Core Insights - The "Three Reductions" policy (reducing salt, oil, and sugar) is crucial for the healthy development of China's catering industry, driven by the rising incidence of non-communicable diseases globally [2][3] - The World Health Organization and China's "Healthy China 2030" initiative set specific targets for the "Three Reductions" by 2030, highlighting the urgency of addressing dietary risks [2] Industry Role - The catering industry is encouraged to comply with national nutrition plans and dietary actions, including employing nutritionists and establishing nutritional operation standards for collective dining units [3] - Guidelines from the National Health Commission provide clear directives for the catering industry to implement the "Three Reductions" effectively [3] Current Implementation Status - Current assessments indicate that while the average sugar intake is within reasonable limits, there is a significant concern regarding excessive salt and oil consumption, which exceeds recommended levels [3] - The sources of salt, oil, and sugar intake have been analyzed, emphasizing that the "Three Reductions" require a gradual approach rather than abrupt changes [3] Collaborative Efforts - The advancement of the "Three Reductions" necessitates a collective effort from society, with policy support and industry innovation being essential [3] - There is a need for food education to instill a sense of personal responsibility for health among individuals, promoting a collaborative approach to achieving the "Three Reductions" [3]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - Increased marketing investment is expected to gradually catalyze performance growth through sports resources [5] - The company has become a partner of the Chinese Olympic Committee, which is anticipated to enhance its product matrix and brand image [7] - The signing of player Yang Hanshen, who was selected in the first round of the NBA draft, is expected to boost the popularity of the company's basketball-related products [7] - The company is focusing on a "single brand, multiple categories, and multiple channels" development strategy, which is expected to drive long-term growth [7] Financial Summary - Revenue projections for the company are as follows: - 2023: 27,598.49 million RMB - 2024: 28,675.64 million RMB - 2025E: 29,026.63 million RMB - 2026E: 30,765.67 million RMB - 2027E: 32,844.70 million RMB - The expected growth rates for revenue are 6.96% in 2023, 3.90% in 2024, 1.22% in 2025, 5.99% in 2026, and 6.76% in 2027 [6] - Projected net profit attributable to the parent company is as follows: - 2023: 3,186.91 million RMB - 2024: 3,012.92 million RMB - 2025E: 2,644.93 million RMB - 2026E: 2,846.01 million RMB - 2027E: 3,103.86 million RMB - The expected net profit growth rates are -21.58% in 2023, -5.46% in 2024, -12.21% in 2025, 7.60% in 2026, and 9.06% in 2027 [6][8]

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6]. Core Insights - The company reported low single-digit growth in retail sales compared to the same period last year, with offline channels experiencing a low single-digit decline and online channels showing a mid-single-digit increase [1]. - The company has signed a partnership with the Chinese Olympic Committee, becoming the official sportswear partner for the 2025-2028 Olympic events, which is expected to enhance brand recognition and support international expansion [2]. - The company has adjusted its profit forecasts due to consumer pressure, projecting revenues of 28.9 billion RMB, 29.6 billion RMB, and 30.7 billion RMB for 2025-2027, with net profits of 2.4 billion RMB, 2.6 billion RMB, and 2.7 billion RMB respectively [4]. Summary by Sections Financial Performance - Retail sales (excluding Li Ning YOUNG) recorded low single-digit growth year-on-year, with offline channels declining and online channels increasing [1]. - As of June 30, 2025, the total number of sales points in China was 6,099, a net increase of 11 from the previous quarter, but a net decrease of 18 year-to-date [1]. Marketing and Brand Strategy - The partnership with the Chinese Olympic Committee is expected to enhance the company's brand image and leverage its association with major international sporting events [2]. - The company has also signed contracts with emerging CBA stars, including Yang Hanshen, who was selected in the NBA draft, which may help in establishing a stronger presence in the international market [2]. Profit Forecast Adjustments - The company has revised its profit forecasts downward due to anticipated consumer challenges, with expected earnings per share (EPS) of 0.93 RMB, 0.99 RMB, and 1.06 RMB for 2025-2027 [4].

