Huawei is in talks with banks to raise $2bn overseas, $1bn from bank loans and $1bn in debt issuance, in a move intended to prove that the company still has expansion power. The financing plan is still in its early stages of negotiations, and it is not clear which banks will join, nor is the final amount of the financing. It will eventually enter the stage of in-depth negotiations at the end of January, with a formal financing plan to begin after the Chinese New Year.
Prior to this, Huawei has carried out two rounds of financing at home and abroad, in October 2019 Huawei Investment Holdings Limited issued a single medium-term note in the interbank market, the current issue size of about 3 billion yuan, the term of three years, the main underwriter is Industrial and Commercial Bank of China, the rating agency for the joint credit rating, The subject’s long-term credit rating and debt rating are AAA.
Huawei Investment Holdings Limited ( ) issued the second issue of medium-term notes ( 19 Huawei MTN002 ) from November 5 to 6 , with a period of 3 billion yuan for a period of three years , and the second period of registration changed from 20 billion yuan in the first issue to 10 billion yuan , while the main underwriter was replaced by ICBC and China Construction Bank .
Like Apple, Huawei’s financing is not about lacking money, but about optimizing its investment structure at lower borrowing costs. Huawei has previously explained the financing, saying, “Huawei has always insisted on continuously optimizing its capital structure through a reasonable financing layout to ensure the company’s financial soundness.” The domestic bond market is developing rapidly, the market capacity is the second largest in the world, and bond financing has become one of the important financing channels. The company through domestic debt issuance to open the domestic bond market, will further enrich the financing channels, optimize the overall financing layout. ”
Huawei said that the capital needed for the operation of the company mainly comes from the enterprise’s own business accumulation, external financing two parts, mainly the enterprise’s own business accumulation (the past five years accounted for about 90%), external financing as a supplement (the past five years accounted for about 10%). The company’s operations are sound and cash flow is abundant. The proceeds from this issue will be used to continuously focus on ICT infrastructure and provide customers with better product solutions and services.
Huawei expects full-year sales of more than 850 billion yuan, up about 18% year-on-year, according to Xu Zhijun, its rotating chairman. Although did not meet expectations at the beginning of the year, but the company’s overall operation is sound, basically withstood the test.
Over the past few years, Huawei’s net profit remained above 8% while maintaining high research and development investment, with revenue of 721.2 billion yuan in 2018 and net profit of 59.3 billion yuan, and the expected net profit of more than 65 billion yuan in 2019, and there is no shortage of money.