The US Securities and Exchange Commission (SEC) said on Tuesday that the Huami had submitted an IPO request. That means Huami could soon be listed in the US stock exchange. Huami’s IPO would have a major impact on Xiaomi’s valuation, as Huami is a Xiaomi eco-chain company.
Huami IPO request did not name a specific price target, but its revenue was reported to be 1.30 billion yuan in the first three quarters of 2017, with a net profit of 95.4 million yuan. Its revenue in the same period of 2016 was 943 million yuan, with a loss of 19.4 million yuan. Huami’s 2016 annual revenue was 1.56 billion yuan, with a net profit of 23.9 million yuan. Revenue in the third quarter of 2017 rose 27 percent from a year earlier, but fell 3 percent from the second quarter.
Huami’s has less net revenue, but is more net profit than Fitbit, a similar company. IDC data showed Xiaomi was the world’s top-ranked wearable equipment maker in the third quarter of 2017, mainly due to Huami’s products. Xiaomi’s market share declined 3.3 percent, but Fitbit was down 33 percent. In these respects, Huami holds an advantageous position, and its valuation would exceed that of Fitbit.
As for shareholders, the request showed Huami CEO Huang Wang owned 39.4 percent of the company’s shares, and is its largest shareholder. Shunwei Capital is the second largest shareholder with 20.4 percent of the stock. People Better Limited, owned by Xiaomi, has a 19.3 percent stake. Companies controlled by Lei Jun own 39.7 percent of the stock – more than Huang and Wang.
It is reasonable to believe that the valuation of Xiaomi will be at least $100 billion, but less than $200 billion. In addition, it is good is Huami is listed before Xiaomi – it could make Xiaomi appear more “valuable”.