Fitch Affirms Lenovo at ‘BBB’; Outlook Stable

NEW YORK - Fitch Ratings has affirmed Lenovo Group Limited (HKSE: 992) (ADR: LNVGY)’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘BBB’ with a stable outlook. In particular the report cited solidifying PC leadership, resumption of PC sector growth, growing AI opportunities, and further service-led transformation as reasons for the rating. Overall, the report and rating reaffirms the effectiveness of the company’s intelligent transformation strategy and the Group’s strong position and pocket-to-cloud portfolio that sees it capturing the tremendous growth opportunities in the AI era, according to the official website of Lenovo.

According to the Fitch Ratings report, “The affirmation reflects Fitch’s expectation that Lenovo will maintain its personal computer (PC) leadership and strong management execution, which has positioned the company well to benefit from a likely recovery in PC demand from 2024. In addition, Fitch expects further progress in Lenovo’s service-led transformation to drive non-PC revenue growth that will increase diversification, improve margin profile, and reduce volatility in profitability and cash generation, which will be key for a rating upgrade.”

“Lenovo’s AI initiatives should allow it to seize growing market opportunities and support its business profile. Lenovo is developing AI PCs, to be launched in the second half of 2024. It will invest an additional USD1 billion to drive the development of its AI portfolio, including AI-enabled devices, infrastructure and solutions. It has major AI collaborations with NVIDIA, Microsoft and AMD. For its solutions and services group, it plans to launch new AI-embedded services in the areas of digital workplace, hybrid cloud and sustainability solutions.” Fitch’s report added, " Lenovo is on the trajectory to achieve greater diversification and further margin expansion in the next few years.”

At CES 2024 last month, Lenovo unveiled a full lineup of more than 40 new devices and solutions powered by AI, furthering the company’s vision of AI for All, including the first AI PC. The announcements brought Lenovo 105 awards and accolades at CES.

In addition to Fitch rating, Lenovo is currently rated ‘BBB’ by S&P Global Rating with a stable outlook, and ‘Baa2’ by Moody’s with a stable outlook.