GOLDEN SUN SECURITIES·2025-08-18 04:00Investment Rating - The report maintains a "Buy" rating for Lenovo Group [4][6] Core Views - Lenovo Group's Q1 fiscal performance exceeded expectations with revenues of $18.83 billion, a year-on-year increase of 22% [1] - The company continues to push its AI strategy, with significant investments in AI capabilities and infrastructure [3] - The PC segment showed robust growth, with a 20% year-on-year increase in revenue, marking the fastest growth in 15 quarters [2] Financial Performance - For Q1, Lenovo's gross margin was recorded at 14.7%, a decrease of 1.8 percentage points year-on-year [1] - The net profit attributable to shareholders surged by 108% year-on-year to $505 million, with a net profit margin of 2.7% [1] - The company expects revenues for FY 25/26, FY 26/27, and FY 27/28 to be $75.947 billion, $81.921 billion, and $89.266 billion respectively, with year-on-year growth rates of 9.9%, 7.9%, and 9.0% [4][13] Business Segments - The IDG (Intelligent Devices Group) revenue grew by 18% year-on-year, while ISG (Infrastructure Solutions Group) and SSG (Solutions and Services Group) saw increases of 36% and 20% respectively [1] - The ISG segment reported a revenue of $4.3 billion in Q2, driven by increased cloud capital expenditures from major clients [3] - The mobile phone business has achieved double-digit growth for seven consecutive quarters, with market share outside China reaching record highs [2] Market Position - Lenovo's PC market share increased to 24.6%, up 1.7 percentage points year-on-year, with shipments of 17 million units [2] - The company is well-positioned to benefit from the ongoing transition from Windows 10 to Windows 11, which is expected to continue for several quarters [2] Valuation - The report estimates a fair market value for Lenovo at HKD 158.9 billion, with a target price of HKD 12.8 per share, corresponding to a P/E ratio of 12x for FY 25/26 [4]