China stocks: Yunmi Technology Co. (VIOT), a subsidiary of Xiaomi

Viomi Technology Co., Ltd. (NASDAQ: VIOT) was founded in 2014 and is headquartered in Shenzhen, China. It has 527 full-time employees (6/30/2018) and is a dedicated smart appliances R & D, manufacturing, sales of whole house Internet home appliance business, is committed to providing safe, intelligent whole house for a family of solutions for Internet appliances, it is the second Chinese rice after the company has an ecological chain millet.

Viomi Technology

Viomi Technology Co. (VIOT):

Yunmi thinks that Xiaomi’s water purifiers will promote OEM OEM business and started. Now Yunmi Technology is committed to becoming a promoter of Internet appliances in the whole house. Relying on Xiaomi’s ecological advantages, Yunmi Technology, which was only four years old, has been able to expand rapidly. Starting from the water purifier, Yunmi Technology has entered the field of all-category home appliances, and has determined the strategic blueprint for “whole house Internet home appliances”.

Prospectus of Viomi Technology Co. (VIOT):

1. Yunmi’s revenue in the second quarter of 2018 was 709 million yuan, gross profit was 191 million yuan, and net profit was 40.86 million yuan. For the six months ended June 30, 2018, Yunmi’s net revenue was 1.04 billion yuan, an increase of 284% compared with 270.6 million yuan in the same period last year. For the whole year of 2017, Yunmi’s net revenue was 873 million yuan, and the net profit was 18.919 million yuan

2. Before the IPO, Yunmi founder Chen Xiaoping held 41.3% of shares through Viomi Limited, plus a total of 50.7% of the shares held on behalf of him, making him the company’s largest shareholder. Shunwei Capital holds 20.5% of shares, and Red Better Limited, a fund of Xiaomi, holds 19.5%. That is, Lei Jun holds a total of 40% of Yunmi and is the second largest shareholder. In addition, Sequoia Capital’s fund SCC Venture V Holdco I, Ltd. holds 6.3%. After the IPO, Chen Xiaoping held 42.5% of the shares and 66.5% of the voting rights. Among them, the shares held by Viomi Limited were 34.5% and 53.7% of the voting rights. Shunwei Capital holds 17.1% of the shares and 2.8% of the voting rights. Xiaomi, through its fund Red Better Limited, holds 16.3% and 26.7% of the voting rights.

3. In terms of revenue, the proportion of Yunmi’s revenue from its own brands has continued to increase, from 10.3% in 2016 to 25% in 2017, and to 45.7% in the first half of 2018. The proportion of revenue from Xiaomi brands dropped from 89.7% in 2016 to 75% in 2017, and then to 54.3% in the first half of 2018. However, it can be seen that Yunmi’s dependence on Xiaomi is still obvious.

Viomi Technology Co. (VIOT) listing analysis (from Sina Technology):

  1. Yunmi Technology relies more on Xiaomi OEM orders, which is a step-by-step development under the wings of Xiaomi’s ecological chain. Yunmi Technology’s brands include Xiaomi water purifiers and self-owned brand products, but the business highlight still comes from Xiaomi water purifiers. In 2016, 2017 and the first half of 2018, Yunmi Technology’s sales of products to Xiaomi Company accounted for 95.9%, 84.7% and 62.6% respectively. It can be seen that the Xiaomi ecological chain is still the biggest driver of Yunmi’s technological development.
  2. The concept of “Yunmi Mutual Internet of Things Whole House Home Appliances” was proposed, but in fact, regardless of product content or business model, they are highly overlapped with Xiaomi’s smart home. Compared with the Xiaomi brand that pursues high cost performance, Yunmi Technology wants to be a mid-to-high-end brand. For the same product, Yunmi does not have a price advantage, and its brand influence is even lower than that of Xiaomi. It is obviously difficult for consumers to buy it.
  3. Yunmi’s expansion is “untimely.” The home appliance industry is already a red sea, and this year is entering a new round of winter. Moreover, in the market brand structure, whether it is major appliances, kitchen appliances, or small home appliances, oligarchs have already taken shape, and it is not easy to seize the market in fierce competition. Especially for Yunmi, if it leaves the Xiaomi ecological chain, in addition to branded products, it is necessary to rebuild the upstream supply chain and downstream channels. These are not as simple as “burning money”.

Viomi Technology Co. (VIOT) investment:

Viomi Technology Co., Ltd. (NASDAQ: VIOT) submitted its IPO prospectus on 8/28/2018, and plans to land on Nasdaq on 9/25/2018 with an issue price of US$9.00-11.00 and an issue of 11.4 million. Shares, raised no more than 14421 million US dollars, Morgan Stanley/CICC joint underwriting.

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