Core Viewpoint - Company reported a low single-digit year-on-year growth in retail sales for Q2 2025, continuing the trend from Q1 2025 [1] Group 1: Operational Performance - For Q2 2025, retail sales (excluding Li Ning YOUNG) showed low single-digit year-on-year growth, consistent with Q1 performance [1] - Offline channel sales experienced a low single-digit year-on-year decline, with direct sales down in the mid-single digits and wholesale channel sales up in the low single digits [1] - E-commerce channel sales grew in the mid-single digits, outperforming offline retail growth [1] - The running and fitness categories continued to lead market performance, with expected high single-digit year-on-year growth in sales [1] - Basketball category remains under pressure, while sports lifestyle category sales were flat year-on-year; smaller categories like outdoor and badminton showed rapid growth [1] Group 2: Channel and Store Strategy - As of June 30, the number of sales points (excluding Li Ning YOUNG) decreased by 18 to 6099, with a net increase of 11 from Q1 [2] - Li Ning YOUNG sales points decreased by 33 to 1435, with a net decrease of 18 from Q1 [2] - Company maintains a steady store strategy focused on optimizing individual stores amid a fluctuating consumer environment [2] - The company expects to see stable store expansion throughout the year, entering a peak opening season in the second half [2] Group 3: Marketing and Future Outlook - Company plans to focus marketing efforts around themes of Yang Hansheng and the Olympics, leveraging his NBA selection for promotional activities [2] - The company has resumed its role as the official sportswear partner for the Chinese Olympic Committee and the Chinese sports delegation, with a marketing focus on "Olympics + Technology" in the second half [2] - Company forecasts revenue growth of 1.7%/5.3%/4.5% for 2025-2027, reaching 29.15/30.69/32.07 billion yuan, with net profit projections of -12.6%/+6.6%/+6.1% to 2.63/2.81/2.98 billion yuan [3] - The company maintains a "buy" rating with corresponding valuations of 15/14/13 times for the years 2025-2027 [3]

Core Viewpoint - In Q2 2025, Li Ning's overall revenue experienced low single-digit growth, with offline revenue declining primarily due to the impact of store closures; e-commerce revenue showed mid-single-digit growth, influenced by competition and consumer sentiment [1][2] Revenue Performance - Q2 2025 revenue growth for Li Ning brand (excluding Li Ning YOUNG) was low single-digit, with offline channels (including retail and wholesale) recording a low single-digit decline; direct retail channels saw a mid-single-digit decline, while wholesale channels experienced low single-digit growth; e-commerce business recorded mid-single-digit growth [1][2] - Revenue performance in Q2 was affected by weather conditions in April, gradual improvement in May, and weak performance in June due to holiday misalignment; July continued the weak trend seen in Q2 [1][2] Inventory Management - Inventory management was effective, with the inventory-to-sales ratio improving to approximately 4 months, down from 5 months in Q1 2025; discounts were deepened both online and offline to ensure healthy channel inventory [2] Store Operations - The number of Li Ning sales points totaled 6,099 (excluding Li Ning YOUNG), a net decrease of 18 from the beginning of the year; direct retail business saw a net decrease of 19, while wholesale business increased by 1; the number of children's clothing sales points (Li Ning YOUNG) was 1,435, a net decrease of 33 [2] Marketing Strategy - In H2 2025, the company plans to increase marketing investments around the NBA (Yang Hansheng) and the Olympics, launching limited edition products and personal logo products in line with the NBA Summer League and the Milan Winter Olympics [3] - The marketing expense ratio in H2 is expected to be higher than in H1 due to increased spending [3] Financial Forecast - Revenue projections for 2025-2027 are set at 28.93 billion, 30.51 billion, and 32.08 billion yuan, with year-on-year growth of 0.9%, 5.4%, and 5.2% respectively; net profit forecasts are 2.43 billion, 2.62 billion, and 2.78 billion yuan, with year-on-year changes of -19.5%, +7.8%, and +6.2% respectively [3]

