DBS released a research report saying that based on its higher earnings per share forecast for Lenovo Group (00992) and the third quarter of fiscal 2025crouchingtigerhiddendragonyoyoma.5 times the P & E ratio, raised Lenovo's target price from HK$10 to HK$13.2, and gave it a "buy" rating.

The bank expects that Lenovo Group's artificial intelligence server shipments will increase by 108% year-on-year in fiscal year 2025 as the shortage of graphics processing units (GPU) is alleviated, and is expected to drive the Infrastructure Solutions (ISG) business to turn profitable., improving to an expected profit of 46 million yuan in the third quarter of fiscal year 2025 and an expected profit of 402 million yuan in the third quarter of fiscal year 2026.

The bank believes that the growth of artificial intelligence servers will drive Lenovo's operating income in fiscal years 2025 and 2026, increasing by 6% and 8% respectively, and profits for the same period will also be driven to increase by 10% and 14% respectively. At the same time, the bank believes that the recovery and growth of Lenovo's service and personal computer businesses will drive a recalibration of the company's share rating, and expects profit growth in fiscal 2025 and 2026 to reach 57.7% and 33.3% respectively. Increased operating margins are mainly due to the company's growing service businesscrouchingtigerhiddendragonyoyoma; by Windows

crouchingtigerhiddendragonyoyoma| DBS: Raise its "Buy" rating target price for Lenovo Group to HK.2

10 The replacement cycle for commercial PCs migrating to Windows 11; factors such as the expected profitability of the server business.

Date: 2024-05-27
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