Huawei issued 1 billion RMB in bonds, attracting market attention. This marks the first issuance of medium-term notes by Huawei after issuing three short-term financing notes earlier this year. Despite the significant contribution made by various Huawei smartphones to the company’s financial performance in the first quarter of the year, these devices have recently experienced a sharp decline in market demand.
On July 11, China Money Network disclosed the subscription instructions for the first tranche of medium-term notes for the year 2024 by Huawei Investment Holdings Limited. Huawei intends to issue 1 billion RMB in medium-term notes with a tenure of 10 years, and the subscription interest rate ranges from 2.4% to 3%. The subscription period for the debt instruments was set from July 12 to July 15. The maturity date is July 16, 2034.
According to Securities Times and Securities China, Huawei has shifted its focus from overseas to domestic debt issuance since 2022. The company’s direct domestic liabilities have exceeded its foreign debts.
The prospectus for the medium-term notes issuance reveals that this is Huawei’s first issuance of such notes this year. Prior to this, Huawei issued a total of 9 billion RMB from three short-term financing notes on February 29, March 25, and April 25.
Data also indicates that since 2022, Huawei has shifted its direct financing channels from overseas to domestic, and as of the signing date of the prospectus, Huawei has 12 outstanding domestic medium-term notes worth a total of 37 billion RMB.
From 2021 to 2023, Huawei reported operating revenues of 630.698 billion, 636.816 billion, and 697.547 billion RMB. Operating cash outflows were 706.719 billion, 752.198 billion, and 764.593 billion RMB respectively, with R&D expenditures of 142.567 billion, 161.309 billion, and 164.563 billion RMB in the same respective years.
Looking back at Huawei’s debt issuance records since 2019, the company has issued both short-term and medium-term bonds to fund its operations.
In response to US sanctions in 2019, Huawei faced financial pressure as its access to overseas financing channels was restricted, forcing the company to rely on domestic bond issuance, experts reported.
Recent financial reports from Huawei for the first quarter of 2024, released on April 30, showed a revenue of 178.45 billion RMB, with a net profit of 19.65 billion RMB attributed to the strong sales performance of multiple smartphone models. Huawei regained the top spot in terms of smartphone sales volume in mainland China in the first quarter.
Analysis by financial media indicates that Huawei’s success in the first quarter of 2024 can be largely attributed to the popular Mate 60 series, which supports 5G technology.
Citing the latest Canalys report, Huawei secured the top position in the Chinese mainland smartphone market in the first quarter of 2024, with shipments totaling 11.7 million units and a market share of 17%. The Mate 60 series led the sales, with the nova 12 series accounting for one-third of Huawei’s total shipments for the quarter.
Despite these positive developments, reports from a second-hand smartphone trader and blogger on July 14 revealed a significant decline in the market value of the Huawei Mate 60 Pro. The blogger noted a sharp drop in market demand for this model over the past month, leading to substantial price decreases.
In a separate observation on July 15, it was reported that the price of the Huawei Pura 70 Ultra model has been consistently decreasing. Starting at 9999 RMB, the price reduction has taken many by surprise, indicating an unexpected and rapid decline in Huawei smartphone prices, surpassing even high-end flagship models in terms of price reduction.
A tech enthusiast and former Brand Planning Director at a 4A company, blogger “Technology Enthusiast” also noted a widespread price reduction across Huawei’s entire product lineup. Customers can now avail of offline vouchers offering up to 9.9 RMB in discounts for every 1000 RMB spent, covering products such as the Pura 70 series, Mate 60 series, Mate X5, nova 12 series, and all peripheral ecological products.