Sep 04, 2019 (China Knowledge) - Chinese smartphone maker Xiaomi Corp (01810) announced a HKD 12 bln (USD 1.53 bln) share buyback plan yesterday, the stock price of Xiaomi climbed as a result.
Xiaomi shares responded to news of the buyback, its biggest, by climbing nearly 7%. Shares of Xiaomi, which listed in Hong Kong last year, have lost nearly a third of their value this year and are at half their initial public offering price, hurt by the company’s sharply slowing growth and increasing competition.
Because of the furious competition, Xiaomi’s market share in China declined by a fifth in the April-June quarter. By contrast, smartphone giant Huawei Technologies surged by 31%.
Buybacks remove some of the firm’s outstanding shares from the secondary market, helping to shore up the stock price. For Xiaomi, the announcement had an immediate impact.
Xiaomi’s Q2 revenue rose 14.8% to almost RMB 52 bln (USD 7.4 bln), ranking it fourth in the world for the sixth straight quarter. Net profit jumped 49.8% at RMB 5.7 bln.
According to the statement, the company is very confident in its business and prospects, and its value creation will benefit Xiaomi.
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