We are raising our target price to HK$6.3 on improving fundamentals and a valuation re-rating. We are raising FY19–21E EPS rep 5% / 5% / 8%.
As highlighted in January, we believe Lenovo is heading in the right direction, with profitability improving across all business lines.
The shares are up 24% YTD (vs HSI Index -12%). We are positive on Lenovo given we see fundamental sustainable growth and 5% div yields.
12-month price target: HK$6.30 based on a Price to Book methodology.
Catalyst: 2Q FY19 results. Action and recommendation
We maintain an Outperform rating.