Chinese smartphone and electronics company Xiaomi Inc. has submitted an application with Chinese securities regulators to issue Chinese Depository Receipts (CDR), according to Chinese media reports citing insiders.
Xiaomi will be the first company that issues CDRs, having submitted its application immediately after China Securities Regulatory Commission (CSRC) issued trial rules for issuance and trading of CDRs on Wednesday night. It is reported that Xiaomi’s CDR prospectus could be released online as soon as today.
An insider told Chinese media that Xiaomi aims to raise US$10 billion from mainland China but it is unclear how Xiaomi will allocate its shares between Hong Kong and the mainland.
Based on Xiaomi’s net income of RMB5.4 billion (US$844 million) and a compound growth rate of 60%, its initial public offering pricing could reach US$81 billion. After listed in Hong Kong, the company’s market capitalization is expected to reach US$100 billion, according to the report.
About 70% of Xiaomi’s income comes from smartphones, but it has a price-earning ratio of 60 times, a P/E ratio more appropriate for internet company, rather than a hardware company. But the insider said Xiaomi’s internet business contributes more than 50% of its gross income.
Last month, Xiaomi filed its IPO prospectus to the Hong Kong Exchange, but the document didn’t give details on the size of the planned IPO, nor the listing date.