Chinese computer maker Lenovo Group kicked out of Hang Seng Index, again

PUBLISHED : Friday, 04 May, 2018, 8:06pm
UPDATED : Monday, 07 May, 2018, 10:59am

Lenovo Group, a Chinese personal computer maker, will lose its status as a component of Hong Kong’s benchmark Hang Seng Index from June 4, Hang Seng Indexes Company said on Friday.

Lenovo initially joined the index in 2000, but was removed in 2006. In March 2013, it was reinstated, but its share price has plunged nearly 60 per cent since then.

At Friday’s close, shares closed 0.5 per cent higher at Lenovo at HK$3.72, giving it a market cap of HK$45 billion (US$5.73 billion) – the smallest among the benchmark’s 50 constituent stocks.

Lenovo will be replaced by Hebei-based CSPC Pharmaceutical Group as part of the index compiler’s quarterly review in March.

CSPC Pharmaceutical had a market value of HK$127 billion as of Friday’s close.

Lenovo said in a written statement to the Post that the company “respects the review results” of the Hang Seng Indexes Company, but it’s “singularly focused on our ongoing transformation to drive sustainable long-term returns for our shareholders.”

To make it as a Hang Seng Index component, a stock should normally have a listing history of 24 months on the Hong Kong stock exchange and must be among the companies that constitute the top 90 percentile of the total market cap of Hong Kong’s stock universe, based on the average figure of market caps in the past 12 months.

It must also be among companies that constitute the top 90 percentile of the total turnover of the stock universe.

In its latest earnings report in February, Lenovo posted a loss of US$222 million for the nine months ended December 2017, mainly hurt by a one-off charge of US$400 million due to US tax reform.

Revenues slightly increased by 6 per cent year on year, with sales from its core PC and smart devices business up 8 per cent. But revenues from mobile business dropped 5 per cent.

As part of the index compiler’s quarterly review, it will also remove Zhuzhou CRRC Times Electric’s H shares from the Hang Seng China Enterprises Index and replace it with China Huarong Asset Management, while including Zhenro Properties Group in the Hang Seng Composite LargeCap and MidCap Index.

All changes will take effect from June 4.