On April 20, Xiaomi Group announced on the Hong Kong Stock Exchange that Xiaomi Group plans to issue US dollar bonds to professional investors, mainly for general corporate purposes and repayment of existing borrowings it depends on.
US dollar bonds are globally recognized as tradable bonds. Xiaomi said that the issuance of US dollar bonds is conducive to the development of multi-level and diversified financing channels. This will improve the company’s financial operation efficiency and enhance financial management flexibility.
At present, the Fed is continuing to cut interest rates. Under such a background, companies can lock in low-interest rates in advance through US dollar bonds. This will help them hedge exchange rate risk to a certain extent and deepen the internationalization process of companies.
According to the financial report, Xiaomi Group’s revenue in 2019 exceeded 200 billion yuan. Its cash reserve was approximately 66 billion yuan and its operating cash flow reached 23.8 billion yuan.
Obviously, Xiaomi has sufficient book funds and is not short of money. Since the second half of last year, Xiaomi has entered a stage of steady growth, while digesting poor inventories and improving profitability and cash reserves.
On March 24, it was reported that Xiaomi Group plans to issue 8 billion yuan of panda bonds (referring to yuan bonds issued in China by overseas and multilateral financial institutions) to repay loan interest in China, supplement working capital, and respond to the new crown epidemic.
On April 2, Xiaomi issued the first panda bond in the interbank market in China, with an amount of 1 billion yuan and a period of 365 days. 20% of the proceeds were used to support the fight against the epidemic. And the rest was mainly used to supplement working capital and repayment of domestic loans.
The industry believes that Xiaomi’s current operating cash flow is relatively abundant. And financing through US dollar bonds reflects Xiaomi’s aggressive attitude, diversified and rich financing capabilities. And also, it reflects the continued confidence of the capital market in Xiaomi.