Lenovo: Does This Fallen Angel's Redemption Lie in an LBO

Lenovo - Earnings Flash - FY 2019-20 Results - Lucror Analytics

Lenovo (992 HK): Starting to Look like Fraud. Fair Value HK$3.35 40% Downside

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Director | Exposing Creative Accounting, Bucephalus Research Partnership

Robert Medd

Director | Exposing Creative Accounting

Exposing Creative Accounting

Bucephalus Research Partnership

Bucephalus Research Partnership Limited. Exposing Creative Accounting.

At the Bucephalus Research Partnership (BRP) we analyse financial statements using our accountant's practical experience and our own quantitative algorithms for corporate governance, accounting risk and peer performance.

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Equity Bottom-Up

<p>Lenovo presents itself as a dynamic IT company, well positioned to benefit from the growth in connectivity. It talks about taking share and record profits. We think the reality is quite different. Lenovo is primarily a hardware manufacturer with commodity margins that grows via acquisitions. It has branched out into data centres and some tech services, but these remain limited and possibly loss making.  The problem is that both liabilities and funding costs are rising. The new US$1bn bond cost 5.875%, exceeding last year’s 4.5% operating return and above our forecast return for FY2021. Cashflow would have been negative without the fall in receivables and the endless fund raising suggests that the cash pile is not all that it seems. SELL.</p><p><iframe src="//www.youtube.com/embed/g-kFNPSUZiE" width="640" height="360"></iframe><a href="https://youtu.be/g-kFNPSUZiE" target="_blank" rel="noopener"></a></p>

Lenovo presents itself as a dynamic IT company, well positioned to benefit from the growth in connectivity. It talks about taking share and record profits. We think the reality is quite different. Lenovo is primarily a hardware manufacturer with commodity margins that grows via acquisitions. It has branched out into data centres and some tech services, but these remain limited and possibly loss making.  The problem is that both liabilities and funding costs are rising. The new US$1bn bond cost 5.875%, exceeding last year’s 4.5% operating return and above our forecast return for FY2021. Cashflow would have been negative without the fall in receivables and the endless fund raising suggests that the cash pile is not all that it seems. SELL.

Sell Lenovo (992 HK) FY2020: Falling Revenue, Rising Debts