China's Xiaomi: Smart phones, no smart IPO

China's Xiaomi: Smart phones, no smart IPO

At opening, each Xiaomi share was valued at 16.60 Hong Kong dollars ($2.12), below the initial offering price of HK$17 ($2.17).

"Investors are skeptical about Xiaomi's growth momentum as the global smartphone market seems to be on a downward slope", said Jacky Zhang, an analyst at BOC International in Shanghai.

Shares lost about 4 percent in early trading but rebounded to 17 Hong Kong dollars ($2.17) at midday. He believed more high-quality internet companies would come to Hong Kong for listing in the future.

The Chinese smartphone giant-and the world's fifth biggest smartphone maker-went public on the Hong Kong Stock Exchange on Monday, reports CNBC.

Still, the eight-year-old company, which has ambitions to transform itself from a low-priced maker of phones to a global rival to match Apple, managed to raise $4.72bn, making it the world's biggest technology float in four years.

The weak pricing values the firm, which also makes internet-connected home appliances and gadgets, at about $54 billion, nearly half its original US$100 billion ambition earlier this year.


"No matter how you look at it, it's too expensive for me", said Francis Lun, chief executive officer at brokerage GEO Securities, drawing comparisons between the price-to-earnings ratio of Xiaomi and Apple.

The company, which makes phones to rival Apple's iPhone, had hoped to hit a valuation of $100bn in the float, but is now valued at around $53bn. Analysts said the company had been weighed down by investor concerns about its hefty valuation on the back of an unfolding US-China trade war that poses a huge threat to China's technology companies, as they could find it harder to acquire core technologies from a more hawkish Trump administration. Ping An Healthcare and Technology Co Ltd dropped below its IPO price on the second day of trading in May.

"From day one, we've set up a dual-class share structure".

Its shares fell Monday even though the broader Hong Kong market was up about 1.5%.

Lei has described Xiaomi as a "new species" of company with what he describes as a "triathlon" business model combining hardware, internet and e-commerce services.

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