Earlier, Xiaomi issued a notice saying that no more than 64 million Class B shares (incentive shares) won by Lei Jun before the listing will be donated to charities. The equity incentives granted to Lei Jun before the listing were also cited by the outside world before being donated to charities. Xiaomi related people responded that it was an industry practice.
Xiaomi executives reduced their shareholdings and responded to charity, which also caused outsiders to question. Some netizens questioned charity as “covering” and netizens commented: “Why should we emphasize the use of charity?”, but some netizens commented on Lin Bin’s message. The reduction is very normal and the concern is high because the stock price is sluggish and most of the retail investors are stuck.
According to information disclosed by the Hong Kong Stock Exchange, Lin Bin sold stocks for three consecutive days after the release of the second quarter earnings report, sold 26,706,200 shares on August 21, sold 5,569,600 shares on August 22, and sold 9,047,600 shares on August 23. A total of 41,340,400 shares of Xiaomi shares, the average selling price of 9.07 Hong Kong dollars, 8.92 Hong Kong dollars and 8.92 Hong Kong dollars per share, cash out of about 370 million Hong Kong dollars, equivalent to more than 340 million yuan.
It is reported that Lin Bin’s sale of shares accounted for 1.48% of its shares, and its shareholding ratio decreased from 11.67% to 11.47%.
Lei Jun disclosed that Lin Bin will no longer sell Xiaomi shares within one year, or intends to stabilize Xiaomi's share price. However, Xiaomi’s stock price hike also caused outsiders to question Lin Bin’s cash-out, fearing that holders may have doubts about the value of the stock.
On August 23, Lin Bin transferred the equity of 3,866,600 shares to the family fund Bin Lin and Daisy Liu Family Foundation. It is reported that the fund is a non-profit charitable fund, and its property is used for charity.education, science, literature or religious activities.
Lin Bin also published a letter and announcement on this promise on Weibo today. He said that Xiaomi is still the whole of my career. I love Xiaomi, I am full of confidence in the future of Xiaomi, I believe that Xiaomi mode will be successful.
On January 9 this year, Xiaomi issued a notice saying that Lei Jun and the controlling shareholder promised not to reduce their holdings of Xiaomi stock within one year, and CFO Zhou also received the same commitment. However, other executives, including President Lin Bin, did not make a commitment to reduce their holdings.
Lin Bin’s reduction seems to be contrary to the group’s efforts. This may be one of the reasons why the outside world is concerned about Lin Bin’s reduction. Xiaomi has frequently repurchased shares, which is designed to help boost market confidence. Since June 3, 19 stock repurchases have been conducted continuously, with funds of HK$1 billion. From June 15 to July 3, Xiaomi repurchased for 15 consecutive trading days. But the stock price has not been boosted.
In addition to the sale of shares by Lin Bin, according to the latest disclosure of information on the Hong Kong Stock Exchange, Xiaoxing’s major shareholder, Morningside Capital, allotted about 111 million shares of Class B shares to the GP and LP of the fund on July 4, the shareholding is visible. For each GP and LP, convert their equity in the fund into the shares of Xiaomi Group. Some insiders of the securities told Sina Finance that Morningside Capital obtained the fund's equity in the transaction, which was the act of stock transfer.
On August 20th, Xiaomi released the first half of 2019 and the second quarter performance report. The report shows that Xiaomi's total revenue in the first half of the year was 95.71 billion yuan, up 20.2% year-on-year; the adjusted net profit was 5.72 billion yuan, up 49.8% year-on-year. Although the performance exceeded expectations, Xiaomi's share price has fallen several times in recent days. Xiaomi's share price hovered around 10 yuan in July. On August 27, Xiaomi's share price closed at 8.79 Hong Kong dollars per share. It rose 1.03% on the day and the current market value is 211.125 billion Hong Kong dollars. (Sina Finance listed company research institute Chen Yanxu)