On the evening of Feb.25, the financial services agency Bucephalus Research posted on Twitter,”Just finished our latest report #Lenovo: It’s starting to look like fraud. The 3q results had some very worrying signs and that was before the virus took hold.” Back on Feb. 21, the agency gave Lenovo a “sell” rating in an interview with Bloomberg.
In response, Lenovo Group stated that “the agency has never contacted us about the so-called report and we have not seen the report. However, we believe that the allegations are not based on any factual situations. Lenovo Group is rooted in China, Listed on the Hong Kong Stock Exchange. Our financial statements are open and transparent, and strictly follow all international accounting standards.”
On Feb. 20, Lenovo announced its third quarter results. The group’s revenue reached 99.3 billion yuan, with pre-tax profits reaching 2.75 billion yuan, marking an over 11% year-on-year increase. When Lenovo just announced its financial report, the firm’s stock price soared 7% right after the company published only to drop 6% on Feb. 26.
However Medd, co-founder of Bucephalus Research, expressed concern that Lenovo needs to repay their debt as soon as possible, and he cannot see where the company is going in the future.
Citibank published a research report saying that the COVID-19 outbreak had an impact on Lenovo’s business, including delayed factory resumption and restrictions on parts supply. However, the bank believes that Lenovo’s stock price has reflected the above negative factors and that its inventory reserve can still hold until March. Citibank lowered the target price of Lenovo slightly from 7.1 yuan to 7 yuan and maintained its “Buy” rating.