Lenovo Group (0992) AI Stock Analysis

• Market Cap: $114.87B
• Dividend Yield: 4.07%
• Average Volume (3M): 107.22M
• Price to Earnings (P/E): 9.4
• Beta (1Y): 1.13
• Revenue Growth: 18.03%
• EPS Growth: 71.00%
• Country: HK
• Employees: 69,500
• Sector: Technology
• Sector Strength: 66
• Industry: Computer Hardware
• EPS (TTM): 0.42
• Shares Outstanding: 12,404,659,000
• 10 Day Avg. Volume: 60,267,707
• 30 Day Avg. Volume: 107,222,372
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.18
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 13.85
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $13.88
• Price Target Upside: 52.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Lenovo Group has a strong financial foundation and is making strategic advancements, especially in AI and market expansion. Despite this, technical indicators show bearish trends, suggesting caution in the short term. The attractive valuation and positive earnings outlook contribute to a favorable long-term perspective. However, potential risks from tariffs and pricing pressures should be monitored.

Positive Factors

AI and Innovation

Lenovo's leadership in on-device AI development and model compression algorithms suggests they are significantly ahead of other PC brands.

Earnings Growth

Net profit arrived at US$359m, which translates to a robust yoy growth of 43.9%, higher than estimates.

Market Positioning

Lenovo is well positioned for the AI boom with its extensive manufacturing expertise and product innovation.

Negative Factors

Consumer Sentiment

Prolonged weak consumer sentiment for consumer electronics is affecting the market.

Server Business Challenges

Earnings for FY25/26 have been cut to reflect a slower turnaround in the server business.

Server Business Margins

There is a shift in the server business towards lower-margin storage servers due to growing sales from cloud service providers.

Lenovo Group Business Overview & Revenue Model

Company Description

Lenovo Group Limited, an investment holding company, develops, manufactures, and markets technology products and services. It operates through Intelligent Devices Group, Infrastructure Solutions Group, and Solutions and Services Group segments. The company offers commercial and consumer personal computers, as well as servers and workstations; and a family of mobile Internet devices, including tablets and smartphones. It also provides laptops, monitors, accessories, smart home and collaboration solutions, augmented and virtual reality, commercial internet of things, and smart infrastructure data center solutions. In addition, the company manufactures and distributes IT products, computers, computer hardware, and peripheral equipment; and offers IT, business planning, management, supply chain, finance, administration support, procurement agency, data management, intellectual property, and investment management services. Further, it is involved in the retail and service business for consumer electronic products and related digital services; development, ownership, licensing, and sale of communications hardware and software; and develops software and applications. Additionally, the company is involved in motherboard design and system, full-rack assembly across server, storage, and other products; and provides device-, infrastructure-, and software-as-a-service. It operates in China, the Asia Pacific, Europe, the Middle East, Africa, and the Americas. Lenovo Group Limited was founded in 1984 and is based in Quarry Bay, Hong Kong.

How the Company Makes Money

Lenovo Group generates revenue primarily through the sale of hardware products, particularly personal computers, which account for a significant portion of its income. The company operates in several key segments, including the PC and Smart Devices Group, which contributes substantially to its revenue through sales of laptops, desktops, and tablets. Another important segment is the Mobile Business Group, which focuses on smartphones and other mobile devices. Additionally, the Data Center Group provides enterprise customers with servers, storage, and networking solutions, contributing to Lenovo's earnings. The Intelligent Devices Group and associated services also play a role in the company's revenue stream. Lenovo's strategic partnerships with technology giants such as Microsoft and Intel enhance its product offerings and market reach, further boosting its financial performance. Moreover, Lenovo leverages its global supply chain and manufacturing capabilities to maintain cost efficiency and competitive pricing, which positively impacts its profitability.

Lenovo Group Financial Statement Overview

Summary

Lenovo Group faces declining revenue and free cash flow, posing financial challenges. However, stable margins and equity provide some resilience. High leverage remains a concern, necessitating improvements in revenue and cash flow management.

Income Statement

Lenovo Group shows a declining revenue trend with a noticeable decrease in total revenue from $71.6 billion in 2022 to $56.9 billion in 2024. The Gross Profit Margin is stable at approximately 17%, and the Net Profit Margin has decreased from 2.8% to 1.8% over the same period. The company faces challenges in maintaining revenue growth but has a reasonable EBIT and EBITDA margin, indicating operational efficiency.

Balance Sheet

The Debt-to-Equity Ratio is relatively high, indicating significant leverage, though it has improved from past years. Stockholders' Equity has remained stable, contributing to a consistent Equity Ratio around 14%. While leverage is high, the company maintains a stable equity base amidst fluctuating total assets.

