Shenwan Hongyuan Group: Lenovo's performance exceeds expectations, AI server maintains high growth.

LENOVO GROUP announces its performance for 2QFY26: the company's revenue was $20.452 billion, a year-on-year increase of 14.6%; non-HKFRS net profit was $0.512 billion, a year-on-year increase of 25.2%; attributable net profit was $0.34 billion, a year-on-year decrease of 5.1%, with non-cash fair value gains related to warrants of $0.148 billion and nominal interest on convertible bonds of $28.47 million. In response to this, the Huang Zhonghuang team of Shenwan Hongyuan Group released a research report stating that overall, the company's revenue exceeded expectations, and net profit greatly exceeded expectations. IDG Intelligent Devices Business Group: PC business performed well, with accelerated penetration of AIPC. In FY25/26Q2, the IDG sector achieved operating revenue of $15.107 billion, a year-on-year increase of 11.79%. According to IDC data, PC revenue was approximately $11 billion, a year-on-year increase of 17.58%, far exceeding the 10.32% year-on-year growth rate in global PC shipments announced by IDC for 3Q25. The company's AIPC accounted for 33% of global PC shipments; in the domestic market, the company's AIPC shipments accounted for 30% of total laptop shipments, a 3 percentage point increase from the previous quarter, indicating accelerated penetration of AIPC. The PC market as a whole maintained a high level of prosperity, with the company continuing to lead the industry. ISG Infrastructure Solutions: Double-digit growth in AI servers, high prosperity expected to be maintained. In FY25/26Q2, the ISG sector achieved operating revenue of $4.087 billion, a year-on-year increase of 23.65%. Breaking it down, AI servers saw double-digit growth, with a good order backlog; revenue from Poseidon liquid cooling technology increased by 154% year-on-year. The operating profit of the ISG sector in FY25/26Q2 was -$32.035 million, a significant reduction in losses of $53.485 million from the previous quarter, as the company's AI server business transformation continues to progress. With the support of scale effects and the global supply chain system, it is expected that the ISG sector will achieve a turnaround. Gross profit margin slightly rebounded, and the company is expected to effectively address the impact of rising storage prices in the future. The company's gross profit margin for FY25/26Q2 was 15.39%, an increase of +0.66 percentage points compared to the previous quarter, confirming that the company's AI server business transformation is progressing well. The company's supply chain system is sound, and as a major buyer in the industry, it has accumulated rich and comprehensive response plans during multiple rounds of component price increases, indicating that the company is expected to effectively address the impact of rising storage prices in the future. Therefore, Shenwan Hongyuan Group maintains its "buy" rating. They are maintaining previous profit forecasts, expecting the company to achieve revenues of $79.49 billion, $91.55 billion, and $105.24 billion in the FY25/26-FY27/28 financial years, with attributable net profits of $1.67 billion, $2.03 billion, and $2.43 billion. Based on the company's leading position in the PC market, the continued advancement of AIPC products, and the strong growth of AI servers in the trend of artificial intelligence, they are retaining their "buy" rating.