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Views - The company is focusing on high-quality development in the new Olympic cycle, despite short-term revenue slowdown [1] - The company has adjusted its earnings forecasts for 2025-2026 and introduced a forecast for 2027, expecting EPS of 0.92, 1.05, and 1.20 RMB respectively [2][8] - The target price is set at 20.07 HKD, based on a 20x valuation for 2025 [2][8] Financial Performance Summary - Revenue for 2023 is projected at 27,598 million RMB, with a year-on-year growth of 7.0% [2] - Operating profit is expected to decline to 4,256 million RMB in 2023, reflecting a decrease of 21.4% year-on-year [2] - Net profit attributable to the parent company is forecasted at 3,187 million RMB for 2023, down 21.6% year-on-year [2] - The company anticipates a net decrease of approximately 10 direct stores and an increase of around 40 franchise stores in 2025 [7] - The gross margin is expected to be 48.4% in 2023, with a slight increase to 49.1% by 2027 [2][11] - The net profit margin is projected to decline from 11.5% in 2023 to 8.2% in 2025, before recovering to 9.5% in 2027 [2][11] Market and Competitive Landscape - The retail environment is becoming increasingly competitive, with intensified discounting pressures from international brands [7] - The company is expected to increase marketing expenditures in the second half of 2025 and throughout 2026 to support sustainable growth [7] - The major shareholder has shown confidence in the company's long-term prospects by increasing their stake by approximately 1.11% [7]

Summary of Li Ning Company Conference Call Company Overview - **Company**: Li Ning Company - **Date**: July 16, 2025 Key Points Industry Performance - June sales showed a month-on-month decline, with both online and offline channels experiencing negative growth due to base effects, holidays, and weather conditions [2][3] - Discounts deepened in Q2, particularly in e-commerce, impacting direct wholesale channels [2][4] - Overall gross margin faced challenges in the first half of the year, making it difficult to maintain flat margins for the entire year [2][4] Product Performance - Functional products outperformed lifestyle products, with running and fitness categories achieving double-digit growth in H1 2025, while basketball and lifestyle categories performed poorly, particularly basketball sales [2][5] - The growth in H1 was primarily driven by professional categories, with footwear performing better than apparel [2][5] - Key running shoe IPs such as "Ultra Light," "Chi Tu," and "Fei Dian" met expectations, with "Fei Dian" and "Chi Tu" performing well, while "Ultra Light" showed weaker performance [2][5] Strategic Partnerships - Li Ning signed a long-term contract with Yang Hanshen in 2023, planning to quickly launch related products during key competition periods [2][6] - No signature shoe plans currently exist, but future consideration will depend on performance, alongside enhanced personal marketing efforts [2][7] Marketing and Branding - The company is focusing on Olympic-related marketing, with the "Rong Rong Yao" series as a direct product line for the Olympics [3][7] - Future product launches will include more technology-enhanced products, expanding into other functional categories and lifestyle areas [3][7] Retail and Distribution - Approximately 100 new children's clothing stores are planned for this year, primarily targeting mid-to-low tier markets [3][9] - The number of outlet stores remains stable at around 400, with no large-scale openings planned [3][9][10] - E-commerce growth was only in the mid-single digits in Q2, falling short of expectations due to the impact of the 618 shopping festival [3][12] Financial Outlook - The company maintains guidance for flat revenue and a high single-digit net profit margin for 2025, but faces significant challenges in the second half due to weak terminal trends and intense competition [3][29] - Future plans include gradually accelerating revenue growth over the next 3-5 years, aiming for a net profit margin of at least 10% [3][29] Competitive Landscape - The company acknowledges ongoing competition from international brands like Nike, which still holds the largest market share [3][17] - Domestic brands have made significant progress in operations, technology, and design, narrowing the gap with international competitors [3][17] Cost Management - Marketing expenses are expected to rise due to Olympic sponsorship and athlete endorsements, with the marketing expense ratio projected to increase from 9.5% to a low double-digit level [3][18] - Human resource costs are also anticipated to rise slightly due to team expansion and talent acquisition [3][19] Future Strategies - The company plans to optimize store locations to control rental costs and enhance same-store sales [3][21][22] - Product assortments will be adjusted based on market tier and store type to capture business opportunities effectively [3][23][24] Segment Growth Potential - The running category is projected to maintain a 30% share of overall business, with future growth opportunities balanced against risks associated with over-reliance on a single category [3][26][28] This summary encapsulates the key insights from the Li Ning Company conference call, highlighting the current performance, strategic initiatives, and future outlook within the competitive landscape of the sportswear industry.

