Investment Rating - The investment rating for Lenovo Group (00992.HK) is "Outperform the Market" [6][20]. Core Views - The company has shown steady revenue growth in FY2025, achieving a total revenue of $69.077 billion, a year-on-year increase of 21.41%, and a net profit of $1.384 billion, up 37.01% year-on-year, indicating a positive turnaround in net profit growth [1][8]. - The company is expected to benefit from three key growth drivers: AI PCs, smartphones, and servers, which are anticipated to sustain performance growth [3][17]. Summary by Sections Financial Performance - In FY2025, Lenovo's gross margin was 16.1%, down 1.2 percentage points year-on-year, primarily due to the rapid increase in smartphone revenue, which has a lower margin [2][12]. - The net profit margin improved to 2.1%, an increase of 0.2 percentage points year-on-year, reflecting enhanced profitability [2][12]. Growth Drivers - **AI PCs**: Lenovo's PC shipments are projected to reach approximately 61.8 million units in 2024, with a global market share of 23.5%, up 0.8 percentage points year-on-year. The post-pandemic demand and the discontinuation of Windows 10 are expected to boost growth in the PC sector [3][17]. - **Smartphones**: Motorola, a Lenovo brand, is expected to see a 23% increase in shipments in 2024, outperforming the industry growth rate of 4%, positioning it as the seventh-largest smartphone brand globally [3][17]. - **Servers**: The company’s infrastructure solutions group successfully turned profitable in the second half of FY2025, with increased demand for AI servers driven by major internet companies' capital expenditures [3][17]. Financial Projections - The adjusted net profit forecasts for FY2026 to FY2028 are $1.604 billion, $1.832 billion, and $2.019 billion, respectively, with diluted EPS projected at $0.13, $0.15, and $0.16 [4][20]. - The current stock price corresponds to a PE ratio of 9, 8, and 7 for FY2026, FY2027, and FY2028, respectively, maintaining the "Outperform the Market" rating [4][20].

Core Viewpoint - Shenwan Hongyuan has initiated coverage on Lenovo Group with a "Buy" rating, indicating significant upside potential due to its status as an undervalued ICT full-stack supplier and the presence of untapped stock price catalysts [1] Group 1: Market Dynamics - The report highlights the potential for Lenovo's stock price to rise due to the success of AIPC products and increased demand for AI servers driven by CSP customer needs [1] - The PC market is expected to enter a new upcycle, supported by the peak in online office PC purchases from 2020 to 2022, the end of Windows 10 support, and the demand stimulated by innovative AIPC products [1][2] - Lenovo has established a stable business model that has allowed it to grow from a local player to a global leader in the PC market, with its revenue closely tied to the global PC market's performance [1] Group 2: Revenue Composition - Historically, PCs accounted for about 70% of Lenovo's revenue, but the rise of AI has shifted growth drivers towards mobile devices, servers, and industry-specific intelligent solutions [2] - The ISG segment, primarily focused on servers, is seeing an increasing revenue share due to global AI capital expenditure, while the SSG segment is expected to grow rapidly as enterprises undergo digital transformation [2] Group 3: AI Strategy - Lenovo is transitioning from a hardware supplier to a software service provider, leveraging AI as a key focus area, with established AI ecosystems like Qingtian 3.0 and Tianxi [2][4] - The company aims to create an "AI ecosystem" that integrates various AI applications through its hardware, positioning itself as a critical player in the AI landscape [4] Group 4: Business Segments - In the IDG segment, Lenovo is experiencing a recovery in PC sales and rapid growth in mobile devices, with a projected revenue share of 73% for FY24/25 [5] - The SSG segment is focused on IT services and solutions, with a revenue share of approximately 6% for FY24/25, benefiting from the AI digital transformation trend [5] - The ISG segment, which includes servers and storage, is expected to account for 21% of revenue in FY24/25, driven by demand from CSPs and SMBs [6] Group 5: Valuation - Lenovo's valuation is compared to global ICT suppliers, with a projected PE ratio of 9x for FY25/26, significantly lower than the average PE of 16x for comparable companies, indicating substantial upside potential [7]

