XIAOMI(01810)2023-04-26 08:55Financial Performance - Total revenue for 2022 reached RMB 280.04 billion, with adjusted net profit of RMB 8.52 billion[9] - Gross profit for 2022 was RMB 47.58 billion, down from RMB 58.26 billion in 2021[9] - Operating profit for 2022 was RMB 2.82 billion, a significant decrease from RMB 26.03 billion in 2021[9] - Revenue decreased by 14.7% to RMB 280.04 billion in 2022 compared to RMB 328.31 billion in 2021[31] - Gross profit declined to RMB 47.58 billion in 2022 from RMB 58.26 billion in 2021[30] - Adjusted net profit for 2022 was RMB 8.52 billion, down from RMB 22.04 billion in 2021[30] - Adjusted net profit for 2022 was RMB 8,518,007 thousand, with a net profit margin of 3.0%[59] - Adjusted net profit for 2021 was RMB 22,039,474 thousand, with a net profit margin of 6.7%[59] Assets and Liabilities - Total assets as of December 31, 2022, amounted to RMB 273.51 billion, with non-current assets at RMB 113.09 billion[10] - Equity attributable to the company's owners stood at RMB 143.66 billion as of the end of 2022[10] - Total liabilities as of December 31, 2022, were RMB 129.58 billion, with current liabilities at RMB 89.63 billion[10] - The company's total equity and liabilities amounted to RMB 273.51 billion at the end of 2022[10] - Cash and cash equivalents increased from RMB 23.5 billion in 2021 to RMB 27.6 billion in 2022[62] - Total cash resources as of December 31, 2022, amounted to RMB 94.3 billion[62] - The debt-to-asset ratio improved from -31.1% in 2021 to -35.6% in 2022, reflecting a net cash position[63] - Total borrowings decreased to RMB 23.6 billion in 2022 from RMB 26.2 billion in 2021[65] Smartphone Business - Smartphone and IoT business remained stable despite global economic challenges, with global economic growth slowing from 6.2% in 2021 to 3.4% in 2022[13] - Global smartphone shipments in 2022 decreased by 11.7% year-on-year, reaching a nine-year low, while the company's global smartphone shipments reached 150.5 million units, maintaining the third position with a market share of 12.8%[14] - The company's smartphone business revenue in 2022 was RMB 167.2 billion, with an average selling price (ASP) of RMB 1,111, a record high[15] - Xiaomi 13 series achieved the top sales ranking in the RMB 4,000-6,000 price segment for seven consecutive weeks in mainland China after its launch[15] - Redmi K60 series sold over 300,000 units within the first five minutes of its launch in December 2022[16] - Smartphone segment revenue decreased by 19.9% to RMB 167.22 billion in 2022, with smartphone shipments dropping by 20.9% to 150.5 million units[33] - Smartphone ASP increased by 1.3% to RMB 1,111.3 per unit in 2022[33] - Smartphone division gross margin decreased from 11.9% in 2021 to 9.0% in the reporting period, primarily due to increased inventory clearance efforts, USD appreciation, and higher inventory impairment provisions[42] IoT and Lifestyle Products - IoT and lifestyle product revenue in 2022 was RMB 79.8 billion, a year-on-year decrease of 6.1%, while global smart TV shipments reached 12.4 million units, up 0.6% year-on-year[18] - Air conditioner shipments increased by over 50% year-on-year in 2022, with online market retail share rising by 1.3%, and refrigerator shipments nearly doubled year-on-year[18] - Tablet shipments in mainland China grew by over 160% year-on-year in 2022, with the company ranking third in market share and second in wearable wristbands and TWS earphone shipments[18] - IoT and lifestyle products revenue decreased by 6.1% to RMB 79.79 billion in 2022, driven by lower sales of smart TVs and other IoT products in overseas markets[34] - Global smart TV shipments grew by 0.6% to 12.4 million units in 2022, outperforming the market decline of 5.6%[34] - IoT and lifestyle product division gross margin increased from 13.1% in 2021 to 14.4% in the reporting period, driven by lower core component prices and improved gross margins in smart TVs and smart home appliances[42] - IoT and lifestyle product division sales cost decreased by 7.6% from RMB 73.9 billion in 2021 to RMB 68.3 billion in the reporting period, mainly due to a decrease in IoT and lifestyle product sales[40] Internet Services - Internet service revenue reached RMB 28.3 billion in 2022, a year-on-year increase of 0.4%[19] - Overseas internet business revenue reached RMB 6.8 billion in 2022, a year-on-year increase of 35.2%, accounting for 24.0% of total internet service revenue[19] - Advertising business revenue reached RMB 18.5 billion in 2022, a year-on-year increase of 2.1%[19] - Game business revenue reached RMB 4.1 billion in 2022, a year-on-year increase of 4.4%[19] - Smart TV global monthly active users exceeded 58 million in December 2022, with paying users increasing by 23.0% year-on-year to 6.0 million[19] - Internet services revenue increased by 0.4% to RMB 28.32 billion in 2022, with overseas internet services revenue growing by 35.2% to RMB 6.8 billion[36] - Internet services division gross margin decreased from 74.1% in 2021 to 71.8% in the reporting period, mainly due to a decline in advertising business gross margin[43] - Internet services division sales cost increased by 9.0% from RMB 7.3 billion in 2021 to RMB 8.0 billion in the reporting period, driven