Guotai Junan Securities·2024-08-18 03:11Investment Rating - The report assigns an "Accumulate" rating to Lenovo Group (0992) [2][20]. Core Insights - The demand for AI devices, infrastructure, and services is strong, which is expected to benefit from the gradual release of AI PC demand. The company is projected to see long-term growth potential due to the ongoing recovery in the global personal computer market and the launch of multiple new products [4][20]. - For FY2025E and FY2026E, the revenue estimates are adjusted to $61.9 billion and $63.6 billion, respectively, while net profit estimates are adjusted to $1.23 billion and $1.62 billion, respectively. The target price is adjusted to HKD 12.4, corresponding to a target market value of $18.45 billion [4][20]. Summary by Sections Performance Overview - In Q1 FY25, Lenovo's revenue reached $15.4 billion, a year-on-year increase of 20%, and the net profit attributable to shareholders was $243 million, up 38% year-on-year. This performance exceeded expectations, driven by strong revenue from infrastructure solutions and smart devices [4][20]. - The gross margin for Q1 FY25 was 16.6%, a decrease of 0.9 percentage points year-on-year, while operating expenses were $2.07 billion, an increase of 11% year-on-year [4][20]. Segment Revenue - The Intelligent Devices Group (IDG) reported revenue of $11.4 billion, a year-on-year increase of 11%, with operating profit of $830 million, up 27% year-on-year. The increase was supported by a recovery in commercial sales and a rise in the proportion of high-end PCs to 31.6% [4][20]. - The Infrastructure Solutions Group (ISG) achieved a record revenue of over $3 billion, a year-on-year increase of 65%, with operating losses narrowing by $37.27 million compared to the same period last year. The growth was primarily driven by AI infrastructure construction [4][20]. - The Solutions and Services Group (SSG) reported revenue of $1.9 billion, a year-on-year increase of 10%, continuing its double-digit growth trend [4][20]. Earnings Forecast - The global personal computer market is expected to continue its steady recovery, with global shipments projected to reach 44 million units in 2024 and 103 million units in 2025. Lenovo plans to launch more AI PC products later in 2024, leading the global replacement cycle [4][20]. - The adjusted revenue estimates for FY2025E, FY2026E, and FY2027E are $61.9 billion, $63.6 billion, and $65.4 billion, respectively, with net profit estimates of $1.23 billion, $1.62 billion, and $1.75 billion, respectively [20][21].