Credit Suisse trimmed its target price for Lenovo Group (00992) to HK$6.1 from HK$6.2 and maintained its "neutral" rating.
The research house said Lenovo's 1Q FY2020 PC beat but Mobile Business Group/Data Center Business Group (MBG/DCG) missed. In 2Q, Lenovo guided low-double-digit QoQ growth on PC despite early pull-ins in 1Q; mid-single-digit QoQ MBG growth on continuous growth in core markets; while DCG will only grow slightly QoQ (down low-teens % YoY) on excessive inventory, which leads to slowing capex spending for servers.
Credit Suisse believes the pent-up demand on new CPU platform, delayed capex spending due to higher inventory and trade tension, as well as falling memory price since last
quarter will continue to weigh on its server growth. It cut FY2020/21 EPS forecasts by 4.4%/3.6% on weaker 1Q results and slower improvement of DCG.
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