Analysis xiaomi application 5 billion anti-epidemic loans: it self-pressure, but should help small and medium-sized enterprises

On February 12th, at least 300 companies applied to local banks in Beijing, with a total loan of at least Rmb57.4bn, according to information obtained by Reuters, citing bank insiders. The list of companies that apply for loans on this document includes a large number of technology companies such as Xiaomi, American Group, Drip, View and so on.

Focus

1, the United States and Xiaomi and other technology companies to Beijing local banks to apply for special anti-epidemic loans, of which Xiaomi applied for 5 billion yuan, the United States Group applied for 4 billion yuan, approval or not has not been determined;

On February 13, before the launch of Xiaomi 10 series, Xiaomi voluntarily disclosed that its total revenue in 2019 will exceed 200 billion yuan, and announced that in 2020 research and development investment will exceed 10 billion yuan;

3, Xiaomi e-commerce platform has a large number of anti-epidemic products for sale, including hand sanitizer, disinfection equipment and thermometers, etc. ;

4. With the progress of the epidemic, catering, offline entertainment, commercial complex, etc. affected, the delay of re-employment has further affected the manufacturing industry.

Analysis xiaomi application 5 billion anti-epidemic loans: it self-pressure, but should help small and medium-sized enterprises

Xiaomi’s first online launch on February 13th was launched.

Xiaomi applied for a 5 billion yuan loan for the production and sale of medical equipment, including masks and thermometers, Meituan Dianping applied for a 4 billion yuan loan to provide financial support for free meals for medical staff in Wuhan, and Apron applied for a 100 million yuan loan. Used to develop more precise facial recognition techniques for people wearing masks, Didi Chuxing has applied for a $50 million loan to withstand the severe damage to business in the outbreak. However, the approval of these loans has not yet been conclusive.

On February 13th, Xiaomi held an online launch to launch the 5G new Xiaomi 10 series. Xiaomi Group Chairman Lei Jun wearing a mask appeared, in the opening remarks about the outbreak in Hubei, Lei Jun once choked, said that “life can be affected by the outbreak, but we can not be defeated by the epidemic.” “

According to Xiaomi, donations, including xiaomi Group, LeiJun and Xiaomi employees, totaled about 40 million yuan, including cash and medical supplies from eco-chain enterprises.

So why did Xiaomi make a great effort to donate money and materials to the epidemic area of Hubei, and apply for special loans against epidemic spending by the local banks in Beijing? Is Xiaomi really short of money?

Is Xiaomi really short of money?

Corporate loans are normal business practices in themselves, but what is puzzled by the public is why Xiaomi applied for a special loan against the epidemic.

On November 27, 2019, Xiaomi Group announced its third quarter 2019 results, with Xiaomi Group’s total revenue of RMB53.66 billion in the third quarter of 2019, up 5.53% YoY, the highest quarterly total revenue since Xiaomi’s inception; In addition, Xiaomi’s net profit for the first three quarters of 2019 totalled Rmb9.2bn, more than for the whole of last year.

Xiaomi outperformed market expectations, both in net income and net income. At the same time, Xiaomi Group’s third-quarter financial results show that Xiaomi’s cash flow reserves in the quarter has reached the size of 56.6 billion yuan, cash reserves sufficient also shows that Xiaomi’s operation is very healthy.

On February 13, 2020, prior to Xiaomi 10’s announcement, Xiaomi Group issued a voluntary announcement on the Hong Kong Stock Exchange, announcing three expected figures for 2019 revenue and research and development costs. Xiaomi’s full-year revenue for 2019 is expected to exceed Rmb200bn, and research and development costs are expected to be about Rmb7bn, according to the announcement. At the same time, it is also expected to spend more than RMB10 billion on research and development in 2020.

If in line with expectations, Xiaomi’s annual revenue will grow by nearly 15% in 2019. This is also the bottom of Xiaomi’s investment in research and development. On the first working day of the year in 2020, Lei Jun issued an internal letter announcing that he would upgrade the investment of 5G-AIoT from 10 billion yuan in the original five years to 50 billion yuan.

Xiaomi Group’s investment in research and development in 2020 is also illustrated by the expected increase of more than 40% in research and development costs in 2019, which is much higher than Xiaomi Group’s revenue growth.

All this shows that Xiaomi has entered a positive cycle, while revenue growth, increase investment in research and development, raise the technical threshold, the use of technology to drive the next stage of development.

In addition to Xiaomi, the US group that followed Xiaomi’s listing on the Hong Kong Stock Exchange has also attracted much attention. The group hopes to receive 4 billion yuan to provide free food and delivery to health care workers in the worst-hit city of Wuhan.

The U.S. mission also gave a lot of support to the Hubei epidemic area. On January 26, 2020, the U.S. Mission Foundation announced a donation of 200 million yuan to set up a special fund for health care support for health care, according to data disclosed by the U.S. Mission. In addition, the Group also jointly branded merchants for Wuhan City Fifth Hospital, Wuhan Hanyang District People’s Hospital and other medical care and fight against the epidemic of front-line personnel to provide free daily 1000 copies of takeaway meals.