近日，申万宏源发布首次覆盖报告，给予联想集团(00992)"买入"评级，认为后续存在较大上涨空间。 报告中指出，其作为被低估的 ICT 全栈供应商，存在未爆发的股价催化剂：AIPC 出现爆款产品,公司相 关产品出货量提升；AI 应用进展显著,CSP 客户算力需求提升带来AI 服务器需求增加､E/SMB 客群AI 解 决方案需求增加｡ 对于PC市场，申万宏源也有着积极的解读， 2020-2022年线上办公PC采购高峰、Windows10系统停更带 来的存量替换，以及AIPC这一创新产品带来的需求刺激，将带领PC市场进入新一轮上行周期。同时， 在 AIPC的加持下，产品结构迎来高端化。联想作为中国最早的PC厂商之一，实现了从本土到全球第一 的成长，已经建立了穿越周期、稳定的商业模式。 2025年,联想进入创业5.0时代,发展核心为混合式AI｡混合式AI 指个人智能､企业智能与公共智能相结合, 共存互补､混合并用｡通俗理解就是构建"端-边-混合云-网"不同侧为载体的AI体系,通过多端部署实现AI 的全面应用｡ 申万宏源认为,联想是建立AI生态的关键角色和重要端口, 将与AI时代充分共振｡并且是实现个人混合式 AI图 ...

Core Viewpoint - Lenovo Group reported strong financial performance for FY2025, with significant revenue and profit growth, despite a decline in net profit in Q4 due to non-cash losses from warrants [1] Group 1: Financial Performance - For FY2025, Lenovo achieved revenue of approximately $69.077 billion, a year-on-year increase of 21.41%, and a net profit of approximately $1.384 billion, up 37.01% [1] - In FY2025 Q4, the company reported revenue of approximately $16.984 billion, a year-on-year increase of 22.50%, but a quarter-on-quarter decrease of 9.64%; net profit was approximately $90 million, down 63.72% due to non-cash warrant losses [1] - Excluding non-cash expenses, the non-HKFRS net profit for Q4 was approximately $278 million, reflecting a year-on-year increase of 25% [1] Group 2: Intelligent Devices Group (IDG) - The IDG segment generated revenue of $51 billion for FY2025, a 13% increase, with an operating profit margin of 7.2%, leading the industry [2] - In FY2025 Q4, IDG revenue was approximately $11.814 billion, also a 13% year-on-year increase, with an operating profit margin of approximately 6.8% [2] - Lenovo's global PC market share increased by 1 percentage point to 24% [2] Group 3: Infrastructure Solutions Group (ISG) - The ISG segment achieved revenue of $15 billion for FY2025, a significant year-on-year increase of 63%, and turned profitable in the second half of the fiscal year [2] - In FY2025 Q4, ISG revenue was approximately $4.12 billion, with a year-on-year growth of 63% and an operating profit margin of approximately 0.1% [2] - The ODM+ model contributed to strong growth in cloud service provider business and balanced growth in sales and profits for small and medium-sized enterprises [2] Group 4: Solutions and Services Group (SSG) - The SSG segment reported revenue of approximately $8.5 billion for FY2025, a 13% increase, with operating profit reaching a record high of $1.8 billion, up 15% [3] - In FY2025 Q4, SSG revenue was approximately $2.15 billion, reflecting an 18% year-on-year increase, with an operating profit margin of 22.7% [3] - The growth in support service orders was driven by improved user experience and the success of digital workplace solutions and hybrid cloud services [3] Group 5: Future Outlook - Revenue forecasts for FY2026 to FY2028 are projected at $76.37 billion, $82.73 billion, and $87.21 billion, respectively, with non-HKFRS net profits of $1.601 billion, $1.874 billion, and $2.218 billion [4] - The company maintains a "buy" rating, anticipating performance improvement driven by the accelerated integration of AI features across various devices [4]

Group 1 - Lenovo Group reported a revenue of 498.5 billion RMB for the fiscal year 2024/25, representing a year-on-year growth of 21.5%, with a net profit of 10.4 billion RMB, up 36% year-on-year [1] - The Intelligent Devices Group (IDG) experienced double-digit revenue growth, with a 13% year-on-year increase in Q4, and Lenovo maintained its position as the global leader in PC market share at 23.7%, widening the gap with the second place by 3.6 percentage points [1] - Lenovo's AIPC category ranked first globally in the Windows AIPC segment, while the smartphone business achieved a record activation volume in Q4, with high-end models accounting for 25% of revenue [1] Group 2 - The Infrastructure Solutions Group (ISG) generated 104.8 billion RMB in revenue for the year, with a 63% year-on-year increase in Q4, marking its second consecutive quarter of profitability [1] - The Solutions and Services Group (SSG) also saw double-digit revenue growth for the year, with an operating profit margin exceeding 21%, and a nearly 20% year-on-year increase in Q4 revenue [1] - Lenovo is increasing its long-term investment in innovation, with R&D spending up 13% year-on-year and R&D personnel making up 27.8% of the workforce, an increase of 1.6 percentage points [2] Group 3 - Lenovo's Tech World 2025 event introduced a comprehensive matrix of super intelligent agents, including personal, enterprise, and city-level agents, along with a new generation of inference acceleration engines [2] - The company projects net profits of 1.665 billion USD, 1.874 billion USD, and 2.068 billion USD for the fiscal years 2026-2028, with respective year-on-year growth rates of 20%, 13%, and 10% [2] - Earnings per share (EPS) are expected to be 0.13, 0.15, and 0.17 USD per share for the same period, with corresponding price-to-earnings (PE) ratios of 9.20, 8.17, and 7.41 times based on the closing price of 9.50 HKD on May 23 [2]

