loss of 43.89 billion yuan compared to a profit of 491.6 million yuan made by the company in the previous year.
In 2016, the company noted an operating profit of 3.79 billion yuan and in comparison, that figure rose in 2017 and touched a total of 12.22 billion yuan.
A large number of internet-connected home appliances and gadgets, such as scooters, air purifiers and rice cookers are manufactured by the company in addition to making smartphones, however the major chuck of the revenues of the company is generated from its internet services business.
Market leaders in the smartphone industry such as Samsung Electronics Co Ltd and Apple Inc. have bene thrown a challenge by the relatively cheap devoices that are offered by the company.
New rules and regulations have been initiated at the Hong Kong stock exchange since Monday last with the aim of attracting more tech listings. This was done fight the competition that it is facing from the other exchanges in New York and in the Chinese mainland with respect to listings of tech companies. And the first company to list itself under the new rules would be Xiaomi.
It is expected that there would be an increase in IPOs and listings from Chinese tech companies that reportedly have a combined market capitalization of $500 billion and the Hong Kong exchange wants to have a large part of that pie. Xiaomi’s IPO is being sponsored by CLSA, Morgan Stanley and Goldman Sachs Group Inc.
(Adapted from BusinessToday.com)