At the same time, the company’s performance in the third quarter of 2019 was also excellent, with revenue of RMB27.49 billion, a record for a single quarter, up 44.1% YoY. The Company achieved an adjusted net profit of 1.9 billion yuan, compared with an adjusted net loss of 2.47 billion yuan in the same period last year. Profitable for two consecutive quarters.

Although slightly lower than Xiaomi, the group’s cash flow is also in good shape. As of September 30, 2019, the group’s cash and cash equivalents amounted to $15.1 billion.

So large Internet technology companies, including Xiaomi and U.S. Groups, are not applying for special anti-epidemic loans in response to short-term cash flow shortfalls, perhaps in preparation for the long-term effects of the outbreak.

The advance and retreat of xiaomi in the outbreak

Xu Gao, chief economist of BOC Securities, said in an interview with the media that the outbreak of new coronavirus pneumonia has brought a certain short-term impact on China’s economy. Affected by the outbreak, catering, tourism, entertainment and other needs to gather people’s business activities greatly affected. As the start of work is delayed to prevent and control the outbreak, the impact of the outbreak on the industrial production sector is gradually emerging.

As one of the main platforms of life services, the Group has been greatly affected. Xiaomi is one of the elements of the industrial production sector and will naturally be affected by the outbreak.

In terms of adverse effects, Xiaomi’s products are behind a huge supply chain system, if there is a problem, the impact of the impact spread upstream and downstream. In the case of the newly released Xiaomi 10, Xiaomi prepares and produces the first batch ahead of schedule, but the subsequent capacity depends more on the ease of labor shortage and logistics constraints.

In an interview after the Xiaomi 10 launch, Xiaomi Group Chairman Lei Jun also admitted that the outbreak will have an impact on Xiaomi 10’s production, sales or Xiaomi’s revenue this year.

But again, the impact of the outbreak has led to a surge in online shopping demand, with many buying anti-epidemic supplies, including masks, disinfectants, hand sanitizers and other disinfectants.

Phoenix Technology (WeChat Soo: iFeng Technology) query shows that in the Xiaomi Mall, mask products have been sold out, but including hand sanitizer, disinfection devices, thermometers and other xiaomi eco-chain products are still on sale. With the resumption of many enterprises, these anti-epidemic supplies will still be popular.

Xiaomi China President Lu Weibing in an interview with the media also said that under the impact of the outbreak, some consumer goods demand is weakening, but some categories are growing, in addition to home health products, home office this new situation has brought a large increase in user demand for notebooks.

In addition, Xiaomi in the first quarter of this year will usher in an important opportunity for transformation. Speaking about how to reduce the impact of the outbreak on Xiaomi, Mr Ray said that in its latest third-quarter results, Xiaomi already had 50 per cent of its revenue from overseas markets and about 10 per cent from the Internet and other services. This is also the key to reducing the impact of the outbreak.

The outbreak has a wide range of domestic impact and a long time. In the overall domestic market demand is weak, Xiaomi can take the opportunity to accelerate the expansion of overseas markets in the first quarter, to increase the proportion of overseas market revenue. In addition, Xiaomi’s Internet and other services revenue is expected to rise further as the holiday season extends and demand for home work increases.

Anti-epidemic loans to help small and medium-sized enterprises

In an interview with the media, Mr. Jia Guolong, Sibey’s chairman, said that because of the impact of the outbreak, Sibe is now only able to rely on takeaways for income, but this portion of the income is only 10 percent of Sibe’s previous income. Without help, Sibe’s cash flow lasted less than three months.

Whether it’s the U.S. or Xiaomi, it’s really impossible to completely avoid the impact of the outbreak. But small and medium-sized businesses like Sibe need more help than they do.

A senior supply chain person in an interview with Phoenix Network Technology (WeChat: iFeng Technology) said that in the manufacturing sector, the more upstream enterprises for the greater demand for capital, because as a supplier of structural materials, need to rely heavily on manpower, but the ability to resist risks is weak, so the current stagnation to them to bring a greater blow.

As the representative of the success of manufacturing industry, ecological chain enterprises have become an important part of Xiaomi. In 2013, Xiaomi launched the EcoChain Program, setting the goal of investing 100 eco-chain enterprises within five years, laying out the Internet of Things, represented by smart hardware and home appliances. Over the past six years, Xiaomi has built a huge AIoT network, and these small and medium-sized enterprises need more financial support than Xiaomi.

As a commercial company, Xiaomi’s application for a loan is justified, after all, it also has some pressure. But as a bright spot for China’s manufacturing industry, as well as for companies that promote social responsibility, Xiaomi should also see small micro-companies that deserve more help.

Finally, if the state does approve the special loan, it is hoped xiaomi will be used to support upstream and downstream supply chain companies, after all, they may need the money more.