On the morning of July 10, Minmi Group founder, chairman and CEO Lei Jun posted a microblog saying, BeiPiao, struggling for more than nine years, finally bought a house! Millet Science Park, 8 buildings, 340,000 square meters, cost 5.2 billion! The micro-blog soon received more than 40,000 praises and more than 5,000 messages.
On July 10, millet closed at HK$9.59, down 43.59% from HK$17 a year ago, while its market value was HK$23.541 billion (about US$29.5 billion), a far cry from the value of HK$100 billion when it was launched a year ago.
To double the earnings of investors who buy millet shares on the first day of listing. A year ago, on July 9, on the Hong Kong Stock Exchange, Lei Jun said in his trademark Hubei Putonghua. In his speech, he talked about the millet porridge he drank together at the beginning of his entrepreneurship. He also talked about the rice noodles who had been supporting millet. Lei Juns eyes burst into tears several times.
With this expectation, Datong, a UI designer who has just been working for millet for three months, spent more than HK$50,000 to buy 3000 shares of millet stock. However, on the day of listing, millet shares broke. Now a year has passed, millets falling share price makes the young shareholder dare not even look at it.
Millet also recognized the seriousness of the problem. At the millet annual meeting in January 2019, Lei Jun said, Students, maybe everyone feels that winter has come. In 2019, we are going to face the most serious challenges. There is no room for blindness and optimism. During the year of listing, winter millet has undergone drastic organizational restructuring, offline channel strengthening and product line combing, and its effect remains to be observed. But there are still many rice noodles who like to use millet products. They believe that millet is underestimated.
In the public road show, Lei Jun once said that good companies depend on profits, great companies depend on peoples hearts, millet to be a great company. But will the market and investors, all measured by numbers, give millet a great opportunity?
At the recent closed-door meeting in China, Lei Jun stressed that the industry has reached the coldest winter, millet should abandon all the fantasy of quick victory.
Xiaomi Beijing An Home
Moving to a new house at the end of September and repurchasing 18 stocks in a month
Millets new home, Millet Science Park has finally been completed! Immediately start moving. It is expected to be finished by the end of September. At 21:53 on July 9, Lei Jun announced the news on his micro-blog. In the photo, he smiled. At the opening ceremony of the evening, thousands of millet employees jogged shoulder to shoulder. Early the next morning, Lei Jun joked on Weibo again: Beipiao, struggled for more than nine years, finally bought a house! On July 10, a reporter from the Beijing News saw in the park that only the first floor of the F building was occupied. Minmi insiders revealed that the official relocation has not yet begun.
Lei Jun was so excited last time, maybe back to a year ago. On the morning of July 9, 2018, the millet executives in the Hong Kong Stock Exchange were lined up with a bronze Gong taller than human beings in the middle, which was specially designed to meet the first millet group of Hong Kong shares with different rights. The glorious Lei Jun picked up the mallet wrapped in red silk and sounded the gong for the millet market. However, the millet market for one year did not double the earnings of investors as Lei Jun said at the celebration dinner that night, and the stock price continued to fall.
On July 3, 2019, Millet announced that it would repurchase 5.12 million Class B common shares at a cost of about HK$49.938 million. In early June, millet shares hit an all-time low of HK$8.91. Starting from June 3, millet has carried out 18 repurchase operations in a month, with a total cost of about HK$1 billion. On July 10, millet shares were still trading below HK$10, closing at HK$9.59.
Millets last stock repurchase was in January this year. At that time, the six-month ban period of millet was over, and 3 billion shares were thawed, reaching 19% of the total issuance. At that time, the repurchase effect was also very significant. According to millet, when it first bought back on January 17, it only spent HK$60 million, boosting its stock price by up to 6%.
The weakness of millet stock price is not without warning. As the market approached, the disclosures of millet valuation declined in turn: from the rumored $200 billion to the investment bank forecast of $100 billion, to the underwriters $75 billion to $85 billion, until the final listing was locked at $53.9 billion, not only below the previous $55 billion valuation bottom line, but four years ago. The $45 billion in financing was not much higher.
