Photo/Shetuwang

Jan. 17 (NBD) – Smartphone giant Xiaomi (1810.HK) has seen early investor cashing in shares after post-IPO lockup expired recently, and has increased stakes in AI and Internet of things amid a global downturn for the smartphone sector.

Undisclosed investor sold 231 million Class-B shares of Xiaomi at HKD9.45 (1.2 U.S. dollars) per share on Wednesday, 5.1 percent lower than closing price of Tuesday, reported Bloomberg. The selling amounts to around HKD2.18 billion (278.3 million U.S. dollars), marking the first sale by an early investor.

The trading came after the lockup of shares held by cornerstone investors and some pre-IPO investors expired on January 9. 

On the expiration day, it is reported that Apoletto Managers Ltd, fund related to Russian billionaire Yuri Milner, has more than halved its stake from 9.25 percent to 4.99 percent of the total shareholding.

More shares will be tradable in July this year, one year after Xiaomi hit IPO in the Hong Kong Stock Exchange last year.

To boost market confidence, controlling shareholders including founder and CEO Lei Jun, senior vice president and CFO Zhou Shouzi pledged to continue locking their shares for another year.

It is noted that the unlocked shares belong to three types of holders, namely pre-IPO investors, employees and cornerstone investors. The former two acquired shares at very low price, not higher than HKD2.66 (33 cents), which means they can still make ample profits when Xiaomi's price dropped to all-time lows.

Xiaomi's price closed at HKD9.7 (1.2 U.S. dollars) Wednesday, over 55 percent lower compared with the highest point since the company's IPO on July 9 last year.

The Xiaomi IPO attracted worldwide attention as some investment banks touted a 100 billion U.S. dollars valuation. The company's market capitalization is HKD232.168 billion (29.6 billion U.S. dollars) as of press time.

Xiaomi's poor performance on the stock market came amid the global slowdown of the smartphone sector after years of high-speed growth.

An analyst with a securities company said that leading smartphone vendors including Apple and Samsung lowered their sales prediction due to the sluggish market of consumer electronic devices in general.

JPMorgan Chase lowered its rating of Xiaomi on January 8, pointing out that though Xiaomi's smartphone business is expanding in overseas markets steadily, the growth is predicted to be counterbalanced by slowing domestic market. Samsung's aggressive strategy to promote medium-priced smartphones also poses threat to Xiaomi in India.

Xiaomi is actively seeking new growth point. On the annual party held on January 11, Lei Jun announced a "double engine" strategy that promises an investment of over 10 billion yuan (1.5 billion U.S. dollars) in the AIoT (AI plus Internet of Things) sector in the next five years, making it another growth engine besides smartphones.

Xiaomi claims it has built the world's largest consumer IoT platform, surpassing Google and Apple. Its platform has connected 132 million smart devices as of November 2018, with over 20 million daily active devices. 

The above-mentioned analyst commented that Xiaomi entered early in the IoT sector and has found relatively mature business models. It's a wise decision both in the long term and the short term.

Email: limenglin@nbd.com.cn