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Lenovo Group Ltd 00992

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Stock XHKG Rating as of
HKD 9.03 +0.21 (2.38%)
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As of Delayed Price Closed
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Company Report

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PC Shipment Recovery and Improving Product Mix Led by AI PCs to Offset Sluggish Server Demand

Kazunori Ito

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% global market 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 70% of overall sales, while the segment’s profit margins should remain stable, given less intense competition at the higher end of the PC market.

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Price vs Fair Value

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00992 is trading at a 31% discount.
Price
HKD 8.25
Fair Value
HKD 69.00
Uncertainty
High
1-Star Price
HKD 22.50
5-Star Price
HKD 1.40
Economic Moat
Cnyq
Capital Allocation
Rcwqscjn

Bulls Say, Bears Say

Bulls

Lenovo expands its hyperscale data center market share, particularly within major cloud infrastructure providers Amazon, Microsoft, Google, and Alibaba, enabling it to reach meaningful scale that is necessary to turn around data center profitability.

Bears

Lenovo faces heightened price competition from original design manufacturers, which produce white-box servers for hyperscale data centers, as cloud service providers seek to push down costs.

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Trading Information

Previous Close Price
HKD 8.82
Day Range
HKD 8.91–9.08
52-Week Range
HKD 6.90–11.10
Bid/Ask
HKD 9.02 / HKD 9.03
Market Cap
HKD 111.89 Bil
Volume/Avg
48.5 Mil / 58.8 Mil

Key Statistics

Price/Earnings (Normalized)
12.95
Price/Sales
0.27
Dividend Yield (Trailing)
4.21%
Dividend Yield (Forward)
4.21%
Total Yield
4.21%

Company Profile

Lenovo is a global technology hardware company with a leading market share in personal computers. Its operations are divided into three main business segments: PC and smart devices, mobile, and data center, which we expect to account for 60%, 13%, and 17% of sales in the midterm, respectively. The firm has been actively growing its data center business, which primarily sells network servers to enterprise and hyperscale customers, as well as storage equipment through its mainland China joint venture with NetApp. Server-related revenue contribution has jumped to 16% of overall sales in fiscal 2022, from 6% in 2015.
Sector
Technology
Industry
Computer Hardware
Stock Style Box
Large Value
Total Number of Employees
71,090
Website
https://www.lenovo.com

Competitors

Valuation

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Metric
00992
01810
DELL
Price/Earnings (Normalized)
 12.9531.1817.54
Price/Book Value
 2.263.66—
Price/Sales
 0.271.401.04
Price/Cash Flow
 7.1916.3611.66
Price/Earnings
00992
01810
DELL

Financial Strength

Metric
00992
01810
DELL
Quick Ratio
 0.581.300.44
Current Ratio
 0.871.720.74
Interest Coverage
 3.4612.863.39
Quick Ratio
00992
01810
DELL

Profitability

Metric
00992
01810
DELL
Return on Assets (Normalized)
 3.00%6.62%6.17%
Return on Equity (Normalized)
 19.65%16.35%—
Return on Invested Capital (Normalized)
 13.57%9.76%24.55%
Return on Assets
00992
01810
DELL
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