A Chinese employee is seen at the stand of Xiaomi during a fair in Nanjing city, East China's Jiangsu province, June 28, 2014. CHINA DAILY/ANN
Xiaomi Corp said on Tuesday it will buy back up to HK$12 billion (US$1.53 billion) worth of stock after the Chinese smartphone vendor lost nearly a third of its market value so far this year.
The move is Xiaomi’s biggest equity repurchase plan since it got listed in Hong Kong last year and its share price surged during the session by 0.69 per cent to the day’s high of HK$8.76 before closing on Wednesday 0.57 per cent lower at HK$8.65.
“The board believes that a share repurchase in the present conditions will demonstrate the company’s confidence in its own business outlook and prospects,” the Beijing-based company said in a stock exchange filing.
The company added that its current financial resources will enable it to implement the repurchase plan while maintaining a solid financial position.
Xiaomi has been grappling with intense competition from its Chinese peers and the market saturation in global smartphones.
In the second quarter of this year, the company is the fourth largest smartphone vendor in the world, shipping 32.3 million units of handsets globally. That was a year-on-year decline of 0.2 per cent, in comparison with the 8.3 per cent year-on-year rise of Huawei Technologies Co, data from market research company International Data Corp (IDC) showed.
In the domestic market, Xiaomi fell 19 per cent year-on-year in terms of shipments, with its market share standing at 11.9 per cent. In comparison, Huawei shipments have surged by 27 per cent and grabbed a record high market share of 37 per cent.
IDC said in a research note Xiaomi was hampered by both internal organisational changes as well as timing differences in its flagship product, which was launched a quarter earlier this year. Xiaomi’s challenges in China include transitioning to new products and managing its offline channels.
Xiang Ligang, director-general of telecom industry association Information Consumption Alliance, said Huawei’s rising momentum came at the expense of other smartphone vendors including Xiaomi, given that consumers are reluctant to upgrade their handsets and saturation in the smartphone sector.
Xiaomi’s revenue growth also slowed down during the quarter ended in June. Its revenue rose 15 per cent to 51.95 billion yuan (US$7.36 billion) from April to June. In comparison, Xiaomi’s revenue grew by 27 per cent in the first quarter of the year.
On top of smartphones, Xiaomi accelerated efforts to expand its presence in the internet of things. Earlier this month, Redmi, an independent brand of Xiaomi, unveiled its first smart TV, signalling the Chinese tech company’s ambition to expand its presence in the TV sector. CHINA DAILY