Regarding the rumored valuation of $20 billion and $100 billion, Lei Jun once used the market dream rate to explain. He believes that investorshigh valuation of millet has little to do with the current sales of millet mobile phones. What they see is the future of millet mobile phones.
Millet in 2018 financial report disclosed: millet hardware after-tax net interest rate is less than 1%. By contrast, Q1 in 2019 accounted for only 10% of the gross profit of Internet services of 2.9 billion yuan, gross profit margin is about 20 times that of smartphones, accounting for 56% of the gross profit of the company.
Its not hard for the industry to understand Lei Juns plan: After winning a large number of customers with his unprofitable smartphone, millet needs to use profitable Internet services to complete the closed-loop business model. In the capital market, the price-earnings ratio of Internet companies is significantly higher than that of manufacturing companies, and their profit prospects are more favourable to investors.
However, the companys prospectus disclosed that in the first quarter of 2018, the revenue of Internet service business accounted for 9.4% of the companys business income. In contrast, the same period of revenue of millet smartphone business accounted for 67.5% of the companys business income.
A year later, in the first quarter of 2019, Millets revenue from Internet services rose slightly to 9.7%, while the revenue from smartphone business fell to 61.7%. Overall, millets mobile phone dependence has been slightly reduced, and the proportion of other businesses has increased, but its revenue structure has not been fundamentally improved.
On the eve of listing, millet temporarily decided to cancel the plan of synchronous issuance of CDR in the Mainland, replacing it with Hong Kong shares and A shares. Now, a year later, the announcement of millets application for postponing the meeting of the issuing and adjudicating committee is still on the companys official website, and the postponed issue of A-share CDR has no further details. In the Hong Kong Stock Exchange, the subscription of millet is only 10 times higher. Compared with the subscription of Pinghao Doctor, Reading Group and other new economic enterprises listed on the Hong Kong Stock Exchange in 2017, millet is not sought after by investors. And financial institutions such as Guojin Securities have given a reduction rating to millets stock.
On June 6, the head of Millet MIUI Experience announced on Weibo that Millet will carry out a comprehensive renovation of MIUI advertisements, including removing a number of advertising spaces and cleaning up vulgar content. The reason for this round of consolidation is that many users are already intolerant of the ubiquitous advertising in MIUI.
Q1 in 2019, millet advertising business revenue of 2.3 billion accounts for more than half of the total Internet revenue of 4.3 billion yuan. Millet must strike a difficult balance between financial statements and user experience.
Enemy in Main Business
In the downturn of mobile phone market, Lei Jun competes for womens heart
The right hand of Leijun, a man of science and technology, compared with an OK gesture in front of his eyes. He raised his mobile phone with his left hand and pressed the shutter. This year, just half a hundred years old, he laughed with obvious crows tail pattern. But in the photo, his skin looks much more tender - this is the beauty function of the C C series mobile phone launched by Millet in July.
This self-portrait was quickly posted on Lei Juns Xiao Hongshu account. In order to win the hearts of women, Lei Jun worked hard before and after the release of the main series of Fashion Appearance + Photography. It was self-portrait shooting and vlog shooting. At the release conference, he said such catchphrases as blingbling and called on everyone to pay attention to his little red book.
Lei Jun holds the customized version of CC9, whose beauty functions are all created by MTlab, the team of American Graphics, the same as the real mobile phone of American Graphics, and the price is 2599 yuan, which is 600 yuan higher than the maximum matching price of CC9 standard version.
On the opening day, the staff of Beijing Heshenghui Millet House told the Beijing News that CC9 was the best seller, and it was the purest customized version of the lineage of the picture that had been in stock for a day.
From born for fever to win womens hearts, millet has gone through a rough road. Fever enthusiasts are naturally geeky and straight men. CC series is directed at the more important female market which pays more attention to the perceptual color such as appearance and photography. The layout of millet mobile phone is quietly changing.
