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HK Equities · Finance research note

HKEX 0992 - Lenovo Group Ltd.

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Evidence and analysis

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2. Company Fundamentals

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 307.07%
Risk / Std Dev (Ann.)* 60.52%
1-Year Price Return* 229.49%

Latest Market Data (as of 2026-08-14, Hong Kong time):

Metric Value
Last Price HK$33.6
52-Week Range HK$8.52 – HK$36.16
Observation Count 245 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year price series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in HK$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2026 FY2025
Revenue Reported revenue HK$83.07B HK$69.08B
Net income Reported net income HK$1.91B HK$1.38B
Total assets Year-end reported balance HK$57.13B HK$44.23B
Shareholders’ equity Year-end reported balance HK$7.64B HK$6.07B
Net margin Net income ÷ revenue 2.30% 2.00%
Asset turnover Revenue ÷ total assets 1.4542x 1.5617x
Equity multiplier Total assets ÷ shareholders’ equity 7.4825x 7.2880x
ROE Net margin × asset turnover × equity multiplier 25.04% 22.81%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue HK$83.07B
Prior annual revenue HK$69.08B
EBIT HK$3.35B
Tax rate 19.10%
NOPAT = EBIT × (1 − tax rate) HK$2.71B
Forecast start-growth basis 15.00%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT HK$2.71B
Add: depreciation & amortisation HK$1.42B
Less: capital expenditure -HK$1.86B
Less/(add): working-capital cash-flow movement HK$381.34M
Current unlevered FCFF HK$2.65B

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 15.00% HK$3.12B HK$1.63B -HK$2.14B HK$438.54M HK$3.05B HK$2.90B
2 11.88% HK$3.49B HK$1.82B -HK$2.25B HK$490.62M HK$3.56B HK$3.05B
3 8.75% HK$3.80B HK$1.98B -HK$2.29B HK$533.55M HK$4.02B HK$3.11B
4 5.62% HK$4.01B HK$2.10B -HK$2.26B HK$563.56M HK$4.41B HK$3.08B
5 2.50% HK$4.11B HK$2.15B -HK$2.15B HK$577.65M HK$4.69B HK$2.95B

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 1.11
Cost of equity 10.83%
Pre-tax cost of debt 12.56%
WACC 10.82%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value HK$57.74B
Implied terminal EV / EBITDA 7.99x
Terminal value as % of enterprise value 69.60%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF HK$15.09B
Present value of terminal value HK$34.54B
Indicated enterprise value HK$49.63B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value HK$49.63B
Less: gross interest-bearing debt HK$5.16B
Add: cash and equivalents HK$4.90B
Add: affiliate investments HK$0.00
Less: minority interests HK$808.56M
Indicated common equity value HK$48.57B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 14,731,835,863.00
Share-count basis reported diluted weighted-average shares
Current market price HK$31.34
DCF indicative value per share HK$3.30
Indicative value vs. market price -89.48%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 4/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 16:42:26.445022 UTC; latest reported fiscal period: 2026-03-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set Asia Pacific ex Japan
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-20 to 2026-06-30
Aligned daily observations 210
Minimum observation requirement 120
Currency conversion for HK listings HKD adjusted close divided by daily USD/HKD close before simple daily return calculation

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 131.57% 121.36%
Adjusted R² 0.10 0.09
Annualised residual volatility 52.18% 52.07%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 1.33 (4.48) 1.42 (4.42)
Size (SMB) 0.75 (1.72) 1.03 (1.87)
Value (HML) 0.67 (1.63) 0.71 (1.54)
Profitability (RMW) NM 0.35 (0.60)
Investment (CMA) NM 0.47 (0.72)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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