by winston » Tue Feb 02, 2016 11:52 am
not vested
<Research Report>M Stanley Expects Lenovo Group to Post Good Results in Last Quarter; Share Price to React Positive in Near Term
Morgan Stanley expected LENOVO GROUP (00992.HK) to post satisfactory results in the last quarter, mainly due to a quick boost from massive OPEX cuts with the mobile business likely turnaround before amortization charges.
The research house expected LENOVO GROUP's share price to react positively to the results in the near term.
However, the share price rally should be temporarily as Morgan Stanley sees challenges of the group's prospect given the unsolved structural issues of smartphones and potential PC channel inventory. Hence, the rating was retained at Equalweight, with a target price of $7.2.
The broker expected total sales to grow [b]10% QoQ [/b]in the previous quarter, with pretax profit reaching US$354 million. However, as quoted from the IDC report, the group's 3Q PC shipments gained 3% QoQ to 15.4 million units.
Lenovo and Moto smartphone shipments gained 7% YoY to 20.2 million. Both figures missed the estimates of Morgan Stanley. Consequently, the improvement of results in the preceding quarter was mainly attributable to the group's large OPEX reduction.
The group's 3Q results were satisfactory, while the results were disappointing in the last quarter.
It is noted that December quarter is usually the peak of the year due to seasonal strength. The crux is that whether such improvement can be sustained, especially when Lenovo is facing not only a shrinking PC market, but also likely weakening sales for smartphone sales.
Source: AAStocks Financial News
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