Xiaomi to Go Public in the Hong Kong Stock Exchange Next Month
The Chinese tech giant is on a roll lately, but some investors are still doubtful of its true valuation.
We’ve been seeing reports of Xiaomi’s rise in some key markets lately, specifically India and Europe. But while this is impressive, investors are still wary in terms of evaluating the company when it comes to its IPO.
Xiaomi launched in 2010 and positioned itself as a smartphone manufacturer that churns out high-quality devices at affordable prices. Since then, it has grown and risen to be the 4th largest smartphone company globally at the time of this writing.
It has since extended its product line to other home-centric niches like fitness tracker, air purifiers, and even rice cookers. Right now, the expanded line includes laptops, WiFi routers, smart TVs, and speakers. Clearly, the company is poised to reel in more sales and based on its recent performance, it will probably do so if brisk sales continue.
But while this all sounds impressive, some investors are still not keen on Xiaomi. Some reports say that these investors are not sold on Xiaomi’s current business model of thin margins and the company’s growth-first approach in terms of running its business. But while this may turn-off investors looking to play short-term in the market, those in it for the long run may find value in the Chinese company if they can prove that its focus on growth right now will yield benefits in the future.
The company also recently placed emphasis in building physical stores which costs money to create and operate, probably another reason that might have turned off some investors. Still, Xiaomi is aggressive in its efforts as it recently opened 61 Mi Stores in China and unveiling Xiaomi stores in India and Europe.
One thing most people aren’t aware of though is that aside from selling products, Xiaomi is also in the business of software. In fact, Xiaomi founder Lei Jun declared during the company’s infancy that their goal is to sell low-priced, top-quality smartphones at small profits then make big bucks selling “internet services”. If you think about it, it’s similar to Apple’s strategy with the App Store, though they really different in terms of execution.
To give you an idea, here’s Xiaomi’s 2017 Revenue and Gross Profit report per each product segment:
All eyes will be on Xiaomi’s IPO next month. And with all that was said and done, the bottom line is that the company is still valued as a top global smartphone manufacturer poised to extend its grasp in more places around the world.