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After issuing 1 billion yuan of medium-term notes last month, Huawei recently completed the issuance of 4 billion yuan of ultra-short-term financing bonds. Huawei said that this part of the funds will be used to supplement the operating capital of the company headquarters and its subsidiaries.

Huawei issues another 4 billion yuan in bonds

According to the China Money Network on August 12, Huawei Investment Holding Co., Ltd. recently completed the issuance of the fourth tranche of ultra-short-term financing bonds in 2024.

The announcement shows that the bond is referred to as "24 Huawei SCP004", with an issue amount of 4 billion yuan, an interest rate of 1.60%, a term of 130 days, an interest accrual date of August 9, 2024, and a redemption date of December 17, 2024. The lead underwriter/bookkeeper of the bond is Pudong Development Bank, and the co-lead underwriters are Agricultural Bank of China and Industrial Bank. After comprehensive assessment by Joint Credit Rating, the issuer's main credit rating is AAA, and the rating outlook is stable.

The prospectus previously disclosed by Huawei shows that in order to support the development of various businesses and the implementation of key strategies, Huawei plans to issue 4 billion yuan of ultra-short-term financing bonds, which will be used to supplement the operating capital of the company's headquarters and its subsidiaries.

Last month, Huawei just completed its first medium-term note issuance this year.

The specific situation is that on July 11, China Money Network disclosed the subscription instructions for the first medium-term notes of Huawei Investment Holding Co., Ltd. in 2024. Huawei plans to issue 1 billion yuan of medium-term notes with an issuance period of 10 years. The subscription interest rate range is 2.4% to 3%.

At that time, Huawei stated that the issuance of 1 billion yuan of medium-term notes would be used to supplement the operating capital of the company's headquarters and its subsidiaries, mainly to support the development of various businesses and the implementation of key strategies.

It is understood that as Huawei has continued to issue bonds in China since 2022, its direct financing channels have gradually shifted from overseas to domestic, and its direct liabilities in China have exceeded its overseas liabilities.

Huawei's latest bond prospectus shows that as of the date of signing of the prospectus, Huawei had 13 outstanding domestic medium-term notes totaling RMB 38 billion, 3 short-term financing bills totaling RMB 9 billion, and Huawei's subsidiaries had 3 outstanding overseas US dollar bonds totaling US$3.5 billion.

With the completion of the issuance of Huawei's fourth tranche of ultra-short-term financing bonds in 2024, Huawei has issued four ultra-short-term financing bonds since 2024, totaling 13 billion yuan.

Continue to invest in cloud, smart cars, and software root technologies

In terms of fundamentals, Huawei is divided into five major businesses: ICT infrastructure, terminals, cloud computing, digital energy, and smart car solutions.

From 2021 to 2023, Huawei's consolidated operating revenue was RMB 630.698 billion, RMB 636.816 billion and RMB 697.547 billion respectively, and its consolidated operating profit was RMB 121.418 billion, RMB 43.324 billion and RMB 99.228 billion respectively. The overall operating conditions were in line with expectations. R&D expenditure was RMB 142.567 billion, RMB 161.309 billion and RMB 164.563 billion respectively.

The prospectus disclosed that Huawei insists on investing more than 10% of its sales revenue in research and development every year. In 2023, R&D expenses will be 164.7 billion yuan, accounting for 23.4% of annual revenue. In the past decade, the cumulative R&D expenses invested have exceeded 1.11 trillion yuan.

As of December 31, 2023, the company's total global employee number is approximately 207,000, of which R&D employees account for approximately 55.0% (approximately 114,000) of the total number of employees, and the localization rate of overseas employees is approximately 64.3%.

Huawei said that in the macro environment where global economic growth is slowing down and the future is full of uncertainty, the company insists on investing in future-oriented basic research and open innovation, development of new business areas, ecosystem construction and digital transformation in cloud, smart car components and software root technologies, and continues to diversify its supply strategy.

Speaking of industry trends, Huawei stated that although global economic fluctuations, geopolitical risks and environmental challenges have brought many uncertainties, the development trend of digitalization, intelligence and low-carbonization has a strong endogenous driving force. The development direction of digitalization, intelligence and low-carbonization is certain, and the progress is accelerating.

Huawei believes that as AI accelerates its entry into terminals, various terminal chip architectures and operating systems are gradually unified, and various ecosystems around all scenarios are gradually unified. The mobile ecosystem, office ecosystem and IoT ecosystem are accelerating their integration. The new era of smart all-scenario is accelerating, bringing users a richer, more convenient and safer experience, and bringing developers higher efficiency and commercial returns. At the same time, in the smart car industry, the electrification, intelligence and networking of the automotive industry are the general trend, and the era of smart driving is accelerating.

When talking about its future development strategy, Huawei said that it is committed to bringing the digital world to everyone, every family, and every organization, and building a smart world where everything is connected: making ubiquitous connectivity the premise and foundation of the smart world, providing the world with diverse computing power, making the cloud ubiquitous, and making intelligence all-encompassing; redefining the experience through AI, allowing consumers to obtain personalized smart experiences in all scenarios including home, travel, office, audio and video entertainment, sports and health; all industries and organizations become agile, efficient, and vibrant because of the powerful digital platform.

Editor: Peng Bo

Proofread by: Tao Qian

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