Xiaomi gathered 3.91 billion USD, but the capitalization “evaporated” to 5.5 billion USD
Shares of Xiaomi today fell the most since being listed in Hong Kong, after raising $ 3.1 billion from the newly completed share offering in this market.
|Founded in 2010 and headquartered in Beijing (China), Xiaomi is one of the largest smartphone makers in the world. Photo: Shutterstock|
Specifically, Xiaomi shares “evaporate” 12% on the trading day of December 2, the deepest decline in the day since its listing in Hong Kong in 2018, according to BloombergQuint.
This morning, 2/12, Xiaomi shares had to postpone trading after the Chinese smartphone maker did not announce the share offering in time at the opening time, causing many market participants to be surprised. course.
In its mid-day announcement, Xiaomi confirmed it had sold 1 billion shares at HK $ 23.70 per share, 9.4% lower than the closing price of the previous session.
Xiaomi shares slipped 6.5% to HK $ 24.40 at 15:21 (Hong Kong time), meaning that Xiaomi’s capitalization “evaporated” to 5.5 billion USD, almost doubling compared with the amount of capital raised by China’s second-largest smartphone maker from an equity offering in Hong Kong.
In the previous session, Xiaomi shares rose 124% and was labeled the best growth stock in the Hang Seng index basket. Xiaomi’s decision to raise more capital has led analysts to question whether the company’s capitalization is about to end.
“The timing of the deal (by Xiami) is not the right time,” said Jason Sun, an analyst at China Renaissance Investment Bank (Hong Kong). Last week, this expert recommended to buy Xiaomi shares.
“Xiaomi is not short of cash. But the decision to issue a large amount of shares is shocking now,” Jason Sun said.
Issuing shares to raise capital at this time is a slow step and even a failure for Xiaomi, because this decision was made about a month after the Hong Kong market was shaken by the decision of the authorities. China has paralyzed the IPO of Ant Group financial services company – the deal is said to be the largest in 2020 in Hong Kong.
“Maybe (Xiaomi) needs more time to get the investor’s transaction confirmation, so the announcement of the deal has been delayed,” said Steven Leung, CEO of UOB Brokerage Kay Hian (Hong Kong). comment.
“In addition, (Xiaomi) is also under pressure from the issuance of convertible bonds (worth $ 900 million), because some investors can buy convertible bonds and turn them into stocks to earn money. more determined, “added Steven Leung.
The share offering and the private placement of convertible bonds are said to help Xiaomi increase its accumulated assets in a competition with rivals such as Huawei.
Xiaomi recently strengthened and grabbed market share from Huawei, especially in Europe and India, after the US imposed additional sanctions on China’s leading telecom group. “Health” recently Xiaomi has left analysts wondering what it will do in the confrontation with Huawei as Xiaomi’s internet services revenue slowed down to 8.7% in the third quarter – the time of operation and online services. The route in China was shrinking because the Covid-19 epidemic in this country was contained. This increase is much lower than the rate of 29% in the second quarter.
Xiaomi’s share offering had the presence of the world’s financial “giants”, including: Credit Suisse Group AG, Goldman Sachs, JPMorgan Chase, and Morgan Stanley. But according to BloombergQuint, Xiaomi’s listing in Hong Kong in 2018 was one of the most notorious stumbles in this market, because after the IPO, Xiaomi’s shares slipped deeply and even hit the bottom of the original price range.