Millets Hong Kong stock listing in 2018 coincides with the global and Chinese mobile phone market began to peak and shrink. Global smartphone shipments in the first quarter of 2019 were 3108 million, down 6.6% from 332.7 million in the first quarter of 2018, according to market research firm IDC. IDC also predicts that global smartphone shipments will fall by 1.9% over 2019.
The overall downturn of the market not only squeezes the edge manufacturers such as hammers and 360 mobile phones, but also brings tremendous pressure to the Huami OV at the top of the list. In close combat, the share of millet in the domestic market dropped from 13% in Q1 in 2018 to 11% in Q1 in 2019, down by 2 percentage points.
The remarkable trend in 2019 is that the pattern of Huami OV you catch up with me has become super strong. Huawei mobile phones continue to add code in China, the share is rising. With the technical advantages of 5G and folding screen, Huawei has been in the first camp alone. Millet, OPPO and vivo are gradually becoming the second camp. Millet mobile phone must do something but not do something.
Wu Yiwen, senior analyst at Strategy Analytics, believes that millet has been in the process of sorting out its brand strategy since the beginning of 2019. This process includes the adjustment of organizational structure, which directly affects the release rhythm of millet products and the management of channel inventory. These internal factors have a negative impact on the sales of millet mobile phones. The bottleneck of millet in China is the decline of the mobile phone market as a whole, and usersdemand for switching phones is mainly high-end products.
Millets user base is also changing. Rice noodle Li Tianmao still remembers how cheap and easy to use his millet 3. But as his working life increased and his salary increased, he was less sensitive to price: Your users grew up, should your products also grow with the growth of users, and make the hierarchy clear?
In the second half of 2018, millets complex and chaotic product line has arrived at the time of having to comb. In 2019, the results of this sort of combing began to emerge intensively: Red Rice series will be independent of Redmi brand, specializing in cost-effective market; the focus of millet mobile phone is planned for four points: exploring innovative technology, pursuing extreme experience, focusing on market segmentation, and strengthening brand characteristics.
Re-positioning of the millet mobile phone will cut down Note series, Max series, Play series and other products that make it difficult for users to distinguish, focusing on the commercial flagship MIX series, technology market digital series and young fashionable PC series.
According to Wu Yiwen, China and India are the two largest markets for millet in the external market, contributing more than 70% of the total volume of millet shipments in the first quarter. Although millet has maintained the first place in the Indian market in terms of shipments, it also faces the challenge of new online brands represented by Realme.
The global mobile Internet industry has a scale of $3 trillion, and mobile phones are a battle that millet cant lose, Millet CFO Zhou said in an interview with the media on July 3.
After all, millets AIoT dream needs to be built on the basis of the expanding market user base of millet mobile phones.
Layout Internet of Things
Driven by scenes, millet digs deep into the ecological moat
When Li Tianmao, an Internet practitioner, came home at night, the lights in his house turned on automatically. In bed, you can control almost all the electrical appliances in just one sentence.
Its so convenient. Li Tianmao purchased five smart speakers and put them in every room of his house, so that I can use them at home to walk to the living room, to the bedroom, or to the kitchen or to the toilet.
For this AI product manager, Millets AI technology is not advanced, its a special basic function. In his view, the AI technology level of manufacturers, whether it is voice recognition or human interaction, is not very different. But Millet has achieved the goal of integrating technology into the scene it deserves, improving your efficiency and convenience. Even the basic technology, as long as the scene is used correctly, will appear very tall.
Li Tianmao told the Beijing News that in this scenario-driven rather than technology-driven model, millets moat is actually deeper than outsiders think. What is really difficult to surpass is its supporting surrounding ecology. In his opinion, millet ecological chain has high degree of standardization, good synergy and greater value.
