Shulou(Shulou.com)11/24 Report--

On August 17, 0992.HK released the first-quarter results announcement of 2023 Universe 24. According to the financial report, as of June 30, 2023, Lenovo Group had achieved 90.3 billion yuan in revenue and 1.33 billion yuan in net profit.

Specifically, after overcoming the industry-wide challenge of digesting inventory, Lenovo's IDG smart device business with PC as the core still ranks first in the world in terms of PC share, while non-PC businesses such as ISG infrastructure solutions business and SSG solution services business further consolidate the engine of diversified growth, and the share of related revenue in its overall revenue has increased to 41.4 per cent.

Under the background of uncertain global economic growth and weak demand in the consumer electronics industry, Lenovo Group, with forward-looking strategic thinking and with the support of the new IT technology framework, actively embraces the AI development opportunities in the new computing era and realizes the sustainable and healthy development of its business.

It is worth mentioning that Lenovo's strategy of anchoring AI to drive long-term growth has attracted the general attention of investment and research institutions. China International Capital Corporation issued a research report to maintain the Lenovo Group's "outperform industry" rating with a maximum target price of HK $8.80; the open source securities research newspaper believes that Lenovo Group is still the core target of the AI PC+AI server and is expected to continue to benefit from the opportunities of the AI industry chain and maintain the "buy" rating; Haitong International Research News gives it a "outperform" rating with a target price of HK $8.70. In addition, Hong Kong brokerage Anxin International reported covering Lenovo for the first time based on Lenovo's commercial PC and AI layout prospects, and gave a "buy" rating to the target price of HK $10.20.

Non-PC business is strong, service-oriented transformation pays off

In recent years, with the technological progress of big data, 5G, Internet of things and artificial intelligence, the transformation of digitalization and intelligence has become a trend for enterprises to improve their competitiveness, open up markets and realize value creation. Under this trend, Lenovo Group continues to deepen the intelligent transformation strategy, which has been transformed from a hardware product company to a service-oriented 3s full-stack full-cycle service provider.

Judging from the latest data performance, Lenovo's strategic transformation is ushering in positive feedback at the performance level.

At present, Lenovo Group business is mainly divided into IDG smart device business, ISG infrastructure solution business and SSG solution service business, specific services mainly cover PC, tablet computers, smartphones, servers, storage, software services, solutions and other products and services.

Among them, IDG smart device business still maintains the leading position of PC in the global market share under the pressure of inventory clearance. With the trend of global PC shipments and activation volume tend to be consistent, channel inventory digestion is nearly completed, laying the foundation for future sales growth of Lenovo Group. It is worth noting that in the field of mobile devices, Lenovo's mobile phone business has also achieved the highest level of activation in 10 years.

China International Capital Corporation research newspaper also pointed out that Lenovo Group PC business inventory level tends to be healthy, parts prices hit bottom and other positive signals have emerged, with the PC market in the second half of the fiscal year to return to positive growth, Lenovo Group as the global PC leader is expected to benefit first, while its AI PC products are expected to lead a new round of PC replacement wave in the future. Open source securities expect that as the inventory clearance of the PC industry is basically over, the position of the bottom of the fundamentals is clear, and the future performance improvement trend is determined, Lenovo PC shipments will return to positive year-on-year growth in 2023Q4, and net profit in 2024-2025 is expected to achieve rapid growth. Anxin International predicts that Lenovo's PC business will gradually pick up steadily with the growth of the commercial PC market.

The core of SSG solution service business is "everything is service", and its performance is particularly eye-catching, which is the embodiment of Lenovo's service-led transformation. According to the data, SSG revenue rose 18% year-on-year, operating profit increased 10% year-on-year, and operating profit margin reached 21%. As a practitioner and enabler of intelligent transformation, Lenovo Group has created rich solutions in health care, education, transportation, energy, finance and other fields, and has helped more than 200 large and medium-sized enterprises to embark on the road of intelligent transformation.

Anxin International believes that Lenovo Group SSG solution service business performance for the gradual increase in service penetration, the future will be a strong profitability to promote the overall profitability.

