Chinese mobile phone company Honor issued an internal announcement on Wednesday stating that the former Huawei sub-brand plans to optimize its equity structure and attract diversified capital through an initial public offering (IPO), as reported by local media outlet Icsmart. Honor has not announced a timeframe or a location for the upcoming listing.
Why it matters: The announcement comes three years after Huawei was effectively forced to sell Honor in November 2020 to help the sub-brand bypass the restrictions imposed upon Huawei by US sanctions. Bought by a state-owned enterprise in Shenzhen, Honor has since emerged as a leading phone brand in the Chinese market.
Details: As part of its preparations for the IPO, Honor has made adjustments to its board of directors: Wu Hui will serve as the new chairperson, while the former chair Wan Biao becomes vice chairperson.
- Following Xiaomi and Transsion, Honor may become the third domestic phone company to go public, according to Jiemian. Xiaomi is listed on the Hong Kong stock exchange and currently holds a market capitalization of HKD 377.8 billion ($48.87 billion), while Transsion’s market capitalization is valued at RMB 95.6 billion ($13.36 billion).
- Ever since Honor’s spin off from Huawei, there has been speculation in the industry about a possible listing for the handset maker, including the possibility of a backdoor listing through Transsion.
- Honor resumed allocation of shares around June of this year, primarily targeting distribution partners at the municipal level in each province, according to the aforementioned report from Jiemian. Additionally, Honor has initiated an employee stock allocation program, with high expectations for the company’s listing among its staff.
- At the end of 2022, Honor completed another round of strategic financing, adding six new shareholders, with leading display-panel industry player BOE among them.
- The newly appointed chair, Wu Hui, previously served in the Shenzhen municipal committee office, before later being transferred to work in the Hubei provincial government and the municipal government in Xianning, a city in Hubei. In April 2021, Wu Hui returned to Shenzhen and took on the role of chairman of Shenzhen Environmental Water Group.
- Vice chair Wan Biao was once a key figure in Huawei’s consumer business department. He joined Huawei in 1996 and held various positions such as president of Huawei’s wireless product line, president of its terminal company, and COO of its consumer business department. In November 2020, Wan Biao joined Honor and became its chairperson.
Context: In the third quarter of 2023, Honor secured the top spot in the domestic smartphone market with a shipment share of 19.3%, according to research firm IDC.
- During July to September of this year, Honor released three foldable devices, namely the Magic V2, V Purse, and Magic Vs2, aiming to establish a strong presence in the high-end phone segment.
- In the third quarter of 2023, the Chinese foldable smartphone market continued its rapid growth trend, reaching a shipment volume of 1.96 million units, an increase of 90.4% year-on-year, according to the same report from IDC. Honor captured a market share of 15.1%, ranking fourth in this segment.