[ET Net News Agency, 9 October 2019] HSBC Global Research initiated coverage on Legend
Holdings (03396) with a "buy" rating and a target price of HK$21.
The research house said Legend's first key investment, Lenovo (00992), delivered a
strong turnaround in net profit of US$597m in FY2019 (ended March 2019). Looking ahead,
HSBC is positive on Lenovo for its leading position in PCs and continued improvement in
its mobile and data center businesses and forecasts a further 32% earnings growth for
FY2020. This will be a major earnings driver for Legend this year.
Despite the private equity market cooling down in China last year, Legend's angel,
private equity and venture capital platforms continue to cement their leading position in
this space.
Given the strong branding, SOE background and efficiency of scale, Legend is
well-positioned to benefit from the structural long-term growth of China's private equity
market and reforms, i.e. registration-based IPO and launch of the Science and Technology
Innovation Board.
HSBC estimated an 11% net profit CAGR in 2018-21, versus -2% CAGR since its IPO in 2015.
(KL)