Changjiang Securities·2025-08-25 09:22Investment Rating - The investment rating for Lenovo Group is "Buy" and is maintained [6]. Core Insights - Lenovo Group reported a revenue of $18.83 billion for Q1 FY2025/26, representing a year-on-year increase of 22%. The net profit attributable to shareholders was $538 million, up 112% year-on-year. The gross margin was 14.7%, down 1.9 percentage points, while the net profit margin was 2.68%, an increase of 1.11 percentage points. Non-GAAP net profit reached $389 million, reflecting a 22% year-on-year growth [4][8]. Summary by Sections Event Description - On August 14, Lenovo Group released its Q1 FY2025/26 financial results, achieving a revenue of $18.83 billion, a 22% increase year-on-year. The net profit attributable to shareholders was $538 million, marking a 112% increase. The gross margin was 14.7%, down 1.9 percentage points, while the net profit margin increased by 1.11 percentage points to 2.68%. Non-GAAP net profit was $389 million, up 22% year-on-year [4][8]. Business Performance - The IDG (Intelligent Devices Group) business exceeded expectations, with both PC and smartphone sales driving performance. According to IDC, global PC sales grew by 6.5% in Q2 2025, with Lenovo's sales increasing by 15.2%, achieving a market share of 24.6%, a historical high. The smartphone sales growth has outpaced the market for eight consecutive quarters, with a historical high market share outside China, and foldable phone share reaching 51%. The IDG business generated $13.46 billion in revenue, a 17.84% year-on-year increase, with operating profit of $950 million, up 14.73% [8]. ISG and SSG Performance - The ISG (Infrastructure Solutions Group) business saw significant growth, with revenue of $4.29 billion, a 35.77% year-on-year increase, although operating profit was a loss of $86 million. The cloud infrastructure revenue grew by 36%, and AI infrastructure revenue doubled year-on-year. The SSG (Solutions and Services Group) achieved a record revenue of $2.26 billion, up 19.75% year-on-year, with operating profit of $501 million, a 26.43% increase [8]. AI Strategy - Under the hybrid AI strategy, Lenovo aims to provide comprehensive solutions for both personal and enterprise users. In the personal sector, Lenovo is developing various intelligent terminal devices, while in the enterprise sector, it is building AI model factories and platforms. The company is expected to leverage its leadership in AI cloud collaboration, projecting net profits of $1.689 billion, $1.990 billion, and $2.296 billion for FY2026, FY2027, and FY2028 respectively, maintaining a "Buy" rating [8].