Citigroup: Lenovo Holdings (03396) may sell BIL or narrow the NAV discount rating by up to 75% to “buy”

The Zhitong Finance App learned that Citibank released a research report saying that Lenovo Holdings (03396) is reportedly seeking to sell about 90% of its interest in the Luxembourg private bank Banque Internationale a Luxembourg (BIL). The business currently accounts for about 9% of the bank's estimated net asset value (NAV) of Lenovo Holdings; the bank gave Lenovo Holdings a “buy” rating, with a target price of HK$21.5.

The bank pointed out that according to reports, the initial bid (ending at around the end of September) meant that BIL (based on 100% equity) was valued at at least 2.5 billion euros (about HK$22.5 billion), which is about 3% higher than the bank's latest valuation of about HK$21.8 billion (calculated at 0.9 times the book value at the end of the first half of 2026). BIL has been a stable source of profit contribution for Lenovo Holdings for many years; however, it is anticipated that BIL's profit contribution to Lenovo Holdings' total net profit in the 2027-2028 fiscal year will drop to 10% to 13% of Lenovo Holdings' total net profit, driven by Lenovo Group's strong growth momentum.

The bank believes that this potential sale or sale of non-core investments for Lenovo Holdings is the first step to focus more on technology holding companies; if the deal is implemented, it is expected that the bank will narrow the NAV discount of up to 75% for Lenovo Holdings. The above target price is calculated based on an estimated 2027 NAV discount of approximately HK$76.81 (a standard deviation lower than the historical average discount).