Lenovo shares gain on hopes for demand boost
Lenovo Group may have settled into a fresh Olympic groove, as the computer maker's shares showed healthy gains in local trading amid news of its solid fiscal first-quarter results and the hope of greater demand from its core mainland market from next month.
One of the lead sponsors of the Summer Olympic Games in Beijing, Lenovo posted a 65 per cent year-on-year increase in net profit to US$110 million in the quarter to June, based on 10.5 per cent year-on-year growth in sales to US$4.213 billion.
The world's fourth-largest personal computer supplier saw its share price rise 3.24 per cent yesterday to close at HK$5.41.
'We remain positive on Lenovo but the impact of the Sichuan earthquake and China's hosting of the Olympic Games is slowing demand in its main market,' said Daiwa Institute of Research analyst Joseph Ho.
Lenovo president and chief executive William Amelio on Thursday said: 'There was some level of slowdown because of the earthquake and the floods [in Sichuan] ... and there might be a slowdown for a couple of weeks with the Olympics ... but after that things should be climbing back to normal and sales will pick up'.
Lenovo expects to continue to face challenges in the United States where the weak economy has affected demand for information technology products in general.
Lenovo chief financial officer Wong Wai-ming said with the exception of the US, all of the company's geographic markets recorded year-on-year sales growth for the quarter.
In its fiscal year to March, Lenovo is forecast to record 6.61 per cent growth in net profit to HK$3.852 billion from HK$3.613 billion in the previous year, according to a consensus estimate of 15 brokers surveyed yesterday by Thomson Reuters. Sales are expected to reach HK$143.845 billion, up 13.03 per cent.
The survey also estimated a 12-month median price target of HK$6.80 for the company's shares. The brokers rated Lenovo a 'buy'.
