Wide Moat Hong Kong Stock With a 4% Yield

Charging & Fearless is the only newsletter that delivers under-the-radar, global stock picks before they make front-page news. We traverse borders to uncover the explosive potential of international companies beyond the scope of Wall Street analysts. Enjoy the 5-minute pitch on this week’s stock below...

Lenovo

Lenovo is the largest PC business in the world, however, that does not tell the full story. Based out of Hong Kong, this tech behemoth also boasts impressive storage and data centre operations, as well as a smartphone production line and a growing services business.  

Primed to Grow

Personal computers might seem like a sleepy industry, but research firm Canalys is predicting a big year, with the market forecast to grow at least 8% in 2024. This growth will be spurred by the rollout of AI PCs, which is potentially the biggest innovation to come to the PC market since the laptop. As the world’s largest manufacturer, Lenovo is in a strong position to catch this tailwind. Its nascent AI strategy, “AI for All”, will see it invest $1 billion back into the business. 

But the PC branch of its business is not the only one set to benefit from this AI wave. Storage and processing power are the bricks and mortar that build the foundation for this next frontier of technology, and as the company’s server and data centre revenue become a larger piece of the overall pie, Lenovo’s income will continue to strengthen and diversify in the years to come.

In Their Own Words

What Could Go Wrong?

Revenue has been choppy in recent years as demand for PCs remains volatile. While other areas are contributing more to overall revenue, PCs still account for about 60% of total sales. We would typically like to see a bit more diversification. The company has also encountered some margin issues in the past with its server business which may yet rear its ugly head once again.

Final Word

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