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The first anniversary of the listing of Xiaomi: frequent adjustment, dual brand strategy, market value is close to the waist

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On July 9, 2018, Xiaomi rang the bell at the Hong Kong Stock Exchange. Today is exactly the first anniversary of the listing of Xiaomi. What kind of achievements did Xiaomi achieve this year? Look at a set of data first. The market value is close to the waist: On July 8, Xiaomi’s share price closed at HK$9.61, which was 43.5% lower than the issue price of 17 yuan, compared with the peak of 22 yuan. Based on the closing price on July 8, the market value of Xiaomi is 29.6 billion US dollars. Revenue profit continued to rise: After the listing of Xiaomi, four quarterly reports were issued. From the second quarter of 2018 to the first quarter of 2019, the income of millet was 184.26 billion yuan, a year-on-year increase of 41%. The adjusted profit was 8.94 billion yuan, a year-on-year increase of 40%. This group of seemingly abnormal data reflects the twists and turns of Xiaomi’s listing. The capital market does not recognize the positioning of Xiaomi Internet Corporation, and PE continues to decline. The competition in the mobile phone market has intensified, and the global shipments of Xiaomi and the growth of China’s shipments have been sluggish, which has made Xiaomi’s core business struggling. At the same time, the size and product system of Xiaomi are constantly expanding. In order to adapt to these changes, Xiaomi began a drastic adjustment. Frequent structural adjustments, dual-brand strategies, and declining market capitalization constitute the key words of Xiaomi this year. After frequent adjustments to the listing, Xiaomi quickly entered a period of frequent adjustment. Two months after the listing (September 2018), Xiaomi established the Group Staff and Group Organization Department. In December, Xiaomi reorganized the Sales and Service Department into China. In February of this year, Xiaomi Mobile Department also established a staff department. After the listing, Xiaomi also established three group-level committees, namely the quality committee, the technical committee and the procurement committee. In May, Lei Jun was the president of China, and was fully responsible for business development and team management in China. In addition, Xiaomi has established six Internet divisions, including the Internet Commerce Department responsible for the commercialization of the Chinese market, as well as the IMOT-related departments such as the TV Department, the Notebook Division, the Intelligent Hardware Division, the Artificial Intelligence Division, the Big Data Division, and the Cloud Platform Division. . Some of these adjustments of Xiaomi are to adapt to the growing number of people and businesses of Xiaomi, such as the establishment of the Group Staff, Organization Department, China Region and the three major committees. The other part is for emergency, such as Lei Jun, the president of China. The former is to adapt to the ever-large body of Xiaomi, and let Xiaomi complete the transformation from startup to big company from the architectural level. The latter is to save the Chinese market and mobile phone business. Mobile phones are the core of all the business of Xiaomi, and also the fundamental to affect its current market value. The former is for development, the future is for the future, and the latter is for the sake of martyrdom. After the listing of Xiaomi’s mobile phone business, global shipment growth slowed down, and the main problem lies in the Chinese market. In the three quarters after the listing of Xiaomi, Xiaomi’s mobile phone shipments in China both fell double digits. This made Xiaomi fall into a dilemma. Dual brand strategy Xiaomi’s main strategy for solving mobile phone problems is dual-brand drive. Although Xiaomi claims to have five major mobile phone brands, including Xiaomi, Redmi (formerly Red Rice brand), POCO, black sharks involved in investment, and a beautiful picture of strategic cooperation. But the real main force is only Xiaomi and Redmi. Xiaomi passed the extremely cost-effective clothes to Redmi, liberating the Xiaomi brand from the price-performance ratio of product materials, pricing and brand tonality. Xiaomi mainly impacts the high-end market, as well as featured segments such as the women’s mobile phone such as Xiaomi CC. In the second half of last year, Xiaomi did not release red rice mobile phones in the Chinese market, just to make Redmi independent paving the way for Xiaomi. This caused a slowdown in millet global shipments and China shipment growth. At this point, the absence of red rice mobile phones in the Chinese market can still be a decline in mobile phone shipments. However, in the first quarter of this year, after Redmi returned to the rivers and lakes, the global shipments of Xiaomi’s mobile phones still failed to boost, and the problem in front of Xiaomi was more difficult. This year’s competition in the Chinese market is more intense than in previous years. Whether Xiaomi as the main brand can stand up to the high-end market is the key to winning the game. For the first half of the implementation of the dual-brand strategy, Redmi has performed well and Xiaomi has yet to be verified.Lu Weibing, the general manager of Redmi, spent six months combing three product lines. The digital series is for the thousand yuan machine market. The Note series is Redmi’s mid-range machine for the 1000-2000 yuan market. The K series is a high-end machine for the 2000-3000 yuan market. . From the first product of Redmi’s independence, Xiaojinang Note 7, to the K20 series released in May, the sales of Redmi phones have achieved good sales. However, the performance of Xiaomi’s main brand is relatively flat. Up to now, the Xiaomi brand has only released two mobile phones this year, namely the Xiaomi 9 series and the Xiaomi CC9 series. Xiaomi 9 was highly anticipated at the beginning of the market, but the lack of supply led to missed the best time to sell. The recently released Xiaomi CC9 series has opened the market for women with a price-performance ratio, and the market response has just begun to be observed. Up to now, Xiaomi mobile phone has identified three series, the digital series is the regular flagship series of Xiaomi, MIX is the high-end mobile phone to explore black technology, Xiaomi CC is the mobile phone facing the female market, the benchmark OV, Huawei nova flagship machine. Whether it is the main card Xiaomi or the deck card Redmi, they have just completed the construction of the product line. The product line is more clearly sorted out, and sales can go up is another problem. On June 18, Lei Jun, founder of Xiaomi Group, stressed at an internal meeting that Xiaomi’s goal in the Chinese mobile phone market in the next three years is to stabilize the situation. To achieve this goal, Lei Jun not only served as the president of China, but also added 5 billion. Add the code line. The market value is close to the waist. Even in the period when the shipment of Xiaomi mobile phone is soaring, the market value is also a problem that plagues Xiaomi. Xiaomi’s PE has been decreasing since it went on the market. When Xiaomi was just listed, its PE was between Internet companies and hardware companies. Now, 15.50 times PE of Xiaomi is the standard hardware company. As an analogy, Apple’s current PE is 15.46. The two are almost the same. Xiaomi hopes to show the position of the Internet company. However, the proportion of Xiaomi’s Internet revenue has always only accounted for 10% of total revenue, and it does not have high gross profit margins like BAT, Google and Facebook. As far as its core business is concerned, it is more like a hardware company like Apple – Xiaomi is a hardware company that values ​​the Internet business, not a hardware company that sells hardware. From CITIC Securities report, however, many brokers are optimistic about Xiaomi’s performance growth. According to Reuters analysts quoted by CITIC Securities, Xiaomi’s revenue and profits will continue to rise in the next three years (including 2019), and net profit will maintain a growth rate of more than 25% for three consecutive years, and the growth rate will continue to rise. With the bottom of Xiaomi’s stock price, Southwest Securities, Pacific Securities, CITIC Securities, Everbright Securities and other institutions recently gave an increase or buy rating. This year, the bubble in Xiaomi’s stock price was continuously squeezed out, and Xiaomi’s Internet company’s coat was torn off, and it was finally treated as a hardware company. .

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