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Bloomberg IPO file disclosure risk: millet is the most important customer and distribution channel

via:新浪科技     time:2018/1/14 12:31:33     readed:277

Prospectus shows that for the two months to November 30, 2017, WAM's revenue was RMB476.7 million (about US $ 71.6 million) and its net profit was RMB52.2 million (about US $ 7.9 million); in 2017 In Q4 of the year, Huawei shipped a total of 6.5 million smart wearable devices.

Credit SuisseSecurities(USA) LLC, Citigroup Global Markets Inc. and Huaxing Securities (Hong Kong) Ltd. will act as underwriters for this IPO.

The following is an extract of Hua Mi prospectus:

Business and industry related risks

- Millet is our most important customer and distribution channel. Any deterioration in our relationship with Xiaomi or any decrease in the sales of millet wearable products may have a material adverse effect on the results of our operations.

- If we can not successfully and timely develop and commercialize new products, services and technologies, our business results may be materially adversely affected.

- The market in which we operate is highly competitive, and the size and resources of some of our competitors may make it more effective than us in competing against each other, which may result in a loss of market share and a decline in revenue and profitability.

- Our business may be materially and adversely affected if we fail to anticipate and satisfy consumer preferences in time, or if technological innovations make existing smart wearable technologies less competitive or outdated.

- Our future success depends on our ability to enhance our brand and protect our reputation. If we can not build and promote brands, including Amazfit, any damage to our reputation will hinder our growth.

- We do not have in-house manufacturing capabilities, we rely on several contract manufacturers to produce our products. If we have problems with these contract manufacturers, our business, brand and operating results may be compromised.

- We are vulnerable to supply shortages, prolonged delivery cycles of raw materials and components, and the impact of changes in supply. Any of these can disrupt our supply chain and have a material adverse effect on operating results as some of our key components of the product, such as low power Bluetooth, System-on-Chip and Sensors) come from one of the few or single sources of supply.

- If we or Xiaomi can not accurately predict consumer demand for our products and services, or can not effectively manage inventory, our business performance may be severely damaged.

- Our intellectual property and proprietary rights may not be sufficient to protect our products, and our business may suffer if our technology, products or other aspects infringe on third-party intellectual property rights, or third parties infringe upon our rights.

- We collect, store, process and use personal and other user data subject to our government regulations and other legal obligations related to privacy, information security and data processing, any security breach or actual or perceived failure to do so Compliance with these legal obligations may do damage to our brands and businesses.

- If we continue to grow, we may not be able to effectively manage our growth and the increasing complexity of our business, which may have a negative impact on our brand and financial performance.

We face a wide range of costs and risks associated with continued international expansion that may not be successful and may adversely affect our profitability and operating results.

We work with a wide range of strategic partners to diversify our application scenarios. If we can not expand or maintain our pool of strategic partners, the number of our product scenarios may not increase rapidly or not at all, which may reduce the attractiveness of our products. Any poor performance or negative publicity by our strategic partners can also adversely affect our operating results.

- Our future success depends on the continued efforts of key employees, including our founder Wong Wong, and our ability to attract and retain highly skilled and senior executives.

- Some directors may have a conflict of interest

- We have granted options and other types of rewards in accordance with the equity incentive plan and may continue to grant these rewards, which may result in an increase in equity rewards expenses.

- Higher labor costs and inflation may adversely affect our business and profits.

- Our business is affected by seasonal fluctuations and our overall financial condition and results of operations may be adversely affected if our sales are lower than expected.

- You should not use the number of MAUs or registered users of our mobile applications as indicators of future retention of users, ongoing interaction with users, or other revenue opportunities.

- We may engage in acquisitions and investing activities which may require a significant amount of management effort that will disrupt our business, dilute the shareholder value and adversely affect our operating results.

- Economic recession or economic uncertainty may adversely affect consumer discretionary spending and its demand for our products and services.

- We are subject to the government's economic sanctions laws, which may give us responsibility and jeopardize our competitiveness in the international market.

- Any major cyber-security incident or damage to our information technology systems or third-party partners can materially damage user relationships and cause us to suffer significant reputational, financial, legal, and operational consequences.

- Our use of open source software may have a negative impact on our ability to sell our products and expose us to potential litigation.

- The products we sell may have potential liabilities, while the costs associated with the bad products may have a material adverse effect on us.

- We do not have comprehensive insurance, which could expose us to huge costs and business interruptions.

- If we fail to implement and maintain an effective internal control system, we may not be able to accurately or promptly report our results or prevent fraud, investors' confidence and our ADS market prices may be materially adversely affected.

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