Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Insights - The company has shown steady performance with a revenue of 29.598 billion yuan in 2025, reflecting a year-on-year growth of 3.2%. However, the net profit decreased by 2.6% to 2.936 billion yuan, with net profit margin and gross margin at 9.9% and 49.0% respectively. The long-term growth potential remains strong due to increasing market share in core categories like running and basketball, and the upcoming marketing opportunities from the 2026 Milan Winter Olympics [5][6] - The company is focusing on enhancing its core brand while expanding into youth sports through the Li Ning YOUNG brand, which has shown a retail revenue growth of 10%-20% year-on-year [6] - The company is optimizing its channel structure, with offline stores reaching a total of 7,609 points of sale, and online operations showing stable growth [8] Financial Summary - The company’s projected financials indicate a revenue increase to 31.522 billion yuan in 2026, with a year-on-year growth of 6.5%. The net profit is expected to rise to 3.123 billion yuan, reflecting a growth of 6.4% [9] - The gross margin is projected to improve to 50.0% in 2026, with a net profit margin of 9.9% [9] - The price-to-earnings ratio (P/E) is expected to decrease from 21.7 in 2025 to 20.4 in 2026, indicating a more attractive valuation [9]

Core Insights - The article highlights the significant achievement of Mao Jinhui, who set a new record in the Wuxi Marathon, completing it in 2 hours, 7 minutes, and 36 seconds, breaking a 39-year-old record for Chinese marathons [1] - Li Ning, the sports brand associated with Mao, has been focusing on expanding its running category, which has grown from 16% to 31% of the company's revenue over the past five years, becoming the largest product category [2][3] Company Strategy - Li Ning's running category has undergone a strategic transformation since 2018, aiming to shift towards professional running products amidst a growing domestic marathon culture [5][6] - The company has developed a comprehensive product matrix that caters to various running needs, including competitive racing, training, and casual running [3][7] - The introduction of the "Feidian" series, which includes advanced technology like the self-developed "Aero" material, marks a significant step in Li Ning's commitment to professional running [10][12] Market Positioning - Li Ning's running products have seen substantial sales growth, with over 2.6 million pairs of professional running shoes sold last year [2] - The brand has strategically targeted the youth market, particularly in response to changes in physical education policies, leading to increased demand among students [19][21] - The company has also focused on building a community around running, aiming to grow its LNRC membership to 200,000 within three years [32] Product Development - Li Ning has established a new research and development framework to support its running category, allowing for innovation in product design and technology [11][25] - The brand's long-term approach to product development, exemplified by the continuous evolution of its "Chaoqing" series, reflects a commitment to building a stable product culture [35][36] - The company emphasizes the importance of maintaining a balance between professional and casual running products to cater to a broader audience [37][38] Competitive Landscape - The running market in China has become increasingly competitive, with Li Ning aiming to solidify its position as a leading brand in the professional running segment [26][39] - The company has recognized the need for strategic partnerships and sponsorships to enhance its visibility and credibility in the running community [15][16] - Li Ning's focus on professional athletes and events is part of a broader strategy to elevate its brand perception and market share in the running category [31][32]

Core Insights - Over 70% of new products from Li Ning were launched on Tmall in the past year, generating at least 2 billion in revenue from the Tmall flagship store [1] - The company values not only the sales certainty on Tmall but also the certainty regarding target demographics and operational forecasts [1] - Tmall provides a sense of "security" for Li Ning, allowing the brand to leverage platform data tools to accurately assess market size and consumer assets before launching new products [1] Company Strategy - Li Ning's Tmall flagship store has over 20 million members, which enhances its ability to predict market trends and consumer preferences [1] - The use of data tools enables the brand to transform the process of identifying potential bestsellers from a guessing game into a more reliable strategy, allowing for greater investment in core R&D resources for new products [1]

