A few days ago, Xiaomi Group announced its 2018 annual financial report. As Xiaomi's first "transcript" after its listing, Lei Jun is very proud: "In 2018, Xiaomi's revenue was 174.9 billion yuan, a year-on-year increase of 52.6%, and its adjusted net profit was 8.6 billion yuan, a year-on-year increase of 59.5%, exceeding market expectations."

Despite the staggering year-over-year growth, savvy investors aren't buying it.

Because in "Lei Jun's Open Letter to Investors", Lei Jun did not talk about the specific financial data in the financial report. Instead, he repeated the old tune and talked about "where does Xiaomi's confidence come from" and "why does Xiaomi persist in struggle"... This kind of investment The behavior of people pouring chicken soup has made the industry question: Is Lei Jun "whitewashing" the financial report?

Before analyzing Xiaomi's 2018 financial report, let's review the various promises Lei Jun made:

Xiaomi will return to No. 1 in the domestic mobile phone market within 10 quarters.

Investors who bought Xiaomi's stock on the first day of listing should make double the profit.

It must be in stock, and it is guaranteed that the supply of Xiaomi Mi 9 will reach one million units in March.

In 5 years from now, we will continue to invest more than 10 billion yuan in the AIoT field!

Within five years, if our Xiaomi's turnover can beat Gree, then please prove that Dong Mingzhu and Dong Zong lost one yuan to me.

Now from the data in the annual report, Xiaomi is ushering in the second entrepreneurial crisis, and it is still very difficult to fulfill these promises.

Smartphone business surges, but far less than expected

As we all know, Xiaomi started out as a cost-effective smartphone business. Therefore, the revenue growth of its smartphone business has not disappointed investors.

According to the data, the revenue of Xiaomi’s smartphone segment was about 113.8 billion yuan, a year-on-year increase of 41.3%; the annual sales reached 118.7 billion units, a year-on-year increase of 29.8%. In the context of a 4.1% year-on-year decline in global shipments in 2018, Xiaomi is a company that maintains rapid growth.

Xiaomi attributed the growth of its mobile phone business to the following three points: the increase in revenue from mid-to-high-end models, the increase in shipments in the international market, and the excellent progress in mobile phone research and development.

The annual report pointed out that in 2018Q4, the revenue of smartphones priced above 2,000 yuan accounted for 31.8% of the total revenue; the international average selling price (ASP) of smartphones increased by 17% year-on-year; when each flagship phone was released, the third-party rating of its rear camera higher than that of mobile phones over the same period.

Judging from the annual report alone, the strong growth of the smartphone business seems to be justified. However, according to the shipments of Xiaomi mobile phones over the years, the year-on-year increase in 2018 is much lower than that in 2017. In other words, Xiaomi's shipments have increased significantly compared to other brands; but compared to itself, despite the blessing of the capital market, the growth rate has also dropped significantly.

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At the same time, Xiaomi struggled with its mid-to-high-end models. In 2018, there are only two flagship products of Xiaomi in the 2500 yuan range - Xiaomi 8 and Xiaomi MIX 3. However, Xiaomi has never introduced the final sales volume of Xiaomi Mi 8 in one year. It only introduced that it exceeded 6 million units in October, but it may not exceed 8 million units in the end.

For Xiaomi's flagship models in 2018, consumers' word of mouth is also not the same. In the official Xiaomi community, users rant about new Xiaomi products that are becoming more and more homogeneous, "Since Xiaomi's listing, Xiaomi's products have changed, they are no longer such a cool design, and they no longer consider the old Mi fans. I feel it.” Such remarks are endless. 2018 was the least cool year for Xiaomi, which made users regret.

As for the improvement of overseas markets and self-developed technologies, there is no need to say more about these two points.

The situation in the overseas market is complicated. The Indian government has begun to nurture local brands, the African market is firmly occupied by Transsion, and Samsung, the big brother, has firmly occupied the throne of the world's largest sales volume. Xiaomi's overseas journey is not optimistic. And Xiaomi's "deep cultivation" camera technology is not the primary factor for consumers to buy a machine, and secondly, the camera module is not a self-developed product of Xiaomi, and only strengthens the algorithm on the supplier's plan.

Finally, let's look back at the first FLAG established by Lei Jun: Xiaomi will return to the first place in the domestic mobile phone market within 10 quarters. This is a statement made in February 2018, that is, the sales or sales will be the first in China by 2020 at the latest.

According to IDC data, the first domestic sales in 2018 were OPPO's 78.94 million units, and Xiaomi's only 51.99 million units; the first domestic sales in 2018 were Apple's 31.590 billion yuan, and Xiaomi's only 9.319 billion. Whether it is sales or sales, the gap between Xiaomi has not decreased, but is slowly expanding...

