Daily Investment Strategy
Daily focus：Lenovo Group（992）
Lenovo Group’s revenue for the first quarter of the fiscal year 2025/26 reached USD 18.83 billion, representing a year-on-year increase of 22%, marking the highest-ever revenue for a first quarter. Profit attributable to equity holders surged by 108% to USD 505 million; on an adjusted profit grew by 22% to USD 389 million. Although the gross profit margin declined to 14.7%, operating profit rose by 59% to USD 785 million, reflecting improved operational efficiency. Infrastructure Solutions business revenue surged by 36%, with AI server business revenue doubling; however, it posted an operating loss of USD 86 million, mainly due to investments in artificial intelligence and transformation.
Inflation data reignites concerns, raising divergent views on the Fed's policy outlook.
The S&P 500 index edged up 0.03% to 6,468.5 on Thursday, reaching a three-day record closing high, though early trading was subject to significant volatility due to inflation data. The Producer Price Index (PPI) surged 0.9% MoM in July, far exceeding expectations for a 0.2% increase. This was the largest increase since June 2022, and the annual rate soared to 3.3%, its highest level since February. The core PPI also surged 0.9% MoM, the largest increase in three years, bringing the annual rate to 3.7%. The data suggests that tariffs are beginning to exert inflationary pressure on the wholesale level, with service prices rising 1.1%, including a 3.8% surge in profit margins for equipment and machinery wholesalers. Market expectations for a September Fed rate cut are divided, with traders currently giving a roughly 9% probability of a rate hold, a significant increase from the near-zero probability before the data was released. Despite Chancellor Benson's public calls for a 50 basis point rate cut, the inflation data provides hawkish officials with more reason to maintain a cautious stance.
On Thursday, the Hong Kong Stock Connect saw a net inflow of HK$1.03bn. China Life Insurance (2628) saw the largest net inflow of HK$1.35bn, followed by Alibaba (9988). Tencent (0700) saw the largest net outflow of HK$1.20bn, followed by Meituan (3690).
Leung Kai Tong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to: https://apps.sfc.https://apps.sfc.hk/publicregWeb/indi/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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