Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company's Q1 2024 all-channel revenue data was released, showing a low single-digit year-on-year growth, which is in line with expectations. The revenue from direct sales, wholesale, and e-commerce channels experienced a mid-single-digit growth, a mid-single-digit decline, and a low 20%-30% growth respectively. Same-store sales showed a low single-digit decline for direct sales, a mid-double-digit decline for wholesale, and a low 20%-30% growth for e-commerce [5]. - E-commerce channels performed well, driven by outlet stores boosting direct sales growth. The e-commerce revenue grew in the low 20%-30% range year-on-year, attributed to a low base in Q1 2023 and the high growth of emerging e-commerce platforms [5]. - Inventory levels improved year-on-year, but discount levels remain to be repaired. The company’s all-channel inventory turnover ratio is slightly above 4, showing improvement. However, with revenue growth lagging behind peers, the expected offline discount level is in the high 60%-70% range, which is still weaker than competitors [5]. - The running shoe category continues to see high growth, while the basketball segment requires adjustments. The classic running series products drove sales, with expected year-on-year revenue growth of over 20% for the running category. However, the basketball shoe market remains weak, posing challenges for the company [5]. - In the short term, monthly retail improvements need time to validate, with expectations of continued revenue weakness in Q2 due to high base effects. However, as the retail base decreases in H2, there is potential for revenue acceleration through store transformations and inventory management [5]. - The company is projected to achieve net profits of 3.24 billion, 3.65 billion, and 4.05 billion yuan from 2024 to 2026, with year-on-year growth rates of 2%, 13%, and 11% respectively. The corresponding P/E ratios are 14, 13, and 12, indicating that the valuation is at a bottom position [5][8].

Investment Rating - The report maintains a "Buy" rating for Li Ning with a target price of HK$26.55, indicating a potential upside of 33% from the current price of HK$19.90 [1][2][3]. Core Insights - The report projects a revenue growth of 5.2% year-on-year for 2024, reaching RMB 29.03 billion, and a net profit growth of 5.1% to RMB 3.35 billion, maintaining a net profit margin of 11.5% [3][4]. - The company is focusing on growth drivers such as running shoes and basketball products, with plans to expand its product lines and optimize store configurations in lower-tier cities [3][4]. - The report slightly adjusts the target price down by 0.5% but maintains the earnings forecasts for 2024-2026, with expected revenue growth rates of 5.2%, 6.0%, and 5.8% respectively [4][6]. Summary by Sections Financial Projections - Revenue for 2024 is projected at RMB 29,033 million, with a gross profit margin of 49.6% [5][6]. - The net profit for 2024 is expected to be RMB 3,349 million, with an EPS of RMB 1.30 [5][6]. - The report anticipates a stable management expense ratio of 4.6% and an increase in sales expense ratio to 33.3% [6]. Market Position and Strategy - Li Ning plans to launch new products in the running and basketball categories, targeting both high-end and value segments to capture market share [3][4]. - The company aims to open 75 new stores in 2024, focusing on lower-tier cities while closing underperforming stores in higher-tier cities [3][4]. Valuation Metrics - The report maintains a P/E ratio of 17x for 2025, with a slight adjustment in net profit forecasts for 2024-2026 [4][6]. - The projected net profit for 2025 and 2026 is RMB 3,673 million and RMB 4,023 million respectively, with corresponding EPS of RMB 1.42 and RMB 1.56 [5][6].