Investment Rating - The report initiates coverage with a "Buy" rating for Lenovo Group [2][7] Core Views - Lenovo is positioned as a leading global ICT vendor with a diversified growth strategy, being the largest PC manufacturer and the fourth largest server manufacturer globally [6][17] - The company is expected to benefit from a new growth cycle driven by AI, with a recovery in PC business and accelerated growth in mobile, server, and industry solutions [7][10] - The report forecasts net profits for FY25/26 to FY27/28 at $1.67 billion, $2.03 billion, and $2.43 billion respectively, indicating significant upside potential compared to peers [7][10] Summary by Sections 1. ICT Leadership and Global Growth - Lenovo has established a diversified product matrix based on PCs, mobile devices, tablets, servers, and digital solutions through mergers and internal efficiency improvements [6][17] - Key acquisitions, including IBM's PC and x86 server businesses, have facilitated Lenovo's global expansion and diversification [6][18][20] - The management framework emphasizes a structured governance model that supports strategic alignment and cultural integration across global operations [25][26] 2. IDG: AI Product Matrix - The IDG segment is expected to see revenue growth driven by the recovery of the PC market and rapid growth in mobile devices [6][29] - Lenovo's AIPC (AI Personal Computer) initiative is set to redefine personal computing by integrating AI capabilities into its product offerings [48][50] 3. ISG & SSG: Digital Solutions and AI Infrastructure - The ISG segment is projected to grow significantly, driven by demand from cloud service providers and small to medium businesses [6][20] - The SSG segment focuses on IT services and solutions, with a strong emphasis on AI-driven transformation [6][19] 4. Financial Forecast and Valuation - Revenue forecasts for FY23/24 to FY27/28 show a steady increase, with a projected revenue of $79.49 billion in FY25/26 [5] - The report highlights Lenovo's attractive valuation, with a projected PE ratio of 9x for FY25/26 compared to the industry average of 16x, indicating substantial upside potential [7][10] 5. Market Perception and Competitive Advantage - Contrary to market perceptions of a declining PC market, Lenovo is positioned to benefit from a replacement cycle and the introduction of high-end products [9][10] - The company's established global supply chain and local service capabilities provide a competitive edge that is difficult to replicate [9][10]

Core Insights - The white paper highlights significant transformations in the global memory market driven by advancements in AI technology, increasing server storage demands, and upgrades in consumer storage products [19] Group 1: Global Memory Market Changes and Technological Developments - High-density 3D NAND Flash storage is continuously improving, with advancements in read/write performance, power consumption, durability, and cost [2][36] - The complexity of etching and deposition processes increases with the number of layers in NAND Flash, leading to challenges that manufacturers are overcoming through various techniques [2][41] - Major manufacturers like Samsung and SK Hynix are focusing on mass production plans for NAND Flash with over 300 layers, utilizing Wafer-to-Wafer bonding technology [2][41] Group 2: Server NAND and DRAM Application Growth - The expansion of global data center infrastructure and increased investment in AI infrastructure are driving the growth of server storage demand [3][9] - In 2024, the application shares of NAND in servers, mobile devices, and PCs are projected to be 30%, 31%, and 14% respectively, with server NAND application share expected to rise to 30% by 2025 [4][43] - For DRAM applications, the shares in servers, mobile devices, and PCs are expected to be 34%, 32%, and 14% in 2024, with server DRAM application share anticipated to grow to 36% by 2025 [5][47] Group 3: Storage Technology and Application Outlook - QLC NAND is improving in performance and reliability, making it suitable for read-intensive applications, particularly in computing centers [6][51] - The rise of AI PCs is driving the growth of PCIe 4.0/5.0 SSD applications in the consumer market, with an expected penetration rate of 35% by 2025 [7][58] - Manufacturers are actively expanding into overseas markets, particularly in Southeast Asia, Latin America, and Africa, where the SSD market holds significant potential [8][71] Group 4: AI Server Storage Demand - There is a surge in capital expenditure for AI infrastructure, significantly increasing the demand for AI servers [9][72] - The global HBM market is projected to reach $16 billion in 2024 and grow to $30 billion by 2025, accounting for 28% of the global DRAM market [11] - The demand for enterprise-grade PCIe 5.0 SSDs is rapidly increasing, with an expected shipment share of 30% by 2025 [12][50] Group 5: Consumer Storage Product Applications and Developments - Global PC shipments are expected to see a slight increase of 3% in 2025, with AI PC penetration reaching 35% [13][58] - The global smartphone shipment volume is projected to reach approximately 1.184 billion units in 2024, with NAND capacity expected to exceed 220GB by 2025 [15][16] - AI glasses are emerging as a significant consumer electronics product, with shipments expected to rise from 2 million units in 2024 to 10 million units in 2025 [17][18]