Investment Rating - The report assigns a "Buy" rating to the company, with a current price of HKD 21.46 and a fair value of HKD 26.66 [9]. Core Insights - The company exceeded expectations in its 2025 performance, achieving revenue of RMB 29.598 billion, a year-on-year increase of 3.22%, and a net profit of RMB 2.936 billion, a decrease of 2.56% [9]. - The healthy performance is attributed to strong e-commerce and distribution channel revenues, effective cost control, and an increase in other income [9]. - The company is expected to maintain a high single-digit net profit margin in 2026, a significant year for sports marketing [9]. Financial Performance Summary - **Revenue Forecast**: Projected revenues for 2024A to 2028E are RMB 28.676 billion, RMB 29.598 billion, RMB 31.627 billion, RMB 33.832 billion, and RMB 36.325 billion, respectively, with growth rates of 3.9%, 3.2%, 6.9%, 7.0%, and 7.4% [4][13]. - **Net Profit**: Expected net profits for 2024A to 2028E are RMB 3.013 billion, RMB 2.936 billion, RMB 3.137 billion, RMB 3.372 billion, and RMB 3.643 billion, with growth rates of -5.5%, -2.6%, 6.9%, 7.5%, and 8.0% [4][13]. - **Earnings Per Share (EPS)**: EPS is projected to be RMB 1.17, RMB 1.14, RMB 1.21, RMB 1.30, and RMB 1.41 for the years 2024A to 2028E [4][13]. - **Profitability Ratios**: The company maintains a gross margin of approximately 49% and a return on equity (ROE) of around 11.5% for 2024A, with slight improvements expected in subsequent years [4][13]. Market Performance - The company has shown resilience in its inventory management, with a healthy inventory turnover ratio and a balanced age structure of inventory [9]. - The retail sales performance remained stable, with specific categories like running and training showing positive growth trends [9].

2025 ANNUAL L I RESULTS N I N G C O M P A N Y L I M I T E D (INCORPORATED IN THE CAYMAN ISLANDS WITH LIMITED LIABILITY) STOCK CODES：2331 (HKD counter) and 82331 (RMB counter) DISCLAIMER 免責聲明 This presentation incorporates information contained in the annual results announcement (the "Results Announcement") for the year ended 31 December 2025 of Li Ning Company Limited (the "Company"). This presentation should be read in conjunction with the Results Announcement and is qualified in its entirety by the more d ...

Core Viewpoint - Li Ning reported a mixed financial performance for the year ending December 31, 2025, with revenue reaching 29.6 billion yuan, a 3.2% year-on-year increase, while net profit declined by 2.56% to 2.94 billion yuan, marking the third consecutive year of "revenue growth without profit growth" since 2023 [4][6][8]. Financial Performance - The decline in net profit is attributed to adjustments in the company's financial planning, including changes in tax rates due to currency fluctuations and investment returns, which increased the effective tax rate from 26.7% in 2024 to 29.9% in 2025 [8]. - Li Ning's operational efficiency has been maintained through cost reduction and efficiency improvement strategies, with total offline stores optimized to 6,091, and a net reduction of 59 direct-operated stores, leading to a 3.3% decline in revenue from this channel [8][9]. - Despite a slight decrease in overall gross margin by 0.4 percentage points, the company managed to control sales and distribution expenses, which decreased by 0.1% year-on-year [8][10]. Market Position and Strategy - Li Ning's cash flow remains robust, with net cash increasing by 1.81 billion yuan to 19.974 billion yuan, providing a strong buffer against market uncertainties and supporting future strategic investments [10]. - The company is focusing on expanding its core product categories, particularly in running shoes, which saw a 10% increase in sales, accounting for 31% of total revenue [12][14]. - Li Ning is also diversifying into emerging categories such as badminton and outdoor sports, with badminton revenue growing by 30% and outdoor product lines being developed [14][15]. Competitive Landscape - Li Ning faces intense competition from brands like Anta, which has built a multi-brand empire through acquisitions, achieving a revenue of 38.54 billion yuan in the first half of 2025 [17][18]. - The running market is highly competitive, with established brands like Adidas and HOKA targeting high-value consumers, while Li Ning aims to strengthen its position through product innovation and strategic partnerships [18][19]. - The basketball category, once a stronghold for Li Ning, is currently underperforming, prompting the company to reduce order sizes and focus on long-term market recovery [19]. Brand Development and Marketing - Li Ning is leveraging partnerships with top-tier sports events, including the 2026 Winter Olympics and the 2026 Asian Games, to enhance brand visibility and drive sales [20][22]. - The company is developing a "Honor Gold Standard" product line and launching co-branded products with the Chinese sports delegation to create a marketing loop from event exposure to consumer purchase [22][23]. - The long-term goal is to establish Li Ning as a comprehensive professional sports brand, despite short-term financial pressures from these investments [23].

