Lyon: Reiterates Lens Technology's (06613) "outperform" rating and expects acquisition of Element 10 Technology to gain entry into NVIDIA Corporation's (NVDA.US) supply chain.

Lyon released a research report stating that Lens Technology (06613) announced plans to acquire over 95% of the equity of YS Tech, a company engaged in the production and sales of server cabinets, structural components, and server liquid cooling modules, which is a supplier to NVIDIA Corporation (NVDA.US). The bank expects the transaction to be completed next year, which will help Lens Technology penetrate NVIDIA Corporation's AI server supply chain, and drive rapid growth in its AI server business. Consequently, they reiterate their "outperform the market" rating and maintain a target price of HK$38. Lyon currently estimates that due to this acquisition, Lens Technology will add RMB 800 million to RMB 1 billion in revenue next year, as well as RMB 100 million to RMB 200 million in net profit.