Summary of Conference Call Company or Industry Involved - The conference call is associated with Guohai Securities, focusing on investment suitability management for clients. Core Points and Arguments - The content of the conference call is intended solely for clients who meet Guohai Securities' investment suitability management requirements and invited clients [1] - Guohai Securities disclaims any investment advice or decisions made based on the conference call content, indicating that it does not bear responsibility for any investment decisions made by clients [1] - The conference call serves as a relay of certain viewpoints from a previously published research report by Guohai Securities, reflecting the judgment of the research personnel on the day the complete report was released [1] Other Important but Possibly Overlooked Content - The conference call emphasizes that participation does not imply any investment recommendations or guarantees from Guohai Securities or its employees [1]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2][6] Core Views - The company's Q1 2024 revenue met expectations, with improvements in retail discounts and low-end sales [6] - The company is expected to see a net profit of 3.34 billion, 3.84 billion, and 4.35 billion for the years 2024, 2025, and 2026 respectively, with corresponding EPS of 1.3, 1.5, and 1.7 [6] - The current stock price corresponds to a PE ratio of 14.0, 12.1, and 10.7 for the years 2024, 2025, and 2026 respectively [6] Revenue and Profitability - The company's revenue for 2022 was 25.803 billion, increasing to 27.598 billion in 2023, and projected to reach 29.297 billion in 2024 [7] - The net profit for 2022 was 4.064 billion, which decreased to 3.187 billion in 2023, with a forecasted increase to 3.339 billion in 2024 [7] - The gross margin is expected to improve slightly from 48.4% in 2023 to 49.0% by 2026 [7] Sales Channels and Performance - Online sales saw a growth of 20-30% in Q1 2024, driven by platforms like Douyin and Dewu, while offline sales experienced a decline in low-end sales [6] - The company closed 26 stores in Q1 2024, maintaining a net opening expectation for the year [6] Inventory and Discounts - The company reported improvements in discount levels, with an overall discount of 60% in offline channels, down from 60% in the previous year [6] - The inventory turnover ratio remains healthy, with a ratio of 4-4.5 across all channels in Q1 2024 [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company reported a slight increase in overall retail sales for Q1 2024, with improvements in inventory and discount levels [3][4] - The company is a leading domestic sportswear brand, facing challenges in 2023 due to inventory pressures and issues related to unauthorized sales, but has shown signs of recovery in early 2024 [4] Summary by Relevant Sections Financial Performance - Total revenue for 2022 was 25,803 million, with a year-on-year growth of 14.31%. For 2023, it is projected to be 27,598 million, with a growth of 6.96%. The forecast for 2024 is 29,191 million, reflecting a growth of 5.77% [2] - The net profit attributable to the parent company for 2022 was 4,064 million, with a decline of 21.58% in 2023 to 3,187 million. The forecast for 2024 is 3,390 million, indicating a recovery with a growth of 6.37% [2] Retail and Sales Performance - For Q1 2024, the company's overall retail sales (excluding young segment) showed a low single-digit year-on-year growth, while same-store sales declined in the mid-single digits [3] - The number of stores as of Q1 2024 was 6,214, with a net increase of 8 stores compared to Q1 2023 [3] Inventory and Discounts - The inventory turnover ratio improved to just over 4 months in Q1 2024, compared to 4-4.5 months in Q1 2023, indicating healthier inventory levels [4] - Discounts for both online and offline channels showed a low single-digit improvement year-on-year, with offline discounts averaging around 60% [4] Earnings Forecast and Valuation - The company maintains a revenue growth guidance of mid-single digits for 2024, with a profit margin expected to remain in the low double digits [4] - The net profit forecasts for 2024 and 2025 have been adjusted down to 33.9 billion and 37.8 billion respectively, with a projected PE ratio of 14/12 for the respective years [4]

Investment Rating - The report maintains a "Buy" rating for Li Ning with a target price of HKD 28.3 [2][4]. Core Insights - Li Ning's Q1 2024 performance aligns with market expectations, with overall retail sales showing low single-digit growth year-on-year, driven by a strong e-commerce segment that grew by 20-30% [1][2]. - The company is expected to return to stable growth as inventory levels normalize, and it plans to launch marketing activities in conjunction with the upcoming Paris Olympics to enhance brand visibility [2]. Summary by Sections Financial Performance - For 2024, the expected EPS is projected at HKD 1.30, with forecasts of HKD 1.45 and HKD 1.59 for 2025 and 2026 respectively [2][3]. - Revenue is forecasted to grow from RMB 27,598 million in 2023 to RMB 29,257 million in 2024, reflecting a growth rate of 6.0% [3][9]. - The net profit attributable to shareholders (excluding non-recurring items) is expected to recover from RMB 3,046 million in 2023 to RMB 3,372 million in 2024, marking a growth of 10.7% [3][9]. Channel Performance - E-commerce channels outperformed expectations, with significant growth across various platforms, including over 100% growth on the Dewu platform and more than 20% on Douyin [1][2]. - Offline channels experienced a low single-digit decline, with direct sales showing mid-single-digit growth while wholesale channels faced a mid-single-digit decline [1][2]. Inventory and Discounts - The inventory turnover for offline channels is reported at 4-4.5 months, with 80% of inventory being new products, indicating a healthy inventory status [1][2]. - Retail discounts have improved year-on-year, with an overall discount rate of approximately 60% [1][2]. Store Count and Sales - As of the end of Q1, the total number of sales points decreased by 26 to 6,214, with retail points increasing by 1 to 1,499 and wholesale points decreasing by 27 to 4,715 [1][2]. - Same-store sales showed a low single-digit decline across offline channels, while e-commerce channels recorded a growth of 20-30% [1][2].

