China’s Xiaomi announces $2.1b share buyback
SHANGHAI : Chinese smartphone-maker Xiaomi announced a HK$12 billion (S$2.1 billion) share buyback plan yesterday, in a reversal of its cash-management strategy aimed at boosting its floundering stock.
Xiaomi shares responded to news of the buyback, its biggest, by climbing nearly 7 per cent.
Just last week, the company scrapped an already delayed plan to offer equity in China, a move aimed at attracting Chinese investors hungry to buy into global companies.
The company said then it had enough money and would focus on business development.
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 increased competition.
The stock has also been hit by losses in the Hong Kong stock market, which has plunged since massive anti-government protests started in the city in June.
Companies on the city's exchange have collectively bled US$152 billion (S$212 billion) in value since June.
"It should give investors more confidence to buy the stock because it shows how confident management is in the sustainable cash generating capabilities of the company," said Morningstar analyst Dan Baker.- REUTERS