“Huawei Issuing 1 Billion Yuan in Bonds” Draws Market Attention
Huawei, having issued three short-term financing bonds earlier this year, has now launched its first round of medium-term notes. Despite these contributions to Huawei’s first-quarter financial report this year, various Huawei smartphones have recently experienced a sharp decline in their market performance.
On July 11, China Money Network disclosed the details of Huawei Investment Holding Co., Ltd.’s first tranche of medium-term notes for the year 2024. Huawei plans to issue 1 billion yuan in medium-term notes with a maturity of 10 years and a subscription interest rate ranging from 2.4% to 3%. The subscription period for the debt instruments was set from July 12 to July 15, with the redemption date scheduled for July 16, 2034.
According to Securities Times, a report from securities brokers in China, Huawei has shifted its direct financing channels from overseas to domestic markets since 2022, with domestic direct liabilities exceeding those held abroad.
The prospectus for the medium-term notes issuance indicates that this is Huawei’s first issuance of such notes this year. Prior to this, Huawei issued three short-term financing bonds on February 29, March 25, and April 25, totaling 9 billion yuan.
Data also shows that post-2022, Huawei’s direct financing channels have shifted from overseas to domestic markets. As of the signing of the prospectus, Huawei has outstanding domestic medium-term notes totaling 37 billion yuan across 12 tranches.
Between 2021 and 2023, Huawei reported operating revenues of 630.698 billion yuan, 636.816 billion yuan, and 697.547 billion yuan, with operating cash outflows of 706.719 billion yuan, 752.198 billion yuan, and 764.593 billion yuan, respectively. Research and development expenditures during the same periods amounted to 142.567 billion yuan, 161.309 billion yuan, and 164.563 billion yuan.
A review of Huawei’s bond-issuance records reveals multiple issuances of bonds, including short-term and medium-term instruments, since 2019.
According to independent finance and technology media outlet “Titanium Media APP,” industry experts have noted that post the 2019 US sanctions against Huawei, financial pressures mounted due to disrupted overseas financing channels, necessitating domestic bond issuances.
On March 29, Huawei’s 2023 annual report highlighted that the Huawei Intelligent Automotive Solutions Business Unit has invested over 30 billion yuan in R&D since its inception in 2019, expanding its research team to 7,000 members. In 2023, the Huawei Intelligent Automotive Solutions Business Unit generated 4.7 billion yuan in sales, with the car business lagging behind other Huawei sectors.
During China’s Electric Vehicle Summit 2024, Yu Chengdong, Executive Director and CEO of Huawei’s Consumer Business Group, and Chairman of the Intelligent Automotive Solutions Business Unit, revealed that Huawei’s car business suffered losses of 10 billion yuan in its initial years, decreasing to 8 billion yuan and 6 billion yuan in subsequent years, with hopes of achieving profitability this year.
Expressing concerns, some netizens pointed out that Huawei’s Intelligent Automotive Solutions Business Unit’s 2023 revenue of 4.7 billion yuan accounted for less than 1% of the total revenue, suggesting an inadequate contribution to overall earnings. Currently, Huawei’s annual gross profits fall short of covering its costs.
Released on April 30, Huawei’s first-quarter 2024 financial report showed revenue of 178.45 billion yuan, with a net profit of 19.65 billion yuan attributed to the successful sales of multiple smartphones. In the first quarter, Huawei regained the top position in China’s mainland smartphone market sales.
Reported by Jiemian News, Huawei’s success in the first quarter of 2024 can be largely attributed to the popular Mate 60 series, which supports 5G technology.
Citing Canalys’ latest report, Jiemian News stated that Huawei dominated the Chinese mainland smartphone market in the first quarter of 2024, with shipments reaching 11.7 million units, capturing a 17% market share. The Mate 60 series was in high demand, while the nova 12 series accounted for one-third of Huawei’s shipments for the entire quarter.
Nevertheless, a blogger specializing in updating second-hand smartphone prices, “Tech Enthusiast Xiao Yuan,” on July 14, reported a significant decrease in the market value for Huawei’s Mate 60 Pro. He noted a sharp drop in prices for this model, contrasting with its high demand and premium prices from the previous year.
Regarding Huawei’s Pura 70 Ultra, another blogger named “Technology in Numbers 2024” mentioned on July 15, a continuous decline in prices. The initial 9,999 yuan price tag has seen a surprising drop, surpassing price cuts on other flagship models.
Identifying as a tech enthusiast and former Brand Planning Director at a 4A company, the online persona “Tech Wanderer” recently stated that Huawei has implemented collective price reductions across all its product lines. Customers can now avail themselves of offline coupons offering up to 9.9 yuan off for every 1000 spent, covering products like the Pura 70 series, Mate 60 series, Mate X5, nova 12 series, and a variety of peripheral products.