Guoxin Securities·2025-05-29 07:45Investment Rating - The investment rating for Lenovo Group (00992.HK) is "Outperform the Market" [6][20]. Core Views - Lenovo Group's revenue for FY2025 reached $69.077 billion, a year-on-year increase of 21.41%, while net profit was $1.384 billion, up 37.01% year-on-year, indicating a positive turnaround in 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]. Financial Performance Summary - Revenue and Profit: For FY2025, Lenovo reported revenue of $69.077 billion and net profit of $1.384 billion. In Q4 FY2025, revenue was $16.984 billion, showing a year-on-year increase of 22.50% but a quarter-on-quarter decline of 9.64%. Net profit for Q4 was $90 million, down 63.72% year-on-year and 87.02% quarter-on-quarter, primarily due to the impact of Hong Kong financial reporting standards [1][8]. - Margins: The gross margin for FY2025 was 16.1%, down 1.2 percentage points year-on-year, attributed to the rapid revenue growth in lower-margin smartphone products. The net profit margin improved to 2.1%, up 0.2 percentage points year-on-year [2][12]. - Earnings Forecast: The forecast for net profit for FY2026 to FY2028 is $1.604 billion, $1.832 billion, and $2.019 billion, respectively, with diluted EPS projected at $0.13, $0.15, and $0.16 [20][24]. Growth Drivers Summary - AI PCs: Lenovo's PC shipments are projected to reach approximately 61.8 million units in 2024, maintaining a global market share of about 23.5%, which is expected to grow further due to post-pandemic demand and the discontinuation of Windows 10 [3][17]. - Smartphones: The global smartphone market is expected to grow by 4% in 2024, with Motorola's shipments increasing by 23%, positioning it as the seventh-largest smartphone brand globally [3][17]. - Servers: Lenovo's server business turned profitable in the second half of FY2025, driven by increased capital expenditures from major internet companies, which is expected to enhance demand for AI servers [3][17].