Great Wall Securities·2024-02-27 16:00Investment Rating - The report maintains a "Buy" rating for Lenovo Group, expecting the stock price to outperform the industry index by over 15% in the next six months [4][13]. Core Views - Lenovo Group has returned to a growth trajectory, driven by its diversified business and effective execution of its service-oriented transformation strategy, with Q3 FY2024 showing a revenue increase of 3% year-on-year and a 9% quarter-on-quarter growth [2][7]. - The company is focusing on innovation and developing superior products and solutions in both personal and non-personal computer sectors, solidifying its leading position in the PC industry [3][7]. - The AI sector is identified as a major growth catalyst, with Lenovo's infrastructure solutions benefiting from increased demand for AI investments [7]. Financial Summary - For Q3 FY2024, Lenovo reported revenue of $15.721 billion, a year-on-year increase of 3%, and a net profit of $337 million, a year-on-year decrease of 23% [1][2]. - The Intelligent Devices Group (IDG) generated revenue of $12.362 billion, up 6.7% year-on-year, while the Infrastructure Solutions Group (ISG) saw a revenue decline of 13.4% [2]. - The company's gross margin for Q3 FY2024 was 16.5%, with a net margin of 3.0% [2]. - The forecast for revenue and net profit for FY2024 to FY2026 shows a decline in net profit from $922 million in FY2024 to $1.577 billion in FY2026, with EPS projected to rise from $0.07 to $0.13 [1][7]. Market Position - Lenovo holds a 24% share of the global PC market, with PC shipments growing above the global average by 6% [3]. - The company has seen strong sales performance in North America, Europe, the Middle East, Africa, and Asia, particularly in the smartphone segment, which recorded double-digit growth year-on-year [3][7]. - The ISG segment is experiencing a recovery in demand from cloud customers, supported by seasonal infrastructure spending increases [3].