Chinese serial entrepreneur Lei Jun has been compared with Steve Jobs. Now, analysts are saying the smartphone giant he built could be twice as expensive as Apple Inc.
Xiaomi Corp. deserves to trade at a premium to global phone brands due to its market-share gains and faster growth trajectory, according to research from Morgan Stanley, one of banks leading its Hong Kong IPO. The Beijing-based company has a fair value of about $65 billion to $85 billion, translating into around 27 times to 34 times forecasts for its 2019 adjusted earnings, Morgan Stanley wrote in a report this week.
That’s roughly double Apple’s valuation of 14.5 times estimated 2019 adjusted earnings, data compiled by Bloomberg show. Xiaomi should also fetch richer multiples than rival smart hardware makers like Fitbit Inc. and GoPro Inc., as well as some major Chinese internet firms including Alibaba Group Holding Ltd. and Baidu Inc., according to Morgan Stanley.
While such pre-deal research is prepared by a bank’s equity analysts, not their investment bankers, it may provide a clue into how Xiaomi plans to sell its growth story. Xiaomi, which has been planning to seek about $10 billion, is considering raising about half that from its Hong Kong IPO and the other half from an offering in mainland China, people with knowledge of the matter have said.
Continue Reading at Bloomberg.com