20 February 2022 – Hang Seng Indexes Limited announced that Lenovo Group (HKSE: 992) (ADR: LNVGY) will be included as a constituent stock of the Hang Seng Index, Hong Kong's main benchmark stock index, effective 7 March 2022. It marks that Lenovo Group will become one of the "blue chip" companies listed on the Hong Kong Stock Exchange, including HSBC, Tencent and Meituan. The Hang Seng Index Series reviewed the quarter ended 31 December 2021 to confirm that Lenovo Group will be reintegrated.
The re-acquisition of the constituent stocks included in the Hang Seng Index ahead of schedule marks a clear recognition of Lenovo Group's performance in recent years. In addition to maintaining outstanding financial performance, Lenovo Group has also developed a clear strategy to transform from a PC/device company to a global technology leader in providing solutions and services. Inclusion in the Hang Seng Index will expand Lenovo Group's potential investor base and attract investment funds and pension funds that include constituents of the Hang Seng Index as an investment criterion.
Lenovo Group has been included in the Hang Seng Technology Index constituent stocks of the Hang Seng Technology Index since July 2020 and is one of the initial members.
Lenovo Group will announce its third quarter results for fiscal 2021/22 on Wednesday, February 23. The results for the second fiscal quarter of fiscal 2021/2022 announced on November 4, 2021 show that Lenovo Group has achieved another good performance, with revenue and profit reaching record highs, and profit margins are expected to double within three years.
In the nearly 30 years since its listing in Hong Kong, Lenovo Group has continued to win high recognition from the capital market with steady development. Up to now, it has been successfully included in 10 indexes, including the Hang Seng Technology Index, the constituent stocks of the Hang Seng Composite Large and Medium Index, and the Hang Seng Sustainable Development Enterprise Index. In 2021, Lenovo Group's stock price rose 28%, becoming one of the best performers among the constituents of the Hang Seng Technology Index. The official inclusion of the Hang Seng Index is also a milestone event in which the capital market fully affirms the long-term value of Lenovo Group.
Affected by the epidemic, the global economy has been in a downturn for more than two years, but Lenovo Group has bucked the trend and maintained full resilience. In the 2020/21 fiscal year, Lenovo Group's turnover soared by nearly 70 billion yuan in one year, an increase of 19.8% year-on-year to 411.6 billion yuan; pre-tax profit was 12 billion yuan, and the net profit was nearly 8 billion yuan, an annual increase of more than 70%, and created the fastest single-quarter growth rate in nearly a decade.
In the Fortune 2021 Global 500 list, Lenovo Group jumped 65th to 159th, ranking first among Chinese companies on the Return on Net Assets (ROE) list. At the same time, three major international credit rating agencies, including Moody's, Standard & Poor's and Fitch, have all awarded investment grade ratings to Lenovo Group, further confirming Lenovo's prospects for sustainable growth and solid financial foundation.
Entering the 2021/22 fiscal year, Lenovo's upward momentum has not diminished. According to the latest quarterly financial report (2021/22 fiscal second quarter), Lenovo's single-quarter turnover reached 115.6 billion yuan, and on the basis of the high base of the same period in the previous fiscal year, the net profit rose by 65% year-on-year.
In recent years, the rapid development of the digital economy, the wide range of radiation, and the unprecedented depth of its impact are promoting profound changes in production methods, lifestyles and governance methods, and have become a key force in reorganizing global factor resources, reshaping the global economic structure, and changing the global competitive landscape. In the face of historic opportunities, Lenovo Group put forward the intelligent transformation strategy and the "new IT" technology architecture in a timely manner, and is committed to becoming a leader and enabler of digital and intelligent transformation in all walks of life.
Recently, the National Development and Reform Commission and other departments issued a notice agreeing to start the construction of national computing power hub nodes in Inner Mongolia, Guizhou, Gansu, Ningxia and other places, and planned 10 national data center clusters. At this point, the national integrated big data center system has completed the overall layout design, and the "East Number West Calculation" project has been officially launched. The market expects that the annual investment volume driven by this strategic project will reach hundreds of billions of yuan.
At present, Lenovo's existing data center layout is highly consistent with the areas that the "National Integrated Computing Network Hub Node" that the national "East, West Computing" project is actively advocating and carrying out, and these forward-looking strategic layouts will also effectively help Lenovo promote the service-oriented transformation strategy. In the future, Lenovo will actively participate in the "East Counting West Calculation" from multiple dimensions such as computing power resource services, data circulation integration, and data security protection.
According to a report released by IDC, a well-known market research organization, the total number of PC shipments in 2021 reached 348.8 million units, an increase of 14.8% year-on-year, the highest level since 2012. Among them, Lenovo Group once again won the global PC championship with a full-year shipment of 81.93 million units and a market share of 23.5%, and its leading position was solid.
Also in the 2021/22 fiscal year, Lenovo Group has announced two major blockbuster moves.
First, in order to seize the opportunities of the new IT era, Yang Yuanqing, chairman and CEO of Lenovo Group, launched a restructuring structure: Intelligent Device Business Group (IDG), Infrastructure Solutions Business Group (ISG) and the newly established Solutions Service Business Group (SSG) to undertake the 3S strategy of intelligent transformation. In September 2021, Lenovo announced that its transformation strategy will be upgraded again, launching a new service brand, TrueScale, which is aimed at the trillion new IT market.
Second, increase investment in innovation. Yang Yuanqing said that Lenovo will double its R&D investment in the next three years and launch the "Global Large-scale Hardcore Science and Technology Talent Recruitment Program" to recruit 12,000 scientific and technological talents for the society and universities on a global scale.
While the performance has risen steadily, Lenovo Group has actively participated in ESG practice, adhered to long-termism, and made its innovation and growth serve the goals of making life better, more inclusive society and more sustainable environment, and won the AA score of MSCI Enterprise ESG Rating.
At present, Lenovo is using scientific methods to move towards a "zero-carbon future" in a step-by-step and phased manner through short-term, medium-term and long-term goals, and contribute to China's 30.60 goals. In 2021, Lenovo raised its greenhouse gas reduction targets to the level of the Group's Key Performance Indicators (KPIs) for the first time, and committed that by the 2025/26 fiscal year, 90% of the electricity in Lenovo's global operations will come from renewable sources; the global supply chain will reduce greenhouse gas emissions by 1 million tons; at the same time, Lenovo will reduce its environmental impact by improving product energy efficiency and using sustainable materials on a larger scale.
In the past two years, in the face of the wave of digitalization and intelligence that has swept the world, Lenovo has proposed an intelligent transformation strategy and is committed to becoming a leader and enabler of intelligent transformation in all walks of life. Yang Yuanqing said that Lenovo will rely on its core competitive advantages in operational excellence, global resources, and local delivery to firmly grasp the development opportunities of digital and intelligent transformation, and create long-term sustainable returns for society and shareholders.