Alibaba Artificial Intelligence Laboratory official told Xinjing News that Tianmao Elves and Xiaoai classmates are obviously different in two aspects: first, in the application of ecological chain, Tianmao Elves co-exist with the brand, while Xiaoai classmates are used in Xiaomis own ecology; second, in the content side, the former and Xiaoai classmates are also different. Partners work together to research users and launch products they need, while the latter gives more of their operations to partners.
When consumers choose a brand of smart speakers as the entrance of smart home, and then purchase several smart hardware for linkage, the cost of subsequent replacement of the whole set of equipment is very high. For this reason, Li Tianmao felt that millet was actually underestimated.
In the prospectus, Mimi disclosed that in the first quarter of 2018, its IoT platform connected 100 million devices (excluding smartphones and laptops), contributing 7.7 billion yuan in revenue. In terms of the number of Internet connections, millet accounts for 1.9% of the global consumer Internet of Things market, surpassing Amazons 1.2% and Apples 1%.
A year later, the first quarter of 2019 earnings of millet showed that the income of IoT and consumer goods was 12 billion yuan, an increase of 56.5% over the same period of last year. As of March 2019, the number of live monthly users of Xiao Ai Tong, the representative of millet AI products, exceeded 45.5 million, an increase of 247.2% over the same period last year. Millet IoT platform has 171 million connected devices, an increase of 70% year on year. Millet is also proud to call it the worlds largest consumer-grade IoT intelligent interconnection platform.
At the China Regional Closed-door Meeting on June 18, Lei Jun described Xiaomis AIOT business as a ride away from dust, and his optimism was not without reason. If we can continue to lay out smart hardware, seize the AIoT entrance, weave a high experience, high viscosity smart Internet of Things, the value of this first advantage may enable the capital market to re-evaluate the prospects of millet.
Lei Jun said on his Wechat public number that AIoT is the next generation of super Internet and the arrival of the AI era has given us super opportunities at least one order of magnitude larger than the mobile Internet era. Lei Jun will never forget his famous saying: standing on the draught, pigs can fly. Now, will AIoT be the outlet for the giant millet to take off again?
In the days of waiting for the wind, millet is speeding up the layout of AIoT business, especially smart home. According to the data released by China Household Appliances Association, the main business income of Chinas household appliances reached 1.49 trillion yuan in 2018. Strategy Analytics, a market research institute, predicts that the global smart home market will continue to grow at a high speed, with a market size expected to exceed $1.3 trillion by 2023.
Among them, the higher unit price and bigger cake are the new frontier that millet is trying to open up. Lei Jun openly said that Xiaomis making household appliances is the inevitable choice for smart home landing to enter a critical stage. CITIC Securities analysis article said that small AIoT to large appliances as the main driving force, category rapid expansion, will hopefully slow down the pressure of weak demand for mobile phones.
In the month of its launch, millet launched its smart air conditioner online in a low-key way. Since then, Millet and Millets family have released their electric appliances more often at the launch meeting. In April this year, millet released a number of smart TV, vertical air conditioning and Walker products. In June, Mijia released products such as washing and drying machine, smoke stove set and intelligent door lock. New Beijing News reporter searched the millet mall on July 8 and found that only different types of air-conditioning products were on sale in six.
Last weeks retail monitoring on Zhongyikang Online showed that during June 18, millet TV and air conditioning products occupied the first and second place respectively in the black and white household appliances list.
But in the very mature household appliances industry, such as Haier, Mei, Siemens, Philips and other domestic and foreign household appliances giants, will be easily revolutionized by millet model? Maybe its not that simple. After Yunmi, a millet eco-chain company, launched the Internet counter-door refrigerator, Li Tianmao went to see it for the first time, but did not buy it: It just stuffed a screen into the refrigerator, which had no connection with other equipment.
Multiple structural adjustments
With drastic personnel adjustment, Lei Jun called throw away the illusion of quick victory
With millet on the market, more people choose to join. At the end of February 2019, Lei Jun revealed that millet employs 23,000 people. This figure is about 60% higher than the 14,513 people shown in the millet prospectus as of the end of March. Nine years after starting a business, millet is no longer the original 14 people to eat porridge millet. The flat management mode in the period of entrepreneurship is also increasingly unable to manage this huge super unicorn.
