Group 1 - The core viewpoint is that Lenovo, as a leading global PC and server manufacturer, is expected to benefit significantly from the upcoming upgrade cycle in 2025, leading to an increased buy rating and a target price adjustment to HKD 20 from HKD 15 [1][2] - Lenovo is transitioning from a technology hardware giant to a service-oriented company, leveraging its 25% market share in active PC users and strong reputation in the PC and server sectors to drive growth in services and solutions [1] - The company is well-positioned in the AI wave, with its AI assistant "Xiao Tian" integrated with DeepSeek, enhancing capabilities such as summarization, translation, and transcription, which is expected to boost AI PC shipment volumes significantly [1] Group 2 - Lenovo's server business is poised to benefit from the super cycle of AI infrastructure in China, with the server market projected to exceed USD 140 billion by 2029, directly impacting Lenovo's order volume [2] - In the period from April to June 2025, Lenovo's AI server revenue saw a remarkable year-on-year growth of 155%, supported by strong partnerships and innovative cooling technologies that reduce data center power consumption [2] - Lenovo currently holds approximately 35% of the AI cloud server revenue in China, with expectations to exceed 20% market share by 2028 as large-scale deployments and water cooling technology become standard in new AI data centers [2]

Core Viewpoint - DBS Bank maintains a "buy" rating for Lenovo (00992) and raises the target price to HKD 20 from HKD 15, citing benefits from the 2025 upgrade cycle [1] Group 1: Transition to Service-Oriented Company - Lenovo is transitioning from a technology hardware giant to a service-oriented company, leveraging its 25% market share in active PC users and strong reputation in PCs and servers to drive growth in services and solutions [2] - The company is well-positioned in the AI wave due to its extensive production expertise and product innovation [2] Group 2: 2025 Upgrade Cycle - The upgrade cycle in 2025 is expected to be driven by the migration to Windows 11 and a strong AI PC product line, with Lenovo's AI assistant "Xiao Tian" integrated with DeepSeek for enhanced functionalities [2] - AI PC shipments are projected to grow by 93% in FY3/26 and by 52% in FY3/27, increasing their share of total PC shipments to 37% and 57% respectively [2] Group 3: Server Business Growth - The Chinese server market is expected to exceed USD 140 billion by 2029, benefiting Lenovo's orders significantly [3] - Lenovo's AI server revenue grew by 155% year-on-year from April to June 2025, supported by strong IDM partnerships and the Neptune water cooling system that reduces data center power consumption by approximately 40% [3] - Lenovo holds about 35% of the AI cloud server revenue in China as of early 2025, with expectations to exceed 20% market share by 2028 as large-scale deployments and water cooling technology become standard [3] Group 4: Financial Projections - The valuation benchmark for Lenovo has been updated to the fiscal year 2027, with earnings forecasts for FY27 and FY28 raised by 10.1% and 17.1% respectively, reflecting higher assumptions for AI server shipments [3]