Investment Rating - The report maintains a "Buy" rating for Li Ning with a target price of HKD 19.2 for 2025, based on a 20x PE ratio [1][4][7]. Core Insights - Li Ning's overall platform revenue (excluding Li Ning YOUNG) recorded low single-digit growth in Q2 2025, with offline channels experiencing low single-digit decline while e-commerce channels saw mid-single-digit growth [2][4]. - The growth in revenue is primarily driven by the running and fitness categories, both achieving high single-digit growth, while the basketball category faced a decline of over 20% due to market conditions [2][3]. - The company continues to optimize its channel structure, with a net decrease of 18 stores year-to-date, and plans to expand new store layouts as per strategy [3][4]. Financial Summary - Revenue projections for Li Ning are as follows: 2025E at RMB 28,698 million, 2026E at RMB 30,498 million, and 2027E at RMB 31,943 million, reflecting growth rates of 0.1%, 6.3%, and 4.7% respectively [5][12]. - The forecasted EPS for 2025 is RMB 0.88, with a decline in net profit expected to RMB 2,269 million, a decrease of 24.7% compared to the previous year [5][12]. - The gross margin is projected to remain stable around 49.2% for 2025, with a slight increase to 49.5% by 2027 [5][13].

Group 1 - Li Ning Group and Beijing Humanoid Robot Innovation Center have signed a strategic cooperation agreement to establish the first "Humanoid Robot Sports Science Joint Laboratory" in China, aiming to integrate sports science with cutting-edge robotics technology [1] - The joint laboratory will focus on two main research areas: data collection and analysis in humanoid robot sports science, and the application of humanoid robots with embodied intelligence technology in retail environments [1][2] - The unveiling event featured a "Tian Gong" robot runner wearing Li Ning's professional running shoes, showcasing its dynamic movement capabilities and the potential for precise simulation of human running posture to support innovative product development [1] Group 2 - Li Ning Group emphasizes the importance of sports science research and technology in developing advanced professional sports equipment, as stated by the General Manager of Shoe R&D Innovation System [2] - Anta Group has also established a "Humanoid Robot Sports Science Joint Research Base" in collaboration with Yushu Technology and Hong Kong Polytechnic University, indicating a competitive landscape in the integration of robotics and sports science [2] - The collaboration between sports brands and humanoid robot companies is a new trend, moving away from traditional sponsorship models, and aims to enhance brand exposure through innovative partnerships [3]

Core Viewpoint - The sportswear industry in Hong Kong is facing significant challenges in the second quarter of 2025, with major domestic brands experiencing a slowdown in growth due to weak consumer demand, inventory pressure, and intense price competition [2][10]. Group 1: Performance of Major Brands - Anta, Li Ning, 361 Degrees, and Xtep have all reported weakened performance in Q2 compared to Q1, with Anta and Xtep experiencing low single-digit growth [3][5]. - Anta's retail sales for its main brand showed low single-digit positive growth, while its FILA brand recorded mid-single-digit growth, both of which are slower than the high single-digit growth seen in Q1 [3][4]. - Li Ning's retail sales saw a decline in offline channels, with overall sales growth falling below expectations, indicating a challenging recovery trend [5][9]. Group 2: Market Environment - The overall consumer environment for the sportswear industry is under pressure, with a decline in transaction rates and average spending per customer, attributed to weakened consumer purchasing intent [6][7]. - In June 2025, the retail sales growth for clothing, shoes, and textiles was only 1.9%, a significant drop from previous months, highlighting the industry's struggles [8][7]. Group 3: Competitive Landscape - The competition among domestic sports brands is intensifying, with international brands like Nike and Adidas increasing promotional efforts, leading to deeper discounting strategies among local brands [9][10]. - The industry is shifting focus towards outdoor segments, with brands like Anta and Li Ning making strides in high-end outdoor products, which offer higher profit margins compared to traditional sportswear [9][11]. Group 4: Future Outlook - Analysts predict that the sales momentum for major sportswear companies will remain weak until at least Q2 to Q3 of 2025, primarily due to sluggish sales in lower-tier cities and increased competition [8][9]. - Despite the challenges, there are opportunities in niche outdoor markets, which are becoming a new growth area for brands looking to enhance product value [11].