During the second quarter, the Matthews Pacific Tiger Fund (Trades, Portfolio) added 7,000,000 shares of Lenovo (HKSE:00992) to its portfolio at an average price of 5.38 Hong Kong dollars (69 cents). The trade had a 0.06% impact on the Matthews Pacific Tiger Fund (Trades, Portfolio)’s portfolio. It now owns 147,394,000 shares of the company.
Lenovo has a market cap of HK$60.43 billion, an enterprise value of HK$71.83 billion, a price-book (P/B) ratio of 2.64, and a price-sales (P/S) ratio of 0.17.
Lenovo is a Chinese multinational technology company headquartered in Beijing, China. The company was originally founded in November 1984 by Liu Chuanzhi and a group of 10 engineers, starting with 200,000 yuan in capital ($30,140.68). The company has since expanded its operations globally and currently has operational centers in China, Singapore and the United States. Lenovo designs, manufactures and sells smartphones, tablets, personal computers, workstations, servers, accessories and software.
GuruFocus gives Lenovo a 3 star predictability rating based on backtesting results, stocks with a 3 star predicability rating produce, on average, a 8.2% yearly return over a 10- year sample size. The company has a 5 of 10 financial strength rating, with a cash to debt ratio of 0.59, ranking it beneath 68% of the 2,250 companies in the global computer systems industry. Lenovo has a Piotroski F-Score of 3, which is low and usually implies a poor business operation. The company has a 6 of 10 profitability and growth rating, with an operating margin of -0.14%, a Net-margin of -0.28%, an ROE of -3.81% and (3y) revenue growth of 7.80%, ranking Lenovo above 70% of the 2,019 companies in the global computer systems industry.
The Matthews Pacific Tiger Fund (Trades, Portfolio) may have added to its stake in Lenovo for the following reasons:
- The company’s gross profit has increased at an average rate of 43.5% annually over the past 10 years.
- The company has over 30 years of operating experience.
- The company has continued to expand its operations globally and has a diversified portfolio of products.
- The company’s price has fallen an estimated 21% during the previous 12 months.
- Lenovo is trading below its intrinsic value according to the Peter Lynch chart below.
The Matthews Pacific Tiger Fund (Trades, Portfolio) was originally incepted in September 1994. The fund invests in all countries and markets in Asia, including developed, emerging and frontier countries and markets in the Asian region, excluding Japan. The fund currently owns 61 stocks with a total estimated value of $6.5 million.
Cheers to your investment success!
Disclosure: Author does not own any shares of this company.
Start a free 7-day trial of Premium Membership to GuruFocus.
