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LENOVO GROUP (00992.HK) Slumps Over 7% as Citi Sees AI Transformation Ambition, Lifts TP to HKD31, Maintains Buy
2026-06-26 11:15:39 LENOVO GROUP (00992.HK) opened 2% lower today, hitting an intraday trough of HKD22.12. It is currently trading at HKD22.26, down 7.17%, with turnover of 76.0588 million shares, involving HKD1.73 billion. Citi published a research report noting that LENOVO GROUP held its US Investor Day on June 25. Management emphasized that the company is transforming from a PC-centric enterprise into a full-stack artificial intelligence (AI) technology leader, covering three major segments: devices, infrastructure and services. Management laid out an ambitious financial blueprint, targeting revenue of USD100 billion and a net profit margin of above 3% within one to two years, and raising revenue to over USD150 billion with a net profit margin above 8% within five years or longer. In addition, management expects Lenovo to have 5.7x valuation upside compared with peers in its sub-segments. The report stated that the Infrastructure Solutions Group (ISG) has become Lenovo's core growth engine. Its x86 server revenue has reached USD19.2 billion, ranking second globally, with a two-year CAGR of 47%. Benefiting from strong domestic and overseas server demand, rising AI server shipments, and improved pricing power amid tight CPU and memory supply, Citi is highly confident in ISG's prospects. Meanwhile, the total addressable market of the Solutions and Services Group (SSG) is projected to reach USD875 billion by 2030, with its TruScale service gaining broad market traction. The PC channel has also seen advance inventory restocking ahead of rising memory prices, bringing positive impact to the company. Given stronger revenue performance and improved profitability from the ISG business, Citi significantly raised its earnings forecasts for fiscal years 2027, 2028 and 2029 by 6%, 29% and 40%, respectively. Owing to significantly enhanced visibility of the ISG segment - currently holding solid AI server orders of USD21 billion - the broker rolled forward its valuation base to fiscal 2028 and lifted its target price-to-earnings multiple from 13x to 13.6x (with ISG valued at 16.7x, in line with peer averages). Citi sharply raised its TP from HKD20 to HKD31 and maintained a Buy rating, while placing the stock on a 90-day positive catalyst watch. AASTOCKS Financial News Website: www.aastocks.com This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. | |