Group 1: Corporate Developments - Didi Enterprise Edition has become the first travel service provider for 3M in China, offering efficient and sustainable travel management solutions [1] - Samsung Medical is expected to win a procurement project from State Grid with a total estimated value of approximately 213 million yuan [2] - Weir Shares is reportedly preparing for an IPO in Hong Kong, aiming to raise no more than 1 billion USD [3] - ExxonMobil is in exclusive negotiations to sell its majority stake in its French subsidiary Esso to a Canadian energy group, with a share price of 149.19 euros [4] - Lenovo has upgraded its Tianxi personal super-intelligent system to create a comprehensive human-machine collaboration ecosystem [4] - Volvo has temporarily halted production at its South Carolina plant due to supply chain issues related to a hardware component [5] - Midea Group has established a new retail company in Foshan with a registered capital of 10 million yuan [5] - Wuliangye has stated that it has no plans to list in Hong Kong [6] - Xiaohongshu e-commerce has launched the "Friendly Market," providing over 1 billion traffic support for selected products [7] - Suning.com has started its 618 sales event, offering various discounts and subsidies [8] - Kingsoft reported a revenue of 2.338 billion yuan for Q1 2025, a 9% year-on-year increase [9] - Ant Group showcased its focus on applications and exploration of AI capabilities during its technology open day [10] Group 2: Investment and Financing - Hangzhou Daka Technology Group has completed a 20 million yuan Series A financing round, aimed at enhancing its smart IoT platform and AI applications [11] - Jiangsu Eslong Holdings has completed a 50 million yuan Series A financing round, focusing on new energy technology and green technology commercialization [12] Group 3: New Products and Market Trends - DJI is set to enter the robotic vacuum market with its first product expected to launch in June [13] - The China Passenger Car Association reported that retail sales of passenger cars from May 1-25 reached 1.358 million units, a 16% year-on-year increase [15] - Retail sales of new energy vehicles during the same period reached 726,000 units, a 31% year-on-year increase, with a penetration rate of 53.5% [15]

Group 1 - HSBC Global Research has lowered Lenovo Group's target price from HKD 14.8 to HKD 12.1 while maintaining a buy rating [1] - The reduction in earnings per share estimates for the fiscal years 2026 and 2027 is by 12% and 18% respectively, due to slowing PC shipment growth and the nominal interest on USD 2 billion convertible bonds [1] - Despite the weak shipment outlook, Lenovo's PC product mix is improving, with a projected quarter-on-quarter sales growth of approximately 5% for the IDG business (personal computers and mobile devices) by the end of June [1] Group 2 - Lenovo's management anticipates that the penetration rates of commercial and AI computers will drive growth momentum, despite uncertainties in shipment volumes [1] - The company is expected to see an acceleration in the personal computer upgrade cycle, leading to a recovery in IDG business gross margins in fiscal year 2026 [1] - Lenovo's ISG business is projected to remain profitable, with an expected operating profit of USD 43 million in fiscal year 2026, a significant turnaround from an operating loss of USD 69 million in fiscal year 2025 [1]

Core Viewpoint - SteamOS has opened installation support for more gaming handhelds, allowing users to replace Windows 11 with a more optimized gaming experience [1][2]. Group 1: SteamOS Development - Initially, SteamOS only supported Steam Deck, while other gaming handhelds from brands like Lenovo and ASUS ran on Windows 11, which is less effective for gaming [2]. - The latest SteamOS 3.7.8 is based on an updated Arch Linux, featuring Linux Kernel 6.11 and Plasma 6.2.5 for desktop mode [2]. - Valve provides recovery images and setup guides for users, with current support limited to AMD hardware and NVMe SSDs [2]. Group 2: Future Prospects and Features - There is a high probability that SteamOS will support additional hardware in the future, potentially including non-AMD devices, due to its Linux foundation [3]. - New features in SteamOS 3.7.8 include battery charge limit settings, frame rate limiting for VRR displays, and the ability for Bluetooth controllers to wake the device from sleep [3]. - Lenovo plans to release the Legion Go S with pre-installed SteamOS in the coming weeks, priced lower than the Windows 11 version, attracting potential buyers to consider third-party handhelds running SteamOS [3].