Daiwa Securities slightly raised Lenovo Group's target price to 9.85 yuan, with stable performance in the third fiscal quarter

Daiwa Capital Markets' research report indicates that Lenovo Group (00992.HK) performed steadily in the third fiscal quarter, mainly benefiting from stronger-than-expected revenue growth across various business segments and resilient operating profit margins. Management stated that rising memory and chip costs have brought pressure, but they believe the company is well-prepared to mitigate the impact through increasing average selling prices, improving product mix, and inventory management.

The firm has raised its adjusted net profit forecasts for the fiscal years 2026 to 2028 by 5.7%, 9.7%, and 4.3%, to USD 1.833 billion, USD 1.77 billion, and USD 2.178 billion, respectively, to reflect downward adjustments in PC and smartphone shipment volumes, as well as sales in the Solutions and Services Group (SSG). However, the impact will be offset by higher operating profit margins in the Intelligent Devices Group (IDG) and a decrease in financing costs; maintaining a "Hold" rating, with the target price slightly increased from HKD 9.7 to HKD 9.85