Lenovo, China's biggest maker of personal computers, fell to a 16-month low in Hong Kong trading after Merrill Lynch cut its investment rating on the stock to "neutral," citing slowing sales in the United States.
The PC maker dropped 4.1 percent to HK$3.29, the lowest close since May 23, 2007. The loss extended the stock's decline this year to 53 percent, compared with a 40-percent decrease in Hong Kong's benchmark Hang Seng Index, Bloomberg News said.
"The Chinese PC company saw falling corporate PC demand in the US from September," Daniel Kim, a Hong Kong-based analyst at Merrill Lynch, said. Kim, who has a price estimate of HK$3.54 on the stock, cut his recommendation on Lenovo from "buy."
In August, Lenovo reported a 5-percent decline in fiscal first-quarter revenue from the Americas, the company's biggest market outside China, as orders from US clients fell. The Chinese computer maker bought the PC division of IBM Corp in 2005 to expand overseas.
Sales in the Americas fell to US$1.09 billion in the three months ended June 30, from US$1.15 billion a year earlier, Lenovo reported. The PC maker, based in Raleigh, North Carolina, reported fiscal first-quarter profit rose 65 percent to US$110.5 million on higher demand in China and Europe.
Kim cut his estimate for Lenovo's profit in the year ending March 31 by 17 percent to US$446 million.
(Shanghai Daily October 7, 2008)
