Lenovo Delivered Robust Results Amid Chip Shortage due to the Better Mix; Raising FVE to HKD 12.60

Lenovo’s acquisition of IBM’s ThinkPad PC business in 2005 has helped propel the company to be a leader in the PC market with 24% share. The successful integration of the ThinkPad business has also enabled Lenovo to increase its commercial-related sales, which currently make up 60% of its PC sales, as well as stabilize its PC margins in recent years. We expect PC sales to continue to make up around 80% of overall sales, while the segment’s profit margins should remain stable, given less intense competition at the higher end of the PC market.