by increased costs in advertising, TV value-added services, and gaming, partially offset by reduced financial technology business costs[41] R&D and Innovation - The company incurred RMB 3.1 billion in expenses for innovative businesses, including smart electric vehicles, in 2022[13] - R&D expenditure in 2022 reached RMB 16 billion, with a compound annual growth rate of 38.4% from 2017 to 2022, and the company plans to invest over RMB 100 billion in R&D from 2022 to 2026[14] - R&D expenses increased to RMB 16.03 billion in 2022, up from RMB 13.17 billion in 2021[30] - R&D expenses increased by 21.7% from RMB 13.2 billion in 2021 to RMB 16.0 billion in the reporting period, primarily due to increased expenses in innovative businesses such as smart electric vehicles[44] Global Market Performance - Overseas market revenue in 2022 accounted for 49.2% of total revenue, reaching RMB 137.8 billion, with smartphone shipments ranking in the top three in 54 countries and regions globally[14] - Global MIUI monthly active users reached 582.1 million in December 2022, a year-on-year increase of 14.4%, and the number of connected IoT devices (excluding smartphones, tablets, and laptops) reached 589.4 million, up 35.8% year-on-year[14] - Global MIUI monthly active users reached 582.1 million in December 2022, a year-on-year increase of 14.4%[19] - AIoT platform connected devices reached 589.4 million by the end of 2022, a year-on-year increase of 35.8%[23] - MIUI 14 system fluency improved by 60%, AIoT product discovery speed increased by 50%, and transmission speed increased by 77%[24] - Offline channel AIoT product GMV increased by over 27% year-on-year in 2022[25] - Xiaomi 13 series offline channel sales contribution reached 55% by the end of February 2023[25] Investments and Financial Activities - The company invested in over 420 companies with a total book value of RMB 63.9 billion, a 5.9% year-over-year increase[66] - Total investment value, including fair value of listed and unlisted companies, reached RMB 65.2 billion as of December 31, 2022[66] - The company recorded a post-tax net gain of RMB 1.2 billion from the disposal of investments in 2022[66] - The company issued 855 million in zero-coupon convertible bonds due 2027[64] - In 2021, the company issued 400 million in 4.100% green bonds due 2051[64] - The net proceeds from the 2020 placement and subscription amounted to approximately 889.6 million, fully utilized by the end of 2022 for similar purposes as the 2020 placement[170][171] - The net proceeds from the 2031 bond issuance were approximately 392.8 million, fully utilized by the end of 2022 for financing or refinancing eligible green projects[174][175] Corporate Governance and Shareholder Structure - The company has 32,543 full-time employees, with 16,171 engaged in R&D as of December 31, 2022[67] - The company repurchased 235,248,000 Class B shares for a total consideration of HKD 2,756,518,651 during the reporting period[77] - A total of 24,341,769 Class A shares were converted into Class B shares on October 28, 2022, with 21,922,431 shares converted by Lei Jun through Smart Mobile Holdings Limited and 2,419,338 shares converted by Bin Lin through Bin Lin 2021 A Trust[80] - A total of 2,937,275 Class A shares were converted into Class B shares on March 22, 2023, with 2,645,338 shares converted by Lei Jun through Smart Mobile Holdings Limited and 291,937 shares converted by Bin Lin through Bin Lin 2021 A Trust[80] - The company plans to issue 363,148,688 new shares (approximately 1.8% of the weighted average number of issued Class B shares) under the Post-IPO Share Option Plan and Post-IPO Share Award Plan[81] - The maximum number of shares that can be issued under the Pre-IPO Employee Share Option Plan is 2,512,694,900 Class B shares[84] - As of the latest practicable date, the company has granted 267,673,823 unexercised share options and restricted share units (approximately 1.07% of the issued share capital) under the Pre-IPO Employee Share Option Plan[88] - The company has three share plans: Pre-IPO Employee Share Option Plan, Post-IPO Share Option Plan, and Post-IPO Share Award Plan[81] - The Pre-IPO Employee Share Option Plan expired on August 24, 2022, after a 10-year term, but unexercised awards remain valid[87] - The Post-IPO Share Option Plan aims to provide selected participants with proprietary interests to encourage them to work actively for the benefit of the company and its shareholders[91] - Eligible participants under the Post-IPO Share Option Plan include employees, directors, consultants, and other related parties of the group[92] - The total number of B shares that may be issued upon the exercise of all options granted under the post-IPO share option plan and any other share option plans is 1,568,094,311 shares, not exceeding 10% of the issued B shares as of the listing date[93] - As of December 31, 2022, the total number of shares available for grant under the post-IPO share option plan is 1,447,394,311 shares, representing approximately 5.8% of the company's issued share capital[98] - A total of 233,500,000 share options have been granted under the post-IPO share option plan as of December 31, 2022[98] - The post-IPO share option plan is valid and effective for ten years