Maybe you think that Xiaomi still has a trump card, but other friends will not stop and wait for you to make a move. In particular, even high-premium brands like Samsung and Huawei have begun to cut prices. If Xiaomi does not have a solid technological innovation "black technology", the ending will be embarrassing.

The stock price has been cut in half, and whoever buys the stock loses?

Regarding Xiaomi's share price, "this is really the first stock that young people are stuck with"! Some netizens commented with blood.

Since Xiaomi Group landed on the Hong Kong stock market with a "low-price issue"-17 HKD/share IPO last year, it has still been broken. On March 20, Xiaomi’s intraday share price fell by more than 4% to HK$11.7, with a market value of about HK$280 billion, and the lowest fell to HK$11.6.

At present, Xiaomi's share price seems to be at risk of being cut in half, and the promise of "doubling the profit of investors who bought Xiaomi's stock on the first day of listing" is no longer clear.

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In addition, in terms of Xiaomi's profits in 2018, there are also "tricks". Generally speaking, operating profit > gross profit > net profit.

However, Xiaomi's gross profit in 2018 reached 221.92 billion yuan, a year-on-year increase of 46.4%; operating profit reached 1.196 billion yuan, a year-on-year decrease of 90.2%; at the same time, the two indicators of profit before income tax and annual profit are "losses". The "adjusted net profit of 8.6 billion yuan" mentioned by Lei Jun is also the calculation result of non-IFRS.

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Perhaps readers will think that this is the performance of Lei Jun's "Xiaomi's comprehensive after-tax net profit margin of hardware will never exceed 5%".

The capital market cannot tell stories or listen to feelings.

When Xiaomi went public, it positioned itself as an Internet company in order to seek a higher valuation. But from the perspective of actual revenue sources, Xiaomi is actually a hardware company. Its Internet business has been unable to play a major role in financial reporting revenue.

In 2018, Xiaomi's Internet revenue increased by 61.2% year-on-year to 16 billion yuan, and advertising revenue was still the main component, reaching 10.1 billion yuan, a year-on-year increase of 79.9%. Although the growth rate is fast, the scale is still too small, and the contribution revenue only accounts for 9.1% of the overall revenue.

What makes it even more difficult for investors to understand is that in 2019, Xiaomi's "dual engine" has become "mobile phone + AIoT", and even Lei Jun said that in the next five years, Xiaomi will invest at least 10 billion yuan in "AIoT". It seems that Xiaomi has no Internet business...

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Finally, look at the IoT business, which is the Xiaomi ecological chain. Under the background that the mobile phone market has gradually become a stock market, Xiaomi has shown its "evolutionary power" through the development of IoT business. In 2018, the revenue of small IoT and consumer goods business was 43.8 billion yuan, a year-on-year increase of 86.9%.

This growth has been exaggerated. Previously public information showed that the revenue of the ecological chain in 2015 was 5 billion, and it increased nearly 9 times to 43.8 billion in just four years, which is crazy. This has also become one of the reasons why Lei Jun is optimistic about "AIoT", after all, this "AIoT" is based on mobile phones and IoT business.

It is worth noting that the ecological chain companies invested by Xiaomi are listed one after another, which will bring continuous investment income to Xiaomi. It is reported that as of last year, Xiaomi has invested in a total of 260 companies, of which 9 companies have been successfully listed.

Xiaomi bet against Gree, a lose-lose bet

On March 20, at Xiaomi's 2018 performance conference, Lei Jun was asked about the result of the three-year 1 billion gambling game with Dong Mingzhu. Lei Jun said that he had not seen Gree's official financial report. When asked if he had contacted Dong Mingzhu, he smiled and said that Dong Mingzhu had contact with him.

Lei Jun's embarrassment is beyond words, but I have to say that neither Gree nor Xiaomi performed well in 2018. This billion-dollar game is ultimately a lose-lose ending...

The development of Gree Electric is not necessarily smooth sailing. Dong Mingzhu has gone through 2018 in the misery of the failure to invest in Yinlong. Although its total operating income for the whole year is 200 billion to 201 billion, the mobile phone business is still dead, and the chip business is still in the investment. There are still variables.

In addition to the doubtful company positioning, lack of product innovation, insufficient patent research and development, internal management of employees and other hidden dangers, the mass production problem has become the first hurdle that must be overcome. It is reported that the Xiaomi Mi 9 mobile phone was released, with new Honor products in the front and iQOO for sale in the back. Multiple manufacturers simultaneously scrambled for components such as 48-megapixel cameras that were already in short supply, resulting in insufficient supply.

Even if the revenue performance is good, you still need to calm down to make up for the shortcomings.