The company reported mid-year 2022 / 2023 with operating income of $34.045 billion, down 2.16% from the same period last year, and net profit of $1.057 billion, up 8.06% from the same period last year.
The profitability has been further improved and the R & D investment has been high. The slight decline in income in the first half of the year was mainly affected by the exchange rate, which, excluding this factor, increased by 4 per cent. Cost management improved, and other operating expenses fell by 8%. The company's gross profit margin in the first half of 2022 2023 was 16.88%, an increase of 0.13pct over the same period last year; the net profit rate was 3.21%, an increase of 0.21pct over the same period last year, and profitability was further enhanced. With a slight decline in overall revenue, the company's R & D spending increased by 13% year-on-year to drive growth engines, support business transformation and ESG initiatives, which will enhance the company's ability to respond to increasing demand changes and the flexibility to meet customer needs other than technology hardware.
The performance of the personal business outperformed the industry. Of the company's three businesses:
Revenue from the smart device business and operating profit decreased by 7% and 8% respectively compared with the same period last year. The overall market is full of challenges, the profitability of the industry is under pressure, the group's smart device business can still maintain the leading profitability, and the operating profit margin is basically stable at 7.5%.
In the second quarter, the Smart device Business Group consolidated its market leadership, further expanded its market share with its competitors, and accounted for the largest share of its PC sector in four of the five major regional markets. The Smart device Business Group is a leader in the field of personal business computers, accounting for 26% of the market. Thanks to games and comparative advantages in smart collaboration, workstations and accessories, revenue from high-end divisions rose 6 per cent year-on-year, while revenue from smart collaboration by smart device business groups increased by 50 per cent year-on-year with the support of scenario solutions.
Revenue from infrastructure solutions, one of the world's fastest-growing providers of infrastructure solutions, rose 24 per cent year-on-year to an all-time high of $4.7 billion, while operating profit increased by $64 million to $47 million.
Program services business revenue and operating profit increased by 25% and 27% respectively to US $3.2 billion and US $697 million, respectively, and the operating profit reached 21.9%, an increase of 0.4pct over the same period last year, boosting the company's overall revenue and profit. And the Group has established a new strategic partnership with PCCW Solutions, a leading service provider in the Asia-Pacific region, and the newly established Lenovo PCCW Solutions will start operation in August 2022.
Investment advice: the proportion of software and service business continues to improve, and the anti-cyclical performance of the company has begun to be reflected. With the improvement of R & D investment, the company's overall profit level has maintained a good situation. We expect the company's EPS to be $0.15 and $0.16 respectively from 2022 to 2023, maintaining a "buy" rating.
Risk tips: PC market competition intensifies; mobile phone business progress is not as expected; the landing of program services is not as expected.