In February 2019, the millet hierarchy began to fall into place. According to media reports, the internal titles of millet are generally divided into Commissioner-Manager-Director and Vice President and above, with a total of 10 levels, ranging from 13 to 22. Commissioner level is about 13, manager level is about 16 to 17, director level is about 19 to 20, vice president level is 22.
Since its listing one year ago, millet has made drastic adjustments in its organizational structure and personnel appointments nearly ten times, which are closely related to the companys business priorities. In terms of organizational structure, millet has set up group staff and organizational departments to strengthen the group brain; set up technical committees and procurement committees to add code to R&D and supply chain management; set up offline business committees, AIoT strategic committees and design committees to improve offline channel capacity, AIoT business collaboration and product design level. u3002
In terms of personnel adjustment, Lei Jun directly served as president of China, demonstrating his determination to grasp the Chinese market; Wang Chuan, senior vice president, stepped down his post as chief of staff and focused on the power supply department; Zhang Feng, supply chain expert, served as chief of staff and chairman of Group Procurement Committee at the same time; Yan Kesheng was in charge of the Quality Committee and the quality of hardware and software. Put control in one.
The large-scale deployment of troops indicates how cruel the upcoming market war will be. For Lei Jun, he may never want millet to fade away from the background of start-up companies. At the product launch in early July, he still called millet a startup company with countless achievements in rice noodles. On April 9, when Xiaomi was nine years old, Lei Jun sounded Xiaomis horn for the second stage of entrepreneurship in his letter.
Lei Jun has said on numerous occasions that his ultimate goal in creating millet is to change the generally inefficient business world. This is also the value Millet has always emphasized - enterprises are not necessarily game with users, it is worthy of user trust. Millet should cut down all premiums so that consumers can enjoy the most generous prices.
But its not easy to subvert a market. With the gradual release of catfish effect of millet, competitors who have found out the channels and technical weaknesses of millet are apt to follow suit and grab the millet market with the Internet model in turn.
KESO, a veteran Internet observer, talked about millets ceiling in the documentary A Fire, saying that the idea and practice of millet used to be more subversive and revolutionary, but now everyones differences are getting smaller and smaller.
At the point where the mobile phone market is expanding to shrink, millet, already a big company, needs to be more organized and flexible. According to 36 krypton reports, within a month after taking over the China area, Lei Jun interviewed hundreds of employees, including the core managers of the China area and the main business managers of the provinces and municipalities offline. At the China Regional Closed-door Meeting held on June 18, Lei Jun announced that he would invest an additional 5 billion yuan in new retail sales and build a new retail Iron army in three years. This $5 billion will be mainly used for additional incentives for partners, investment in channel innovation, team building and incentives.
Whether the vigorous supplementary lessons of millet in organization and channel can bring about the improvement of performance still needs time to test. But the question before Lei Jun is whether millet, who dreamed of launching a profound revolution in commercial efficiency, will be assimilated gradually in the struggle with friends and businessmen.
On the second day after the CC series conference, Lei Jun held a mobilization meeting for millet dealers all over the country.
As a millet user, Li Tianmao will open the millet app every day to see if there are any new eco-chain products recently, but somehow, the latest update speed has slowed down significantly. Under his Amway, some colleagues and friends also used many millet ecological chain products when decorating.
At the same time, Designer Datong has left millet, but millet stock is still in his hands, no way, can only hold for a long time.
At the previous closed-door meeting in China, Lei Jun stressed that the industry has reached the coldest winter, millet should abandon all the fantasy of quick victory theory.
Beijing News reporter Chen Weicheng intern promised editor Xu Chao to deal with Chunbing
Source: New Beijing Daily Responsible Editor: Yao Liwei_NT6056