Xiaomi reports positive quarterly results

Xiaomi Corp, the world's fourth-largest smartphone maker by shipments, reported better-than-expected quarterly results, despite its highly-anticipated IPO being given the cold shoulder by retail investors and getting off to a bad start in Hong Kong.

The company, founded by serial entrepreneur Lei Jun eight years ago, posted second-quarter net profit of 2.1 billion yuan ($309.1 million) on Wednesday, in its maiden financial report unveiled on the heels of its $4.7 billion Hong Kong listing.

The quarterly numbers, beating JPMorgan Chase & Co's forecast of 1.7 billion yuan, come as Xiaomi reported a first-quarter net loss of 7 billion yuan ahead of its blockbuster IPO in June.

Its smartphone shipments jumped 43.9 percent thanks to robust overseas growth in countries and regions including Indonesia, India and Western Europe, helping Xiaomi's net revenue rise 68.3 percent year-on-year to 45.2 billion in the three months ended in June.

"The results live up to our own expectations and should exceed market expectations," said Zhou Shouzi, chief financial officer of Xiaomi, in a teleconference on Wednesday.

Despite smartphone shipments accounting for 67.4 percent of the total revenue for the period, Zhou reiterated the company is a combination of a smartphone maker and technology company. It is a new species that could hardly fall into any of the existing category.

The second-quarter earnings are a confidence booster to investors, who are losing their faith in new economy flag-bearers like Xiaomi that have shown signs of losing steam after a cluster of twists and turns on a bumpy ride to selling shares in Hong Kong.

In the first half of the year, the Beijing-based company turned its business around to register adjusted net profit of 3.8 billion yuan. This may put Xiaomi on course to reverse from a staggering full-year loss of 43.89 billion yuan in 2017 to being out of the red for the whole year of 2018.

Since the lukewarm market debut on July 9, shares of Xiaomi have fluctuated around the offering price of HK$17, touching a post-IPO peak of HK$22.2 at one time before sinking to as low as HK$15.52.