‘China’s Ap­ple’ Xiaomi lifts share-trade ban

Irish Independent - Business Week - - TECHNOLOGY - Sofia Horta e Costa

MANY Xiaomi in­vestors, who could only watch as the stock shed $14bn in mar­ket value, are now able to join in on the sell­ing af­ter a lockup pe­riod ex­pired yes­ter­day.

The six-month term fol­lowed its Hong Kong de­but, dur­ing which some em­ploy­ees and corner­stone in­vestors were banned from dis­pos­ing of their al­lo­cated shares.

It’s been painful: Xiaomi has dropped to HK$10.34 from a list­ing price of HK$17, los­ing an­other 6.9pc yes­ter­day on al­most seven times its av­er­age vol­ume of the past three months.

More than three bil­lion shares were un­locked, equal to about 19pc of those out­stand­ing, ac­cord­ing to data com­piled by Bloomberg. The lockup pe­riod for con­trol­ling share­hold­ers – such as chair­man and founder Lei Jun – was ex­tended yes­ter­day for an­other 365 days, Xiaomi said in a state­ment. It was pre­vi­ously due to ex­pire in July.

Touted by bankers last year as

China’s an­swer to Ap­ple, Bei­jing-based Xiaomi sought a val­u­a­tion that would have made it the most ex­pen­sive smart­phone maker in the world. The stock trades at 16 times pro­jected 12-month earn­ings, less than half its July mul­ti­ple. It’s still 32pc more ex­pen­sive than Ap­ple, which is reel­ing from its worst quar­terly rout in more than a decade.

To be sure, longer-term in­vestors may want to hold on to Xiaomi’s shares rather than dump them at a loss. An­a­lysts still pre­dict Xiaomi will re­bound to $16.72 on av­er­age within the next year. Hedge funds have been in­creas­ing their bear­ish bets, with al­most 30 mil­lion shares sold short on Tues­day, the most since Au­gust.

Xiaomi at­tracted the likes of China Mo­bile and US wire­less-chip giant Qual­comm as corner­stone in­vestors last year.

Bloomberg

Elec­tron­ics com­pany Xiaomi is one of the stars of the Chi­nese tech world

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