Daiwa Research lowered its target price for Lenovo Group (00992) to HK$6.5 from HK$6.9 and maintained its "outperform" rating.
The research house said Lenovo's 1Q FY2020 results (June-quarter) featured a stronger-than-expected operating profit. Daiwa sees favorable seasonality in 2Q FY2020, led by PC and Smart Devices (PCSD).
The recent delay in implementation of the US's 10% tariffs on China-made notebooks/
smartphones is welcome, though some cost impact may be inevitable (such as production relocation). Lenovo believes it is better placed than peers given its existing capacity outside China (India, Mexico, etc).
Daiwa raised its FY2020 EPS forecast by 9% to factor in the 1Q FY2020 results but cut FY2021 EPS by 2% on likely tariff impact.
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