Tue, Jun 12, 2018 - Page 10 News List

Xiaomi reports US1bn loss as it prepares for IPO

READY TO FLOAT:The company is reportedly seeking US$10 billion in funds through an initial listing that would include selling CDRs, which allow foreign entities to list in China

Bloomberg

Xiaomi Corp (小米) revealed that it lost more than US$1 billion in the first three months as the Chinese smartphone maker prepares to persuade investors to buy into the largest initial public offering (IPO) since 2014.

The eight-year-old company has begun gauging demand for a first-time share sale intended to fuel its expansion beyond China and bankroll the development of devices and media services.

It yesterday also published its first prospectus for the sale of China depositary receipts (CDR) in Shanghai, saying it plans to use about 40 percent of the proceeds to enlarge its global footprint.

Xiaomi reported a 7 billion yuan (US$1.09 billion) net loss on revenue of 34.4 billion yuan in the first quarter.

Xiaomi is one of the most hotly anticipated Hong Kong coming-out parties in years, taking advantage of new regulations aimed at attracting major homegrown technology companies to Hong Kong and China.

The company, led by billionaire cofounder Lei Jun (雷軍), is said to be seeking about US$10 billion in an IPO that could become the world’s largest first-time share sale since Alibaba Group Holding Ltd (阿里巴巴) listed in the US in 2014.

The company could also become the first to issue CDRs — a signature reform to try and reverse an exodus of its largest companies to overseas bourses in recent years by allowing foreign firms to be traded on Chinese exchanges.

“In 2018, the company plans to enter or consolidate positions in Southeast Asian and European markets,” Xiaomi said in its Chinese prospectus, which did not mention a fundraising target.

Xiaomi opened its first store in Paris last month, while company senior vice president Wang Xiang (王翔) has said several times that the company is looking to sell smartphones in the US and compete against Apple Inc.

The Beijing-based company saw sales from more lucrative smart-home devices and Internet services grow as a proportion of overall revenue in the first quarter.

About 31.8 percent of Xiaomi’s revenue in the first quarter came from products such as air purifiers and scooters, as well as online services such as mobile apps, the filing said.

Those two segments contributed 29 percent of sales last year. The company’s biggest business, smartphones that barely make a profit, declined in importance to just 67.5 percent of sales from more than 70 percent last year.

Xiaomi said it made a profit excluding one-off items of 1.038 billion yuan in the first quarter.

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