Legend says its annual net profit rose 12 per cent, supported by financial investments
Legend, the parent company of Chinese PC and smartphone maker Lenovo, said its 2015 net profit rose 12 per cent to 4.66 billion yuan (HK$5.58 billion) despite a tough economic environment.
Revenue rose 7 per cent to 309.8 billion yuan. Basic earnings per share rose 3 per cent to 2.14 yuan.
Legend has seen 88.58 per cent profit generated by its financial investments, rather than from its strategic investments. The IT segment, mainly referring to the business under Lenovo, recorded a loss of 1.33 billion yuan “mainly due to restructuring costs of approximately 3.73 billion yuan, and one-time charges (including additional spending to clear smartphone inventories and inventories write off) of approximately 2.02 billion yuan,” according to the annual report.
Liu Chuanzhi, founder and chairman of Legend said the restructuring of Lenovo had been “carrying deep intention” and expected Lenovo to “shine” again, particularly on the overseas market.
In late June, Beijing-based Legend Holdings listed in Hong Kong, raising US$1.96 billion.
Its shares closed at HK$20.45 on Wednesday, downe more than 50 per cent from its IPO price of HK$42.98
“I have been very upset about the Legend’s share price. The thing is we went public during a very good window and we did not expect the IPO price to be that high. Now investors are concerned about Lenovo, and it takes time for our new business pillars to grow,” Liu said.
Fu Liang, a Beijing-based independent technology commentator, said it will take time for Lenovo to win back confidence.
“Lenovo had failed to deliver a fast synergy after it acquired Motorola for its smart phone business, and now its tablet computer business is also under threat as rivals like Huawei and Xiaomi investing more. It is crucial to see if Lenovo could coordinate its business in handset and computer, and realise the turn around this year,” he said.
“On the other hand, Legend Holdings has been asked by investors that if it could bring out new growth engines with its wide strategic investment,” Fu said.
Zhu Linan, executive director and president of Legend Holdings, said he was confident about the growth of Legend’s investment in the next 3 to 5 years.
“The market has not given Legend a fair evaluation. Hopefully our investors would evaluate Legend with a long-term perspective,” he said.
“Legend Holdings will continue to focus our strategic investments on financial services, medical services, agriculture and food, internet and consumption in 2016 and longer,” Zhu said.
As of December 31 Legend Holdings held a 31.38 per cent equity interests in third-party payment provider Lakala, a 54.90 per cent equity interests in high-end dental service provider Bybo Dental, and a 23.54 per cent equity interests in car-rental giant CAR.
Founded by Liu, Legend has grown into one of China’s biggest investment groups. Apart from Lenovo’s interests in information technology and consumer electronics, Legend is also involvedin financial services, logistics, food and agriculture, property, chemicals and energy materials, and car rentals.