Honor, the Chinese smartphone manufacturer, announced on its official website that it has transitioned into a joint-stock company as of December 28, 2024, with its official name now Honor Terminal Company, Ltd. According to reports from ICSmart and HKET, the restructuring, launched in the fourth quarter of 2024, has been carried out seamlessly.
Beijing News reported that Honor's restructuring entails adjustments to its corporate structure and name but leaves its daily operations unaffected. Upon completing the equity restructuring, Honor plans to initiate its IPO process, with details to be announced as the plans progress.
Amid speculation about a possible backdoor listing, Honor emphasized its commitment to a direct public offering, positioning the move as a key step in its strategic push to establish a strong presence in capital markets.
Breaking free from Huawei
Honor gained independence from Huawei in 2020, with Huawei retaining no shares or involvement in Honor's management or operations. The separation was facilitated by over 30 agents and distributors, representing a supply-chain-driven effort to ensure Honor's survival.
Huawei founder Ren Zhengfei stated in an email at the time that the decision to divest Honor stemmed from mounting US sanctions, which he described as an effort not to correct but to dismantle Huawei. While confident in overcoming its challenges, Huawei opted to sever ties to protect Honor and other stakeholders from collateral damage.
Four years after separating from Huawei, Honor has rebranded and unveiled plans to go public, signaling a new chapter in its growth trajectory.
Strategic investments fuel IPO momentum
On November 22, 2023, Honor announced its intent to enter the capital markets via an IPO. The company highlighted its rapid growth over the past three years, strengthening its market position and overall competitiveness. To support its next phase, Honor plans to optimize its equity structure, attract diverse investments, and accelerate its IPO plans.
Reuters reported on August 5, 2024, that Honor was gearing up for an IPO, reportedly backed by the Shenzhen government. However, Honor clarified that it began equity restructuring in the fourth quarter of 2024 to prepare for the IPO and has not received special government support since January 2021.
On August 24, 2024, Honor concluded several financing rounds and shareholder adjustments, including an investment from China Mobile. ICSmart reported this as likely the final funding round before Honor's IPO. Honor characterized the investment as a strategic partnership, fostering innovation in personal and household terminal markets.
In October 2024, Honor disclosed investments from China Telecom, CICC Capital, CoStone Capital, Oriental Fortune Capital, and Jinshi Xingyao Intelligent Equipment Private Equity Fund. The company reiterated its commitment to transparency and its focus on diversifying its equity structure.
Building a robust shareholder foundation
Data from Tianyancha reveals that Honor's 23 shareholders include notable entities such as Shenzhen Pengcheng New Information Technology Partnership, Shenzhen Baoan District Investment Management Group, BOE Technology Group, China Telecom, China Mobile, and Jinshi Xingyao. This diverse shareholder structure spans local state-owned enterprises, suppliers, private capital, and telecom operators, underscoring Honor's robust market position and strategic alliances.
Navigating market challenges
According to IDC, China's smartphone shipments reached approximately 68.78 million units in the third quarter of 2024, reflecting a 3.2% year-over-year increase. Honor ranked fifth, capturing 14.6% of the market, highlighting its ability to navigate challenges while maintaining competitive momentum.
Between 2020 and 2024, Honor contended with numerous obstacles, including the COVID-19 pandemic, shifting international dynamics, declining consumer demand, chip shortages, and Huawei's market resurgence. Given its shared history with Huawei, Honor frequently draws comparisons, further intensifying its journey to establish a distinct identity in the market, as noted by Sina.
George Zhao, Honor's President, stated, "Huawei's re-entry into the smartphone market has heightened competition, but it inspires us to innovate and improve continuously. Since gaining independence, Honor has overcome traditional limitations in thinking, embraced forward-looking strategies, and refined its business plans iteratively to secure its future."