Xiaomi files application for IPO in Hong Kong

Hong Kong stocks lower in early action, Ping An leads insurance companies down for a second day

Hong Kong stocks lower in early action, Ping An leads insurance companies down for a second day

Xiaomi posted a gross profit margin of just 8.8 per cent for its smartphone business in 2017 compared to 60 per cent for its internet services business. While the filing didn't say how much money Xiaomi is seeking to raise, it's expected to be at least $10 billion, valuing the Beijing-based firm at $100 billion, according to multiple reports citing people familiar with the plan.

Under Lei, Xiaomi is looking to enter developed markets for smartphones as it consolidates its position in emerging markets. Xiaomi's decision, four years after Alibaba Group Holding Ltd. chose NY, signals a new phase for the city's ambitions to rival the US market.

The listing documents offered a glimpse of Xiaomi's finances, with the company reporting that revenue rose by two-thirds past year to 114.6 billion yuan ($18 billion), including 80 billion yuan from its smartphone division. It also said it made a net loss of CNY 43.89 billion versus a profit of CNY 491.6 million in 2016.

Excluding one-time charges, it said its profit was 5.36 billion yuan, according to the file, which is the first time the company has reported financial details. Though it suffered through a challenging 2016, the company bounced back by revamping its sales model and expanding in India, where it rivals Samsung Electronics Co. as the biggest vendor.

That would catapult Xiaomi, founded in 2010 by serial entrepreneur Lei Jun, past Baidu and JD.com to become the third-biggest Chinese technology company by value, after Tencent Holdings and Alibaba Group Holding.

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That would make it the biggest IPO since Chinese e-commerce giant Alibaba's $21.8 billion IPO in 2014 on the New York Stock Exchange.

Xiaomi, which means millet in Chinese, will use 30 per cent of its IPO proceeds to develop the ecosystem of its technology business, especially in artificial intelligence and in IOT, where devices and appliances are connected to each other via the internet. Xiaomi could be the first company to IPO under the new rules.

According to Xiaomi's application, its shareholding structure will comprise class-A shares and class-B shares.

CLSA, Morgan Stanley and Goldman Sachs Group Inc are sponsoring Xiaomi's IPO.