from the listing date[97] - The total number of B shares that may be issued under the post-IPO share incentive plan without shareholder approval is 1,118,806,541 shares, with an annual grant limit of 3% of the total issued shares[102] - As of December 31, 2022, 387,027,516 reward shares were available for grant under the post-IPO share incentive plan[102] - The total number of new B shares that may be issued under the post-IPO share incentive plan will not exceed 1,118,806,541 shares[103] - As of December 31, 2022, 956,637,549 new shares were available for issuance under the post-IPO share incentive plan, representing approximately 3.8% of the company's issued share capital[103] - No maximum quota set for participants under the share incentive plan[104] - No payment or purchase price required for awarded shares under the share incentive plan[105] - The share incentive plan will terminate 10 years after the listing date or earlier if decided by the board[107] - Total awarded shares under the share incentive plan as of December 31, 2022, amounted to 564,256,129[108] - The fair value of awarded shares is determined based on the market value at the grant date[108] - The remaining duration of the share incentive plan post-IPO is approximately over 5 years[107] - Awarded shares do not carry voting rights until vested[106] - The board may determine the vesting conditions and periods for awarded shares[105] - The share incentive plan prohibits granting awards during restricted periods before financial results announcements[104] - The plan ensures compliance with applicable securities laws and regulations[104] - Total unvested reward shares as of December 31, 2022, amounted to 566,410,221[109] - The fair value of reward shares granted in 2022 was determined based on the market price at the grant date[109] - The company granted a total of 1,799,732 reward shares in 2022[109] - The weighted average market price of shares before the grant date in 2022 was 13.94[109] - The company's reward shares granted on March 23, 2022, had a fair value of 14.20 at the grant date[110] - The total reward shares granted under the post-IPO share reward plan amounted to 3,179,543 as of December 31, 2022[110] - The company did not enter into any equity-linked agreements during the reporting period[111] Leadership and Management - Lei Jun, the company's CEO, is responsible for strategy, corporate culture, and key products[114] - Lin Bin, co-founder and Vice Chairman, responsible for international business expansion including India and Indonesia, and domestic market sales and after-sales services[115] - Liu De, co-founder and Senior Vice President, oversees recruitment, promotion, training, and evaluation of mid-to-senior management, and organizational structure design[115] - Liu Qin, non-executive director and member of the audit committee, co-founded 5Y Capital, an early investor in the company[116] - Chen Dongsheng, independent non-executive director, has extensive experience in corporate governance and led reforms at Taikang Insurance Group[117] - Wang Shunde, independent non-executive director and chairman of the audit committee, has a strong background in financial management and strategic planning[118] - Tang Weizhang, independent non-executive director and chairman of the nomination committee, brings over 30 years of academic and administrative experience[118] - Lei Jun, aged 53, serves as the founder, CEO, Chairman, and Executive Director of the company, as well as the CEO of the smart electric vehicle business[120] - Lin Bin, aged 55, is a co-founder, Vice Chairman, and Executive Director of the company[120] - Lu Weibing, aged 47, is a partner, President of the Group, and President of the International Business Department, responsible for the mobile phone division, ecosystem chain division, major appliances division, China region, and India region[120] - Zhang Feng, aged 53, is a partner and Senior Vice President, serving as the President of the Major Appliances Division, with over 20 years of experience in the mobile phone and communications industry[121] - Zeng Xuezhong, aged 49, is the Senior Vice President and President of the Mobile Phone Division, responsible for the R&D and production of mobile phone products, with extensive experience in corporate strategy and innovation[121] - Yan Kesheng, aged 52, is the Vice President and General Manager of the Intelligent Manufacturing Department, responsible for intelligent manufacturing system-level solutions[121] - Lin Shiwei, aged 49, is the Vice President and Chief Financial Officer of the Group, also serving as the Chairman of Tianxing Digital Technology[122] - Zhu Dan, aged 45, is the Vice President and Deputy President of the Mobile Phone Division R&D, with significant contributions to the development of the camera and display departments[122] - Wang Xiaoyan, aged 48, is the Vice President and President of the China Region, playing a key role in the construction of the new retail business in China[122] - Qu Heng, aged 41, is the Vice President, Chairman of the Group's Technology Committee, and Chairman of the Group's Information Security and Privacy Committee, responsible for the quality and procurement committees[123] Shareholder and Voting Rights - Lei Jun holds 4,132,