Core Insights - The company emphasizes health and stability as its primary focus while actively exploring growth opportunities in various segments [1] - The company has a long-term strategy of "single brand, multiple categories, and multiple channels" [1] - The company has achieved significant sales in its running category, with a projected 26 million pairs of professional running shoes sold by 2025 [1] - The company plans to expand into outdoor categories starting in 2024, targeting the light outdoor market [1][2] - The company has renewed its partnership with the Chinese Olympic Committee for the period of 2025-2028 [2] - The company reported a revenue increase of 3.2% year-on-year, reaching 29.598 billion yuan in 2025 [3] - The company has a strong cash position with net cash of 19.97 billion yuan and no interest-bearing debt [4] Revenue and Sales Performance - The company sold 5.5 million badminton rackets in a year, with badminton revenue accounting for approximately 7% of total revenue [1] - The running category's revenue share increased from 16% five years ago to 31% [1] - The company plans to double its revenue in the outdoor category by 2025 [1] - The company’s overall inventory before provisions was 2.852 billion yuan, with a turnover period of 64 days [4] Marketing and Partnerships - The company increased its marketing expenditure by 445 million yuan year-on-year [2] - The company is testing its "Honor Gold Standard" product line through pop-up stores nationwide [2] - The company has established new partnerships with the Chinese National Fencing Team and extended collaborations with the National Space Administration and the Palace Museum [2] Store Performance and Strategy - The company operates over 7,600 stores, with an average monthly store efficiency of 284,000 yuan [4] - The company aims to enhance store efficiency and invest further in sports leisure, female, and youth consumer demands [4] - The company intends to explore new categories and store formats under its multi-category strategy [4]

Core Viewpoint - The outdoor equipment industry is transitioning away from a focus on "function stacking" and is embracing a new paradigm that prioritizes performance without compromising on weight and usability [2][4]. Group 1: Material Innovations - The lightweight revolution is driven by material breakthroughs rather than mere reduction in features, with new materials like supercritical foaming and bio-based fibers allowing for lighter products without sacrificing durability [5]. - The Li-Ning Feidian 6 ELITE exemplifies this trend, utilizing revolutionary "supercritical capsule" technology to enhance performance in racing shoes [4][7]. - Environmental materials are no longer synonymous with compromised performance; technologies like ePE membranes and bio-based materials now match or exceed traditional materials in waterproofing and durability [18][21]. Group 2: Design for Women - Brands are moving away from simply scaling down men's designs for women's products, instead creating items based on female body data and physiological needs [12][13]. - The collaboration between Decathlon's KIPRUN and SMOON has resulted in innovative products like the KIPRUN Run 900 period-friendly shorts, which address specific needs of female athletes [15][16]. Group 3: Versatile Equipment - The concept of "dual-use" equipment is gaining traction, with items like the Cotopaxi Clase 28L backpack designed for both commuting and outdoor activities, reflecting a shift towards multifunctionality [8][10]. - The industry consensus is that equipment should serve multiple purposes, allowing users to maximize the value of their purchases [11]. Group 4: Consumer Awareness - Consumers are encouraged to select equipment based on specific needs rather than being swayed by high performance metrics alone, such as waterproof ratings, which should be chosen according to the intended use case [6][23]. - The article emphasizes that the best path for beginners is to rent or start with basic models before upgrading, as equipment is best learned through experience rather than immediate high-end purchases [6][8].

