Xiaomi has finally applied for listing in Hong Kong which may see its market value exceed $90 billion. However, Xiaomi’s loss was RMB 43.9 billion (about $7 billion) in 2017. During a three year period, Xiaomi’s total revenue increased from RMB 66.8 billion in 2015 to RMB 114.6 billion yuan in 2017.
As of December 31, 2017, Xiaomi Group had a net debt of RMB 127.2 billion, and a cumulative loss of RMB 129 billion. This is as a result of a fair value loss incurred on convertible redeemable preference shares. Convertible redeemable preference shares are designated as liabilities on the consolidated balance sheet, and an increase in fair value is recognized as a fair value loss in the consolidated statement of profit or loss. The company plans to expand its business into more emerging markets, regions, and international operations/expansion. This may continue to lead to increased operating costs and the company will face a number of risks, including increased competition and uncertain IP enforcement.
From the recent Hong Kong listing, Xiaomi emphasized that after deducting the fair value changes of convertible redeemable preferred stock; share-based compensation; gains in investment fair value; and amortization of intangible assets resulting from acquisitions, the adjusted non-IFRS loss for 2015 was RMB 303.9 million (special writing method for listing), and the adjusted non-IFRS profit for 2016 and 2017 was RMB 1895.7 million and RMB 5361.9 respectively. It is reported that after listing in Hong Kong, Xiaomi will take out some of the shares and issue CDR (Chinese depository receipts) in A shares. For Xiaomi’s IPO, it is expected to be the world’s largest IPO since 2014.