China’s Legend Holdings looks beyond technology for growth
Key officials outline the firm’s thinking, as it battles sagging computer sales, a slumping stock price, and the reality it has missed the mobile internet wave
Officials at Legend Holdings Corp, owner of the Lenovo brand of personal computers and mobile phones, say the business is shifting its emphasis towards investment in consumer technology and lifestyle-related services, as the company bets big that China’s “new economy” will help it weather the global slump in sales of computers and mobile phones.
The group’s change in priority has come after the painful realisation that one of China’s largest conglomerates had missed the mobile internet wave that propelled Chinese companies such as Tencent Holdings and Xiaomi Corp to new heights.
The pivot also comes as Legend’s stock valuation remains depressed.
Since listing in Hong Kong in June 2015, Legend Holdings has lost half its value after the personal computer and mobile phone businessof its 31.5 per cent owned subsidiary Lenovo Group, also listed in Hong Kong, took a beating in the consumer markets.
Its recent first half figures show exactly what a challenge lies ahead.
Half-time net profit declined 36 per cent year on year to 2.58 billion yuan, while revenue in the same period fell 5 per cent to 135 billion yuan.
Technology, accounting for almost 93 per cent of Legend’s total revenue, contributed 27.8 per cent of net profit, weighed down by a 7 per cent drop in personal computer sales and a 6 per cent dip in sales of mobile devices.