Core Insights - In 2025, Li Ning Group reported a revenue of 29.6 billion RMB, a year-on-year increase of 3.2%, and a net profit of 2.94 billion RMB with a net profit margin of 9.9%, exceeding market expectations [1][3] - The company is strategically positioning itself for the new Olympic cycle from 2026 to 2028, leveraging its solid operational foundation and focusing on technology investment and the national sports trend [3][12] Financial Performance - Li Ning's revenue growth of 3.2% amidst a challenging consumer environment and a weak recovery in the sports brand industry reflects its robust operational strategies [3] - The operating profit margin increased by 0.4 percentage points to 13.2%, and the net profit margin reached 9.9%, both better than market forecasts [3] - The company’s net cash increased by 1.81 billion RMB to 19.97 billion RMB, providing a strong financial cushion for market fluctuations [5] Strategic Initiatives - Li Ning has actively engaged in partnerships, such as becoming the official partner of the Chinese Olympic Committee (COC) and launching the "Honor Gold Standard" product line targeting mid-to-high-end consumers [1][7] - The company is focusing on enhancing its basketball product line despite short-term pressures, aiming to maintain its brand's professional image and market leadership [7][10] Product Development and Innovation - In 2025, Li Ning launched a space dynamic thermal technology platform, applied in winter Olympic outfits, showcasing its commitment to integrating advanced technology into its products [8][10] - The "Honor Gold Standard" series combines COC branding with Li Ning's identity, targeting quality-conscious urban elites [10][11] Market Trends and Consumer Engagement - The company is capitalizing on the growing national sports trend, with running becoming its largest category, accounting for 31% of total revenue in 2025, and selling over 26 million pairs of running shoes [16][17] - The badminton segment also saw significant growth, with a revenue increase of approximately 30% in 2025, driven by a shift towards professional equipment [19][20] Future Outlook - Li Ning is expected to benefit from the Olympic cycle, with analysts predicting that the integration of Olympic resources and professional technology will enhance brand credibility and drive sales growth [11][12] - The company is exploring new retail models, including differentiated store types like "Dragon Stores" and outdoor shops, to capture market opportunities [23]

Investment Rating - The report maintains a "Strong Buy" rating for Li Ning (02331.HK) with a target price of HKD 26.54, indicating an expectation of over 20% outperformance against the benchmark index in the next six months [2][7]. Core Views - Li Ning's 2025 performance exceeded expectations, driven by dual growth in product and channel strategies. The company reported a revenue of CNY 29.6 billion, a year-on-year increase of 3.2%, and a net profit of CNY 2.94 billion, a decrease of 2.6% year-on-year, resulting in a net profit margin of 9.9% [2][7]. - The company declared a final dividend of HKD 0.2336 per share, with a total annual dividend of HKD 0.5695, reflecting a payout ratio of 50% [2][7]. Financial Performance Summary - **Revenue and Profit Forecasts**: - 2025A: Revenue of CNY 29.6 billion, net profit of CNY 2.94 billion - 2026E: Revenue of CNY 31.9 billion, net profit of CNY 3.19 billion, with a growth rate of 8.7% - 2027E: Revenue of CNY 34.3 billion, net profit of CNY 3.54 billion, with a growth rate of 11.1% - 2028E: Revenue of CNY 36.8 billion, net profit of CNY 3.97 billion, with a growth rate of 11.9% [3][8]. - **Profitability Ratios**: - Gross margin for 2025 was 49.0%, a slight decrease of 0.4 percentage points year-on-year - Net profit margin for 2025 was 9.9%, down 0.6 percentage points year-on-year [7][8]. - **Earnings Per Share (EPS)**: - 2025A: CNY 1.14 - 2026E: CNY 1.23 - 2027E: CNY 1.37 - 2028E: CNY 1.54 [3][8]. - **Valuation Ratios**: - Price-to-Earnings (P/E) ratio for 2026 is projected at 19 times, decreasing to 13 times by 2028 - Price-to-Book (P/B) ratio for 2026 is projected at 1.7 times, decreasing to 1.5 times by 2028 [3][8]. Product and Channel Insights - **Product Performance**: - Revenue from footwear, apparel, and equipment was CNY 146.5 billion, CNY 123.3 billion, and CNY 26.2 billion respectively, with footwear and apparel growing by 2.4% and 2.3% year-on-year, while equipment saw a significant increase of 12.7% [7]. - The company launched new technologies and products, enhancing its professional product matrix [7]. - **Channel Performance**: - Revenue from the distribution channel increased by 6.3% to CNY 137.7 billion, while direct sales decreased by 3.3% to CNY 66.5 billion - E-commerce revenue grew by 5.3% to CNY 87.4 billion, indicating a stable growth trajectory [7].