联想集团：服务器业务稳固复苏，估值已基本体现

Reiterate Neutral: solid server turnaround,but largely priced in Reiterate Rating:NEUTRAL| PO:26.50 HKD| Price:23.78 HKD 22 June 2026 Reiterate Neutralon fair valuation; new PO HK$26.5We lift Lenovo’s FY27-28E earnings by 70-82% on strong server profit expansion. We raise our PO to HK$26.5 (16x FY27E P/E; was 11x) from HK$9.9. We note PC cycle andserver profit have been the two key drivers behind Lenovo’s valuation. Our target P/E of16x is the peak level of Lenovo’s historical trading range, justified by its solid serverturnaround. However, we reiterate Neutral on Lenovo’s fair valuation. The stock tradesat 16x FY27E P/E, similar to leading server ODMs. Our SOTP sanity check also derives animplied P/E of 16x (Exhibit 4). Our new ADR PO is US$67.20 (was US$25.19). Equity ISG turnaround; better demand and pricing powerThe stock re-rated post-March quarter results, as ISG turned profitable with a record OPM of 3.6%. We view this round of profit recovery as more sustainable vs. the lastcycles, thanks to rising demand from CPU servers and storage, as well as rising AIservers mix. We expect Lenovo to command better pricing power amid CPU shortagewhile AI servers should bring scale/operating leverage. However, compared with ODMleaders, Lenovo’s scale is still small (Exhibit 5) and AI server is at 10-20% ISG sales vs Robert Cheng>>Research AnalystMerrill Lynch (Taiwan)+886 2 2376 3731 Cash cow IDG business still faces margin concernsSupply chain turned more conservative on 2H26 PC shipment due toprice hike and mix Katherine Zhu>>Research AnalystMerrill Lynch (Hong Kong)+852 3508 3374 shift. Although ASP uplift could partially offset the downside, concerns about demandand margins are likely to linger due to the prolonged memory upcycle. We acknowledgethe market’s rising expectations for AI PC or Nvidia’s RTX Spark PC. However, AI PCfailed to drive PC demand over the past two years, and RTX Spark is tailored for niche Doris Kao>>Research AnalystMerrill Lynch (Taiwan)+886 2 2376 3722 Thisresearch report provides general information only. No part of this report may be usedor reproduced or quoted in any manner whatsoever in Taiwan by the press or otherpersons without the express written consent of BofA Securities. >> Employed by a non-US affiliate of BofAS and is not registered/qualified as a research analystunder the FINRA rules. Refer to "Other Important Disclosures" for information on certain BofA Securities entities that takeresponsibility for the information herein in particular jurisdictions. Fora list of acronyms, see page 6 BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision. Refer to important disclosures on page 11 to 14. Analyst Certification on page 8. PriceObjective Basis/Risk on page 8. Company SectorPC Hardware Company Description Set up in 1989, Lenovo is the world's largest PC maker witharound 25% market share. It is the leading PC brand inChina market with 30+% marketshare. In 2001, Lenovo(Legend) spun off its distribution and enterprise servicebusiness (Digital China, listed in Hong Kong) and became apure PC vendor. In 2004, Lenovo renamed itself from Investment Rationale We have a Neutral rating on Lenovo on balanced risk-reward. We see improving server business, but uncertain PCdemand may weigh on the positive. Meanwhile, valuationlooks fair compare to tier-1 server ODMs. Stock Data Shares / ADRPrice to Book Value Valuation discussionWe lift Lenovo’s FY27-28E earnings by 72-80% to reflect the stronger-than-expected server profit expansion, and introduce 2029E. We raise our PO to HK$26.5 (16x FY27EP/E, was 11x) from HK$9.9. We note PC cycle and server profit are the two key driversbehind Lenovo’s valuation historically. Our target multiple of 16x is at the peak level ofLenovo’s historical trading range since 2019, which we believe is justified by the We also did a SOTP valuation for sanity check, in order to better reflect Lenovo’s serverbusiness. We derived a value per share of HK$27 and an implied P/E of 16x, by using: (1)15x FY27E P/E for IDG and SSG businesses, matching the average P/E of Lenovo’s keyPC peers; and (2) 20x FY27E P/E for ISG business, at the higher end of the trading range We reiterate Neutral on Lenovo due to fair valuation. The stock now trades at 16x FY27EP/E, similar to leading server ODMs like Hon Hai/Quanta/Wiwynn while below Dell’s 21x.We highlight that Lenovo’s server scale and operating margin are both lower thanindustry leaders like Taiwan ODMs and Dell (Exhibit 5,Exhibit 6). Thus, more efforts are Exhibit2: OurFY27-29Eearnings are22-27%aboveconsensusas we model a sustainable server margin recoveryBofAe vs consensus, FY27-29E BofA GLOBAL RESEARCH ISG turnaround, better demand