Sunday, 21 October, 2018


Xiaomi makes its IPO, watches shares plummet by almost 6%

Xiaomi makes its IPO, watches shares plummet by almost 6% Xiaomi makes its IPO, watches shares plummet by almost 6%
Melba Vasquez | 11 July, 2018, 07:15

Shares lost about 4 percent in early trading but rebounded to 17 Hong Kong dollars ($2.17) at midday.

Xiaomi Corp. fell as much as 2.9 per cent on its debut, as fears of an escalating trade war and uncertainty about its valuation combined to dampen Hong Kong's biggest coming-out party in two years.

Beijing-based Xiaomi is the first firm in Hong Kong to trade with a controversial dual-class structure since listing rules were overhauled to allow weighted voting rights for different sets of shareholders.

In the end, it had to settle for a more modest $54 million valuation as it raised $4.7 billion from the IPO.

Speaking at the ceremonial opening of trading, chairman Jun Lei noted the IPO comes at a time when financial markets have been roiled by U.S.

The weak pricing values the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, nearly half its original US$100 billion ambition earlier this year.

The HK$17 price valued the company at 39.6 times its forecast 2018 earnings, while iPhone maker Apple is trading at 16 times and Chinese social media and gaming giant Tencent Holdings at 36.

Typically companies are valued on a multiple of profits or sales.

Mo Jia, a Shanghai-based analyst with industry consultancy Canalys, said the weak debut was to be expected. Most recent floats in Hong Kong dropped below IPO prices.

"We believe online technology platforms, especially those focusing on health care like us, which could tap the pinpoints of China's 1.4 billion population, will be acknowledged and rewarded by the market", he said, without revealing a specific time frame for the listing.

Xiaomi is the biggest smartphone seller in India and is making inroads in Europe.

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