Lenovo Group Making a Comeback

| About: Lenovo Group (LNVGY)

I've been curious lately about Lenovo Group (OTCPK:LNVGY). Lenovo’s net profits for year-ended March 2007 came to US$161 million; that amount was well above most analysts expectations, though part of it came from a US$12 million reversal in prior restructuring charges. Margins also impressed across all geographical segments, with EBIT margins at 5.9% from its China business, which was at 4.8% a year ago. Overseas operations also showed encouraging results, with EBIT also increasing to 1.6% from -0.3% in the Americas, and 2.5% from 1.6% in Europe, Middle East and African operations.

With these impressive results, Lenovo is making a comeback, and I'm expecting the company to post solid revenue growths this year, explained by higher PC shipments triggered by the launch of Microsoft’s (NASDAQ:MSFT) Vista operating system. Couple this together with lower component costs, and they should improve on margins even further. For 2008, a reasonable forecast would be revenues in between US$15,550 to US$15,600 million and earnings of US$250 to US$260 million.

LNVGY 1-yr chart


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