Published: Thu, May 03, 2018
Science | By Celia Watts

Asia shares mixed as markets mull Fed, China trade talks

Asia shares mixed as markets mull Fed, China trade talks

Some reports recently have suggested that the company's IPO could put the valuation at close to $100 billion, but one person close to the situation said that company is planning to go public at a value lower than $100 billion.

According to the news site, the company is taking advantage of changes in the Hong Kong stock market that allow companies with multiple classes of shares to raise capital for the first time. The lack of that option is one reason why Alibaba chose the USA over Hong Kong for its public listing, prompting the city's exchange to revise its rules. Xiaomi, reporting detailed financials for the first time, posted a net loss of 43.9 billion yuan in 2017, reversing from a meager profit a year earlier.

In the filing document, the company said it reported revenues of 114.6 billion yuan in 2017, almost double its 2015 revenue. Revenue surged 70% during 2017 to end the quarter at $18 billion while operating profit tripled to $1.9 billion. By the end of a year ago, Xiaomi had topped Samsung Electronics to lead sales charts in India. Its success hinges on whether it can convince investors that it is more than just a gadget company. The mounting supply chain problem forced the company to retreat from many overseas markets, including Indonesia and Brazil. The amends in the policy is expected to spin a new growth tangent for companies that will host IPO and get listed on the HKEC.

While Xiaomi has expanded to Southeast Asia, Europe and Russian Federation, it still does not sell smartphones in the United States, where Huawei and ZTE have recently faced official resistance due to suspicion that their devices could pose risks to national security. For Q4 2017, Xiaomi grabbed the top position for smartphone shipments in India and in Q1 2018 was number four globally.

Xiaomi still depends on China for the majority of its revenues, a challenge given that that market is nearing saturation. Each Class A share has 10 votes while each Class B share has one vote.

Xiaomi said it would have a weighted voting rights (WVR) structure, or dual-class shares. Lei now owns 31.4 per cent of Xiaomi while Lin holds 13.3 percent.

CLSA, Morgan Stanley and Goldman Sachs Group Inc are sponsoring Xiaomi's IPO.

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