LENOVO GROUP(00992) 海通国际·2024-12-23 10:23Investment Rating - The report initiates coverage with an OUTPERFORM rating for the company, with a 6-month target price of HKD 13.57 based on a FY2025 PE of 20x [8][72] Core Views - The company is expected to achieve revenue growth of 9.56%, 7.03%, and 6.44% for FY2025-FY2027, with gross profit margins of 17.74%, 18.24%, and 18.74% respectively [8][72][83] - Net profit is projected to grow to 1.16, 1.61, and 1.98 billion USD for FY2025-FY2027, with EPS of 0.09, 0.13, and 0.16 USD [8][72] - The company's strategic partnership with Alat provides access to sovereign wealth resources and growth opportunities in the MEA region, with expected annual interest savings of 0.11 billion USD [10][25][55] Financial Performance - FY2024 revenue was 56.90 billion USD, down 8.16% YoY, with net profit of 1.01 billion USD, down 37.15% YoY [22][91] - FY2025Q1 revenue grew 19.75% YoY to 15.45 billion USD, with net profit up 37.86% YoY to 0.24 billion USD [22] - Smart devices accounted for 44.60 billion USD, or 78.43% of total revenue in FY2024 [22][91] Business Segments - The Intelligent Devices Group (IDG) is expected to grow at 8%, 7%, and 7% for FY2025-FY2027, contributing 77.32%, 77.30%, and 77.71% of total revenue respectively [83][64] - Infrastructure Solutions Group (ISG) is projected to grow at 18%, 10%, and 8% for FY2025-FY2027, with revenue shares of 16.90%, 17.37%, and 17.62% [64] - Solutions and Services Group (SSG) is expected to grow at 9%, 5%, and 3% for FY2025-FY2027, contributing 13.07%, 12.83%, and 12.41% of total revenue [64] Strategic Initiatives - The company announced a strategic cooperation with Alat, including the establishment of a new regional headquarters in Riyadh for the MEA region [14][25][55] - Innovative financing includes the issuance of 115 million rights at 1.43 HKD each, raising approximately 0.21 billion USD, and a 2 billion USD convertible bond agreement with Alat [34][55] - The proceeds from the convertible bonds will be used for debt refinancing and expanding MEA operations, with no dilution of existing shareholders for the first three years [55] Valuation and Peer Comparison - The company's FY2025-FY2027 P/E ratios are projected at 12.71x, 9.16x, and 7.44x, compared to the industry average of 21.01x, 19.43x, and 18.31x [95] - EV/EBITDA ratios for FY2025-FY2027 are 2.58x, 2.21x, and 1.80x, indicating a relatively attractive valuation compared to peers [13]