IPO hopeful Xiaomi set to breeze past 2017 revenue targets

Xiaomi has told its bankers it will top its annual revenue target by as much as 18 per cent, according to sources close to organisation

PUBLISHED : Friday, 22 December, 2017, 9:52am
UPDATED : Friday, 22 December, 2017, 11:19pm

Xiaomi Inc, the Chinese smartphone maker Xiaomi, has told its bankers it will top its annual revenue target by as much as 18 per cent, according to sources close to organisation, marking a comeback from a sales slump in recent years that triggered a business overhaul.

Xiaomi has been hearing bank pitches for what could be the world’s biggest tech float next year, and banker projections are that it will rake in a net profit of at least US$1 billion in 2017, based on the company’s revenue estimates of US$17-18 billion. Profits are tipped to reach about US$2 billion in 2018.

The calculations also take into account data on operating costs provided by the company, said the sources, who spoke on condition of anonymity.

Bankers and analysts expect Xiaomi’s profits to continue growing sharply into 2019, which one source said would make a US$100 billion IPO price tag look “reasonable”.

A spokeswoman for Xiaomi – likely soon to mandate its leading banks for an IPO – confirmed the company had topped the annual revenue goal of about US$15 billion, but declined to comment on IPO-related matters or its financials.

“We have never externally disclosed any expected net profit and growth data and we do not respond to irresponsible speculation and rumours,” she said.

Xiaomi was valued at US$46 billion in a 2014 funding round, the world’s most valuable start-up for a brief period. It sales stagnated over the next two years as the firm overextended itself launching in new markets while being hammered at home by rivals including Huawei Technologies, Vivo and Oppo.

The maker of budget smartphones has since branched out into selling accessories and home appliances. In the third quarter of this year, Xiaomi overtook Apple to become China’s fourth largest smartphone vendor, according to International Data Corp (IDC).

“This is a good time for them (Xiaomi) to list because right now they are on a roll,” said IDC’s senior research manager for client devices, Kiranjeer Kaur.

“If they get a good valuation, they will get it now,” Kaur said. She cautioned, however, that the company needed to focus on retaining customers.

“Xiaomi will need to make sure that users upgrade to higher-end Xiaomi from lower-end Xiaomi instead of ditching it for other brands.”