LENOVO GROUP's AI Ambitions: LENOVO GROUP is aiming to become a leader in AI by forming partnerships with major language model companies globally, as stated by CFO Winston Cheng at the World Economic Forum in Davos.

Potential Partners: The company is considering collaborations with firms such as Humain from Saudi Arabia, Mistral AI from Europe, BABA-W, and DeepSeek to enhance its AI capabilities.

Market Performance: The Hong Kong stock market saw a rebound with the HSI rising 0.4% to 26,585, driven by the US-Europe dispute over Greenland and a total market turnover of HKD250.451 billion.

AI and Tech Stocks Surge: The launch of the new DeepSeek model, MODEL1, boosted AI and chip-related stocks, with notable gains from companies like SENSETIME-W and INSILICO, while some stocks like UNISOUND experienced declines.

Chinese Exports Growth: China's exports in December increased by 6.6% year-on-year, surpassing the previous value of 5.9% and exceeding forecasts of 3%.

Mixed Performance Among Major Tech Firms: BIDU-SW launched a new AI feature and saw a 3.3% stock increase, while other tech giants like TENCENT and JD-SW had modest gains, and NTES-S faced a significant decline of 3.7%.

Market Overview: The HSI closed down 39 points (0.2%) at 26,447, while the HSCEI fell 24 points (0.3%) to 9,070. The HSTECH saw a slight increase of 8 points (0.15%) to 5,691, with a total half-day turnover of HKD127.653 billion.

AI-Related Stocks Performance: Stocks like GDS-SW and UNISOUND experienced declines of 3.2% and 5.2%, respectively, while INSILICO and MINIMAX-WP surged by 5.5% and 6.6%.

Chip Sector Movements: SMIC, ASMPT, and HUA HONG SEMI saw gains of 3-4%, while INNOSCIENCE and BIREN TECH faced declines of 5.6% and 3.6%.

Tech Stocks Activity: BIDU-SW rose by 3.3% following a target price increase from Morgan Stanley and Citi, while other notable movements included a decline in LENOVO GROUP and a slight increase in KUAISHOU-W.

Market Performance: The HSI fell by 39 points (0.1%) to 26,447, while the HSTI rose by 8 points (0.1%) to 5,691, and the HSCEI decreased by 24 points (0.3%) to 9,070.

Active Heavyweights: Notable movements included XIAOMI down 2.3%, BABA up 1.1%, and TENCENT down 0.2%, with significant short selling activity across these stocks.

HSI & HSCEI Constituents: ANTA SPORTS and LI NING saw significant declines of 5.8% and 4%, respectively, while BIDU-SW increased by 3.3%, reaching a new high.

HSMI & HSSI Constituents: SKYWORTH surged by 37.6% to a new high, with TCL ELECTRONICS and SF INTRA-CITY also showing strong gains of 17.1% and 15.5%, respectively.

Lenovo's Financial Performance: Lenovo Group is expected to report a non-HKFRS net profit of USD480 million for 3QFY26, reflecting an 11% year-over-year increase, with an overall net profit forecast of USD670 million.

Impact of Rising Memory Prices: Despite anticipated pressure on PC margins due to increasing memory costs, Lenovo's strong bargaining power is expected to help maintain its financial resilience compared to competitors.

Revised Profit Forecast: CLSA has adjusted Lenovo's non-HKFRS net profit forecast for FY2026-27 down by 3-6% and lowered the target price from HKD12 to HKD10.3.

Market Rating: CLSA has maintained an Outperform rating for Lenovo, indicating confidence in the company's ability to navigate market challenges.