20150529-大和证券-_Lenovo_Tech_World__takeaways_13页_462kb

报告摘要

Lenovo Group 992 HK Summary

Core Content and Key Points

Event Overview: The document discusses the insights from Lenovo's first-ever "Lenovo Tech World" ("LTW") event held on 28 May in Beijing, where the company showcased its vision for future product concepts and innovation efforts.
Rating and Target Price: The analyst maintains a Hold (3) rating with a 12-month target price of HKD12.60, based on 1-year-forward non-GAAP EPS and an unchanged 16x PER, which is at the higher end of the past 3-year range of 10-18x.
Market Position: Lenovo is the largest PC vendor globally and in China, and it is currently the second-largest smartphone vendor in China.
Strategic Direction: Lenovo positions itself as a device company, not just a hardware company, aiming to integrate hardware, software, and services for the best user experience. It may form JVs or strategic alliances to build services or expand into new areas.

Main Points

Product Innovations

Magic View Smartwatch: A dual-screen smartwatch with a small screen on the wrist strap using VID technology, allowing users to view images up to 20 times larger than a regular watch face. The product's launch date is not yet announced.
Smart Cast: A smartphone with the world's first laser projector, capable of projecting images and touch interfaces (e.g., a virtual keyboard). The product's launch date is also not announced.
Vibe Shot: A slim smartphone with a 16-megapixel rear camera, optical image stabilisation, infrared autofocus, and a tri-colour LED flash. It is expected to be launched by end-July 2015.

Management Insights

Vision and Strategy: Lenovo aims to offer the best user experience by integrating hardware, software, and services. It may spin off successful products like SHAREit if it makes business sense.
PC Business: Lenovo targets a 30% global market share in 3 years, up from ~20% now. It sees growth opportunities in EMEA and Asia-Pacific, and it does not plan to pursue M&A for PC expansion.
Smart Devices: Integration with MMI is ongoing, and Lenovo aims to break even by end-FY16. It is adopting a dual-brand strategy, with Motorola as the premium brand and Lenovo for mass and entry-level segments. It also plans to launch the "Moto Maker" service in China.
Enterprise Business: Integration with IBM System X is almost complete, enhancing cost-competitiveness. Lenovo is targeting a wide range of enterprise clients, including hyperscale clients like BAT (Baidu, Alibaba, Tencent).

Key Information

Market Share: Lenovo's PC market share is expected to increase from ~20% to 30% in 3 years.
Smartphone Challenges: The decline in smartphone demand in China is attributed to the shift in distribution channels, with a focus on retail and online channels after the subsidy cut in 2014.
M&A Integration: Concerns remain about the integration of acquired businesses like MMI and IBM System X.
Valuation: The target price of HKD12.60 implies an upside of 2.4% from the 29 May price of HKD12.30.
Financial Highlights:
- Revenue: Expected to grow from USD53,457m in FY16 to USD62,513m in FY18.
- Net Profit: Projected to increase from USD898m in FY16 to USD1,461m in FY18.
- EPS: Projected to rise from USD0.081 in FY16 to USD0.132 in FY18.
- Dividend Yield: Expected to increase from 1.9% to 2.6%.
- PBR: Projected to decrease from 3.3x to 2.2x.
- EV/EBITDA: Projected to decrease from 7.6x to 4.6x.
- ROE: Expected to increase from 19.2% to 20.2%.

Financial Summary

Metric	2016E	2017E	2018E
Revenue (m)	53,457	58,112	62,513
Operating Profit (m)	1,093	1,448	1,850
Net Profit (m)	898	1,155	1,461
Core EPS (fully-diluted)	0.081	0.104	0.132
DPS	0.029	0.032	0.041
PER	19.6	15.3	12.1
Net Debt/(Cash)	(3,265)	(4,386)	(5,630)
BVPS (USD)	0.474	0.592	0.711

Key Ratios

Ratio	2016E	2017E	2018E
Sales (YoY)	15.5%	8.7%	7.6%
EBITDA (YoY)	9.6%	17.9%	17.4%
Operating Profit (YoY)	(1.4)%	32.5%	27.8%
Net Profit (YoY)	8.4%	28.6%	26.5%
Core EPS (YoY)	4.1%	28.6%	26.5%
Gross-profit margin	15.4%	15.2%	15.0%
EBITDA margin	3.5%	3.8%	4.2%
Operating-profit margin	2.0%	2.5%	3.0%
Net profit margin	1.7%	2.0%	2.3%
ROE	19.2%	19.5%	20.2%
ROIC	31.8%	59.3%	69.0%

Risks and Concerns

M&A Integration: Uncertainty around the integration of newly acquired businesses like MMI and IBM System X.
Smartphone Demand in China: Weakening demand due to changes in distribution channels and reduced subsidies.
Currency Volatility: Potential impact on financial performance due to currency fluctuations.

Conclusion

The analyst is positive on Lenovo's long-term vision and execution capabilities, but concerned about near-term uncertainties. The company's strategic direction and product innovations show promise, but the successful implementation of its plans will be crucial for future performance. The Hold (3) rating and HKD12.60 target price reflect the balance between optimism about long-term prospects and caution regarding short-term challenges.

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