2024-08-19 09:42Investment Rating - The report assigns a "Buy" rating to Lenovo Group with a target price of HKD 12.1, indicating a potential upside of 25.0% from the recent closing price of HKD 9.68 [2][3]. Core Insights - Lenovo Group reported a 20% year-on-year increase in revenue for Q1 2024/2025, reaching USD 15.447 billion, while net profit attributable to equity holders rose by 38% to USD 243 million [1][2]. - The company's gross margin was 16.6%, a decrease of 0.9 percentage points, primarily due to lower profit margins in the rapidly growing ISG business segment [1]. - The Intelligent Devices Group (IDG) saw an 11% year-on-year revenue growth, driven by high-end PCs and a new AI computer product based on Arm architecture [2]. - The Infrastructure Solutions Group (ISG) experienced a robust 65% year-on-year growth, with strong demand for general servers and liquid cooling solutions [2]. - The Solutions and Services Group (SSG) recorded a revenue of USD 1.9 billion, marking a 10% year-on-year increase and achieving double-digit growth for 13 consecutive quarters [2]. Financial Performance Summary - For Q1 2024/2025, Lenovo's adjusted net profit surged by 65% to USD 315 million [1]. - The company expects net profits of USD 1.24 billion and USD 1.47 billion for the fiscal years 2024/25 and 2025/26, respectively [2]. - The report highlights a diversified market advantage and robust financial health, with a projected P/E ratio of 15.5x for 2024/2025 [2][3].