[ET Net News Agency, 14 August 2020] Morgan Stanley lifted its target price for Lenovo
Group (00992) to HK$4.9 from HK$4.6 and maintained its "overweight" rating.
The research house expects Lenovo's PC shipments to be up 4% q/q in September quarter,
but mix will be skewed towards Chromebooks, so Morgan thinks revenue will only be up 1%
sequentially to US$10.7bn.
It expects smartphone revenue to recover strong double-digits q/q to US$1.4bn revenue,
but think DCG (Data Center Group) will be down mid single-digits q/q to US$1.5bn as its
largest hyperscale customer pulled ahead into the June quarter; enterprise demand will
likely also be pressured in the September quarter, especially from SMEs.
Overall, Morgan forecast FY2Q 2020 (3Q 2020) revenue to reach US$13.6bn (+2% q/q, +1%
y/y) with pre-tax income of US$340mn (+2% q/q, +9% y/y). On the call, management was
pretty optimistic about Chromebook demand and expects PC TAM (total addressable market) to
expand to 300mn units+ over the next 12 months. However, Morgan thinks 2H 2020 will remain
strong supported by Chromebook demand, but think some of these orders are pulled in from
2021. (KL)