Lenovo's ISG infrastructure solutions business invests in all aspects of AI infrastructure research and innovation, including the development of AI edge computing, hybrid cloud, and servers and storage that support AI workloads. The performance of the business declined in the first quarter of fiscal 24, affected by the slowdown in technology spending by global cloud service manufacturers, but key products such as storage, software and services all achieved strong growth, of which the storage business grew by 120%. The market share reached the fourth place in the world; software and service revenue increased by 50% and 11% respectively; and high-performance server business grew by 45%. The emerging AI hardware infrastructure-related business achieved triple-digit year-on-year growth, ranking third in the world.

China International Capital Corporation said that Lenovo's ISG infrastructure solutions business actively embraces the AI wave and is optimistic that it will achieve sustainable growth in the AI wave with its comprehensive AI product portfolio and stable partnership with the world's leading CSP customers. Anxin International said that Lenovo's AI server, as a computing carrier, is the core of the competition among technology enterprises. at present, its server, storage and software segments have moved from the transformation domain to the performance domain, which is a strong engine driving its future growth.

The new IT takes the lead in full-stack service, using "Puhui" to generate AI opportunities.

At present, the development of digital economy is accompanied by the continuous breakthrough of AI technology, which brings new momentum for the digital and intelligent transformation and upgrading of various industries. In other words, as a cutting-edge technology, AI is widely used in various fields and industries, and has become a key force to promote enterprise transformation. With the continuous integration of AI technology into various industries, AI-related industrial chain also ushered in broad opportunities for development.

Among them, computing power, as the basis of the development of AI, is the key direction for various industries to compete for the AI industrial chain. At present, the new computing era driven by AI technological innovation is beginning, the demand for computing power breaks out, and the high potential value of the computing industry chain rises.

According to the report "Puhui Computing Power ushering in a New Computing era" jointly released by KPMG and Lenovo Group, it is estimated that by 2025, the scale of China's computing power core industry will be no less than 4.4 trillion yuan, and the scale of computing power related industry will reach 24 trillion yuan. Computing power is expected to rise as another super race track after the national digital economic blueprint relay electronic information manufacturing and software industry.

It has become a consensus for the development of science and technology enterprises to participate in the construction of China's computing infrastructure and promote the layout of the computing supply system. Lenovo Group, as the world's leading ICT technology enterprise and intelligent full-stack solution and service provider, with its powerful computing genes formed for decades, through the new IT technology framework covering all elements of "end-edge-cloud-network-intelligence", continues to increase the layout and innovation of the computing industry chain to meet the development opportunities under the tide of AI.

Under the new IT architecture, Lenovo focuses on AI computing power and grows into the world's most full-power infrastructure and service provider with full-stack computing products and services such as servers, edge computing, cloud computing and advanced computing services. Based on this advantage, Lenovo Group looks forward to the development trend of numeracy and is committed to providing more "Puhui" numeracy products and services for all kinds of customers with numeracy needs.

Under the proposition of "Puhui" arithmetic power, like water and electricity, it will eventually become a universal and universal public resource. At present, Lenovo Group is gradually promoting the development of "Puhui" computing power in various business lines:

The IDG smart device business leads the revolution in personal computing and promotes the transformation of PC to AI PC, making the latter a disruptive mix of terminal, edge computing, and cloud technologies, fully meeting the needs of new generative AI workloads.

The SSG Solutions Services business uses AI technologies extensively in its product portfolio, including AI device intelligence, spanning AI customer service, and AI enhanced vertical industry solutions.

The ISG Infrastructure Solutions business continues to deepen the layout of the artificial intelligence infrastructure, providing a rich AI portfolio and a powerful family of AI servers. In order to accelerate the deployment of AI, Lenovo will invest an additional 7 billion yuan in the next three years to expand the product portfolio of ISG infrastructure solutions and provide one-stop data support and solutions from pocket to cloud.

Driven by cutting-edge technologies such as artificial intelligence, the digital and intelligent changes in various industries are being accelerated. Under the guidance of its own intelligent strategic transformation, Lenovo Group launched AI, stabilized the performance basic market, and pried the new momentum of growth. At the same time, Lenovo Group also contributes to the intelligent transformation of Qianhang Baiye with the help of "Puhui" arithmetic.

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