Citi: Maintains "buy" rating on LENOVO GROUP (00992) and raises target price to HK$18.4

Standard Chartered released a research report stating that it maintains a "buy" rating on LENOVO GROUP (00992) with a target price raised significantly from 12.7 Hong Kong dollars to 18.4 Hong Kong dollars. The bank said that the company will benefit from this year's replacement cycle driven by the migration to "Windows 11" and strong artificial intelligence personal computer (AIPC) channels. It is expected that the profits of LENOVO GROUP for the fiscal years 2025 and 2026 will increase by 46.6% and 45% respectively. Standard Chartered pointed out that flagship models such as "ThinkPad", "Yoga", and "IdeaPad" will be launched at the beginning of this year, further enhancing Lenovo's competitive advantage. The bank mentioned that Lenovo has incorporated the "DeepSeek" artificial intelligence into its "XiaoTian" assistant, and further collaboration with DeepSeek will strengthen Lenovo's artificial intelligence ecosystem. It is expected that Lenovo's AIPC shipments will increase by 125.9% and 153.8% in the fiscal years 2025 and 2026, accounting for 20% and 47% of total PC shipments. The bank believes that the profit growth of Lenovo in the fiscal years 2025 and 2026 is mainly driven by the commercial PC replacement cycle driven by spec upgrades, benefiting from the standardization of AIPC specifications and the increase in "Copilot+" adoption rate; the continuous expansion of services brings about an increase in operating profit margin; and the server business is expected to be profitable at the end of fiscal year 2025.