Xiaomi's stock price dropped by more than 8% on high trading volume, what bearish news should we pay attention to? How does the market view Xiaomi's smartphone and home appliance business amidst the disturbing news?
On June 27, Cailian News reported that Xiaomi Group-W (01810.HK) fell by more than 8% during the day, hitting a new low in nearly two months.
On the news front, earlier Xiaomi co-founder and vice chairman Lin Bin violated his promise not to reduce his holdings for five years, triggering continued market controversy.
According to the Hong Kong Stock Exchange, from June 4 to June 6, Lin Bin reduced his holdings of Xiaomi shares for three consecutive days, cashing in approximately HKD 179 million in total.
Although Lin Bin explained that the shares sold this time were 120 million B-class shares previously donated to the foundation and not included in the lock-up commitment. Most of the shares were sold to fulfill the donation agreement of RMB 100 million with Sun Yat-Sen University and other public welfare purposes.
However, due to Lin Bin's history of selling a large number of Xiaomi shares for cash in the past, some investors are still very concerned about this reduction and even see it as a signal of Lin Bin's "cash out of the market".
Data shows that in August 2019, Lin Bin also sold 41.3 million shares of Xiaomi stock for three consecutive days, with a total of HKD 370 million in cash. One year later, after the 12-month lock-up commitment expired, Lin Bin signed a bulk trading agreement with Goldman Sachs and sold 350 million B-class shares, with the selling price at that time resulting in a reduction of approximately HKD 8 billion according to. current price.
Interestingly, according to information from the Hong Kong Stock Exchange, the Bin Lin and Daisy Liu Family Foundation, which received Lin Bin's donated shares, is registered overseas.
More importantly, the foundation still holds more than 50 million shares of Xiaomi stock, which are not included in Lin Bin's lock-up commitment, which naturally makes the market worried about the impact of continued selling.
On the other hand, Xiaomi's smartphone and home appliance businesses have also been disturbed by the news recently.
Financial reports show that in the first quarter of this year, Xiaomi's home appliance business revenue increased by more than 46% year-on-year, and the smartphone business revenue increased by more than 33%, becoming the main driver of its performance growth.
According to TechInsights, during China's 618 shopping festival, smartphone sales fell by 2% year-on-year.
In addition, the latest production monitoring data from AVC shows that the domestic sales of home air conditioning companies in June and July have decreased by 10.0% and 12.5% year-on-year, which may also affect the market's expectations for Xiaomi's home appliance business.