Cash Flow

Lenovo's Free Cash Flow has decreased significantly from $2.8 billion in 2022 to $0.7 billion in 2024, indicating potential cash flow challenges. However, the Operating Cash Flow to Net Income Ratio remains healthy, suggesting effective conversion of income into cash. The company needs to address declining Free Cash Flow to maintain financial flexibility.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
56.86B	61.95B	71.62B	60.74B	50.72B
	Gross Profit
9.80B	10.50B	12.05B	9.77B	8.36B
	EBIT
2.01B	2.67B	3.08B	2.18B	1.44B
	EBITDA
3.54B	3.80B	4.29B	3.10B	2.25B
	Net Income Common Stockholders
1.01B	1.61B	2.03B	1.21B	718.85M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.63B	4.32B	3.96B	3.13B	3.62B
	Total Assets
38.75B	38.92B	44.51B	37.99B	32.13B
	Total Debt
3.96B	4.36B	5.93B	4.42B	6.44B
	Net Debt
401.86M	109.27M	2.00B	1.35B	2.89B
	Total Liabilities
32.67B	32.87B	39.12B	34.38B	28.07B
	Stockholders Equity
5.58B	5.59B	4.99B	3.56B	4.19B
Cash Flow		Free Cash Flow
725.09M	1.22B	2.79B	2.81B	1.26B
	Operating Cash Flow
2.01B	2.80B	4.08B	3.65B	2.21B
	Investing Cash Flow
-1.28B	-1.92B	-1.50B	-975.90M	-956.95M
	Financing Cash Flow
-1.34B	-413.78M	-1.76B	-3.23B	-238.49M

Lenovo Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 9.10
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0992, the sentiment is Neutral. The current price of 9.1 is above the 20-day moving average (MA) of 8.47, below the 50-day MA of 10.47, and below the 200-day MA of 10.07, indicating a neutral trend. The MACD of -0.32 indicates Negative momentum. The RSI at 48.23 is Neutral, neither overbought nor oversold. The STOCH value of 82.26 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for HK:0992.

Lenovo Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0992	70 Outperform	$114.87B	9.45	27.60%	4.07%	18.03%	71.00%
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%

Lenovo Group Corporate Events

Lenovo Group Schedules Board Meeting to Review Financials and Dividend

Lenovo Group Limited has announced a board meeting scheduled for May 22, 2025, where the board will consider approving the audited financial results for the fiscal year ending March 31, 2025. The meeting will also discuss the recommendation of a final dividend payment, which could impact the company’s financial strategy and shareholder returns.

Lenovo Announces Board of Directors and Their Roles

Lenovo Group Limited has announced the composition of its board of directors, including the roles and functions of each member. This announcement provides clarity on the governance structure of the company, which is crucial for stakeholders to understand the leadership dynamics and decision-making processes within Lenovo.

Lenovo Revises Annual Caps and Renews Agreements with Fujitsu

Lenovo Group Limited has announced revisions to its existing annual caps for continuing connected transactions with Fujitsu, reflecting the strong performance of FCCL’s business. Additionally, Lenovo has renewed its agreements with Fujitsu, extending the terms for the provision of services and products, while also entering into a new secondment agreement for employee transfers. These strategic moves are aimed at facilitating FCCL’s operations and maintaining beneficial partnerships, ensuring that the terms remain fair and reasonable for all stakeholders involved.

Lenovo Announces Major Board and Management Changes for 2025

Lenovo Group Limited announced significant changes in its board and management structure, effective in 2025. Several independent non-executive directors, including Mr. William O. Grabe and Mr. William Tudor Brown, will resign due to reaching the maximum term of service, leading to a reshuffle of committee memberships. Mr. Gordon Robert Halyburton Orr and Mr. John Lawson Thornton will take on new leadership roles within the board. Additionally, key management changes include the retirement of Mr. Wong Wai Ming as CFO and his replacement by Mr. Winston, Shao-Min Cheng, with Mr. Wong transitioning to a non-executive director role, along with Ms. Laura Green Quatela.

Lenovo Announces Board Composition and Governance Structure

Lenovo Group Limited announced the composition of its board of directors, detailing the roles and functions of each member. The board includes a mix of executive, non-executive, and independent non-executive directors, with Mr. Yang Yuanqing serving as Chairman and CEO. The company has structured its governance with three key committees: Audit, Compensation, and Nomination and Governance, each chaired by different board members. This announcement strengthens Lenovo’s governance framework, potentially enhancing strategic oversight and decision-making processes, which could impact its market positioning and stakeholder confidence.

Lenovo Reports Robust Q3 Growth Driven by AI and Strategic Investments

Lenovo Group reported strong financial results for FY2024/25 Q3, with a 106% increase in profit attributable to equity holders and a 20% rise in revenue. The company’s strategic focus on Hybrid AI, cloud demand, and operational excellence across its business groups drove significant growth, positioning Lenovo as a leader in AI solutions. Lenovo’s ISG, IDG, and SSG divisions all achieved notable revenue growth, with ISG benefiting from cloud demand and IDG expanding its PC and smartphone market share. The company’s focus on innovation, sustainability, and strategic global partnerships, such as with Alat, are expected to enhance its growth trajectory and market diversification, especially in the Middle East and Africa.