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Lenovo Group (992): reported a record high third-quarter revenue, up 18% year-on-year to US$22.2 billion. However, due to a one-time restructuring charge of US$285 million, profit attributable to equity holders fell 21% year-on-year to US$546 million. Excluding one-time charges and non-cash items, adjusted net profit increased 36% year-on-year to US$589 million. Overall gross margin declined by 0.6 percentage points year-on-year to 15.1% due to changes in product mix and lower profits in the infrastructure business. Going forward, attention should be paid to whether its AI server business can truly improve profitability after optimizing its cost structure, and whether the high-margin services business can continue to hedge against the volatility risks in the hardware market.
AI Disruptive Risks Trigger Widespread Revaluation in US Stocks
US stocks plunged overnight due to heightened sentiment surrounding the "AI disruptive risks." The S&P 500 fell 1.6% to 6,832, while the Dow Jones and Nasdaq declined by 1.3% and 2%, respectively. The decline was concentrated in industries considered potential losers in the AI narrative. Meanwhile, financial services, freight logistics, and office real estate have also been included in the AI disruption narrative. Valuation discount rates and long-term cash flow assumptions are being re-examined by the market, and declining US Treasury yields reflect a shift of funds towards safe-haven assets ahead of the CPI release. In this environment, the performance divergence between AI infrastructure and beneficiary stocks and overvalued, easily replaceable business models continues to widen.
Hong Kong Stock Connect recorded a net inflow of HK$4.57bn on Friday, with Tencent Holdings (700) recording the largest net inflow at HK$1.43bn, followed by Xiaomi Group-W (1810); WuXi Biologics (2269) recorded the largest net outflow at HK$390mn, followed by Zijin Mining (2899).
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.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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