Xiaomi executives caught in a storm of reducing holdings

Author: Yu Yan

Editor: Zhou Zhiyu

Executive share reductions always attract investors' attention, and when the seller is Xiaomi's number two figure Lin Bin, it becomes even more lively.

The disclosed information shows that from June 4th to 6th, Xiaomi's co-founder and vice chairman Lin Bin reduced his holdings of Xiaomi Group by 10 million shares over three trading days, cashing out a total of approximately HKD 179 million (approximately RMB 166.5 million).

This has raised questions from investors as Lin Bin did not adhere to his commitment not to reduce holdings made four years ago. As a partner who started the business with Lei Jun back then, Lin Bin, Xiaomi's second employee, ranks only after Chairman Lei Jun on Xiaomi's official website, making him the "number two figure" in Xiaomi Group.

In 2020, Xiaomi Group announced that Lin Bin voluntarily committed not to sell any of his directly or indirectly owned shares in the company from September 15, 2020, for five years.

With the five-year period not yet expired, Lin Bin's significant reduction naturally attracted market attention. Over the past two trading days, Xiaomi's stock price has also fallen by approximately 1.62%.

However, Lin Bin and Xiaomi Group responded quickly. Regarding Lin Bin's share reduction, Xiaomi Group responded that he did it for charity.

Subsequently, on June 22nd, Lin Bin provided a detailed response to the share reduction on his Weibo. Lin Bin stated that the announcement in 2020 already indicated that the commitment not to reduce holdings did not include the 120 million shares donated to the Bin Lin and Daisy Liu Family Foundation, and these shares donated to the foundation can only be used for charitable purposes. In addition to the portion to be donated to his alma mater Sun Yat-sen University, there will be more charitable donations in the future.

Two months ago, during the centennial celebration of Sun Yat-sen University, Lin Bin and his wife Liu Xiangdong announced a donation of 100 million yuan to Sun Yat-sen University.

With this, the storm caused by Lin Bin's share reduction among Xiaomi executives has finally settled.

Xiaomi has always been generous in charity, with the Xiaomi Public Welfare Foundation donating to universities and research institutions multiple times. Lei Jun himself has also made continuous donations to his alma mater Wuhan University for several years, with a single donation of 1.3 billion yuan last year being the largest personal cash donation received by a national university alumni.

Despite the recent decline in Xiaomi's stock price due to factors such as the share reduction storm, many professional institutions have expressed optimism about Xiaomi's long-term investment this year. Morgan Stanley stated in this year's report that based on a valuation of 90 billion for Xiaomi's electric vehicle business, it is their top recommended choice.

Xiaomi has always attracted attention, and with Lei Jun becoming a top figure in the automotive industry, any movement by Xiaomi will attract attention.

As Xiaomi progresses further in the car manufacturing industry, it will receive more attention. While being optimistic, it will require more investment and face challenges in profitability.

Currently, Xiaomi's car factory is running at full capacity, producing the Xiaomi SU7 day and night. However, as a newcomer in the automotive industry, whether in the future development of new car models or continuous technological investment, Xiaomi's automotive sector will still be in an investment phase for some time to come This also requires Xiaomi's management to stabilize investor expectations, while steadily advancing in core businesses such as smartphones and IoT. Therefore, Lin Bin's reduction in holdings this time may make investors worry about whether he is pessimistic about Xiaomi's future stock performance.

From the recent performance data, it seems that Xiaomi has not yet had such concerns. During the recent 618 shopping festival, Xiaomi's total channel payment amount reached 26.3 billion, setting a new historical record and being one of the few companies to openly share their performance.

In the future, the momentum that Xiaomi has built up in the recent period will continue to benefit the entire Xiaomi brand and will continue to translate into Xiaomi's performance.

Furthermore, although the current automotive sector is still in the investment stage, the efficiency of making money from selling cars is much higher than selling other devices. The just achieved record sales of 26.3 billion is equivalent to about 87,700 top-of-the-line Xiaomi SU7 vehicles. And this year, Xiaomi SU7 aims to deliver 120,000 vehicles.

Investment bank UBS is also optimistic about Xiaomi, predicting that Xiaomi's electric vehicle shipments in the next two years will be 100,000 and 230,000 respectively, and expressing confidence in Xiaomi.

Once the automotive sector begins to scale up, Xiaomi Group will have a new story. However, in this process, it also requires the concerted efforts of Lei Jun, Lin Bin, Lu Weibing, and other management as well as Xiaomi employees to lead Xiaomi to higher levels