initiation our top pc hardware pick

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1、InformationTechnology/China992HKInformationTechnology/China24May2013LenovoGroupLenovoGroupTarget(HKD):9.00Upside:22.0%992HK23Mayprice(HKD):7.38Initiation:ourtopPChardwarepick1Buy(initiation)2Outperform•WeexpectLenovotooverhaulHPastheglobalNo.1PCvendor3Holdinthenextfewquarters4Underpe

2、rform•FortheMIDHbusiness,smartphonesshouldremainastrong5Sellrevenue-growthdriver,asshoulditstabletbusiness•WeexpectpositiveresultsfromitsM&Aactivityofrecentyears,andariseinitsin-houseproduction;initiatingwithBuy(1)callHowdowejustifyourview?SmartphonestrengthshouldOurEPSforecastsareab

3、ovethecontinue.InthemultimediaInternetBloombergconsensusestimatesby&digitalhome(MIDH)business(ie,6%forFY14Eand12%forFY15E.non-PCproducts),LenovowastheNo.2smartphonevendorinChinain■RisksStevenTseng1Q13,andweforecastabout70%YoYThemainrisktoourviewwouldbe(886)287586252shipmentgrowthfor2

4、013.Byworse-than-expecteddemandinsteven.tseng@daiwacm-cathay.com.twleveragingitssolidbrandrecognitionChinaforPCsandsmartdevices.andexistingITchannels,LenovohasAvaChangbeenabletosecurethesupportof(886)287586257solutionprovidersandChinatelcos,ava.chang@daiwacm-cathay.com.twthusspeeding

5、upitstime-to-marketSharepriceperformanceandproductdistribution.Also,we(HKD)(%)9.0110■Investmentcaseforecastastrongpick-upinitstablet8.0101LenovoisourtopPChardwarepick,shipmentsthisyear.7.093aswearepositiveonthecompany’s6.084solidpositionintheChinamarketM&Aandverticalintegration5.075a

6、ndexpectittomakeprogressintheaddingvaluetoitscoreMay-12Aug-12Nov-12Feb-13May-13smartdevicessegmentandseebusiness.Lenovo’sM&AactivityinLenovo(LHS)RelativetoHSI(RHS)market-sharegainsinthePCspace.recentyearsisnowhelpingtoenhanceWeinitiatecoveragewithaBuy(1)itsgeographicalpresence(eg,Bra

7、zil)12-monthrange5.37-9.00rating.andcapabilitiesincertainproductMarketcap(USDbn)9.63areas(eg,cloudcomputing).Also,we3mavgdailyturnover(USDm)58.01expectitsrisingin-houseproductionSharesoutstanding(m)10,133■CatalystsMajorshareholderLegendHoldingsLtd.(26.0%)ExpectongoingPCmarket-capacit

8、ytoenableitt