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Xiaomi Has a Value Peaking at $92 Billion USD, According to JPMorgan Analysts – Could be Twice as Expensive as Apple

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Jun 12, 2018
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A lot of people compare Lei Jun, founder of Xiaomi, to Steve Jobs, co-founder of Apple. However, while some readers could pitch on how are similar and different in many ways, some analysts have also stated that Xiaomi could be twice as expensive as Apple.

Analysts Are Claiming That Xiaomi Could Ship More Devices in 2020 Than Apple’s 2017 Fiscal Year Shipments

According to Bloomberg, Morgan Stanley, which is one of the banks leading Xiaomi’s IPO has said that the company is an internationally renowned smartphone maker because of its high market share and rapid growth trajectory. Currently, Xiaomi’s fair value is between $65 billion to $85 billion, which is nearly 27 times to 34 times the forecast for its adjusted earnings in 2019.

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This is twice the Apple’s valuation of 14.5 times estimated adjusted earnings for 2019. Xiaomi is also expected to exceeded analyst expectations for rivals such as GoPro, Fitbit, Alibaba, and Baidu.

Even though this Morgan Stanley analysis was done by its equity analysts and not their investment bankers, it still provides a lot of clues. Xiaomi wants to obtain $10 billion through its IPO and it plans to raise half the amount from its Hong Kong while the other half from mainland China.

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Analysts from JPMorgan Chase have predicted that after 2020, Xiaomi’s cash flow will improve significantly and may increase the company’s market value to $92 billion. CLSA believes that the company’s success could be attributed to quality and affordability and predicts that Xiaomi’s smartphone shipments may increase by 42 percent to 130 million units in 2018. The shipments are expected to increase to 179 million units and 218.6 million units by 2019 and 2020 respectively and for comparison purposes, Apple’s iPhone shipments were 216.8 million units in the last fiscal year.

One of the Goldman Sachs analysts thinks Xiaomi’s market value is around $70 and $86 billion. It is 26-32 times the analyst’s forecast adjusted 2019 net income. Goldman Sachs’ report explains that Xiaomi generates traffic through its hardware; its software provides a platform, and its internet services bring in a boatload of revenue and profit.

According to an exchange filing, Morgan Stanley, Goldman Sachs, and CLSA will lead Xiaomi’s Hong Kong IPO while Deutsche Bank AG, JPMorgan, Credit Suisse Group AG, and six Chinese banks will also help Xiaomi with equity sales.

Source: Bloomberg

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