Investment Rating - The report maintains a "Buy" rating for Li Ning [4] Core Views - The company's Q1 2024 performance is stable, with adult revenue showing low single-digit year-on-year growth, while same-store sales declined in the mid-single digits. The company opened 8 new adult stores, bringing the total to 6,214 [1][2] - The children's segment is expected to outperform adults, with revenue growth projected in the single digits for Q1 2024. The total number of children's stores is 1,405, with a net decrease of 23 stores compared to the end of 2023 [2] - The company is focusing on optimizing channel efficiency and adjusting its store structure, with expectations for net store openings in lower-tier cities while closing underperforming stores in higher-tier cities [2] Summary by Sections Financial Performance - For 2024, the company expects revenue growth in the mid-single digits, with a stable profit margin. The projected revenues for 2024-2026 are 34.21 billion, 38.57 billion, and 43.50 billion respectively, with a PE ratio of 12 times for 2024 [2][3] - The revenue for 2023 was 27.60 billion, showing a growth rate of 7% year-on-year, while the net profit was 3.19 billion, reflecting a decline of 21.6% [3][8] Operational Insights - The company reported a healthy inventory turnover ratio of over 4, indicating effective inventory management. Discounts in both online and offline channels are showing improvement [2] - The adult segment's e-commerce sales grew by 20%-30% in the low range, benefiting from a lower base due to a shift in customer traffic back to offline stores [1][2] Market Position - Li Ning's total market capitalization is approximately 45.23 billion HKD, with a total share count of 2.58 billion shares [4] - The company is strategically enhancing its product mix and operational capabilities to improve the efficiency of high-quality stores [2]

Investment Rating - The report maintains an "Outperform" rating for the company, indicating an expected price increase of 10-20% [3][4]. Core Insights - The company's Q1 2024 sales performance met expectations, with the main brand (excluding Li Ning YOUNG) achieving low single-digit growth in retail revenue. Online sales grew by 20-30%, while offline channels saw a decline [3]. - The company is focusing on optimizing its channels and product offerings, particularly in the running shoe and fitness categories, which have shown strong growth. The basketball category is currently under adjustment [3]. - Inventory levels are healthy, with improvements in discount rates contributing to better average selling prices (ASP). The company expects continued improvement in discounts and stable ASP moving forward [3]. - Management maintains a conservative growth outlook for 2024, targeting mid-single-digit revenue growth and low double-digit profit margins, supported by new product launches and seasonal sales [3][4]. Financial Summary - The company forecasts revenue growth from 258 billion RMB in 2024 to 344 billion RMB by 2026, with a compound annual growth rate (CAGR) of approximately 9% [4][9]. - Net profit is projected to recover from 31.9 billion RMB in 2023 to 40.7 billion RMB in 2026, reflecting a gradual improvement in profitability [4][9]. - The gross margin is expected to remain stable around 48.4% to 49.2% over the forecast period, indicating effective cost management [4][9].

M N 24 Apr 2024 CMB International Global Markets | Equity Research | Company Update Li Ning (2331 HK) Healthy outlook after a beat in retail discounts Li Ning may not be our top pick in the sportswear sector. But thanks to potential Target Price HK$22.17 sequential acceleration in sales growth and decent margin improvement (better (Previous TP HK$24.86) discounts and operating leverage), we are still positive on Li Ning and maintain Up/Downside 19.9% BUY with TP of HK$ 22.17, based on 15x FY24E P/E. Current ...

Financial Data and Key Metrics Changes - In Q1 2024, the company's overall revenue increased by a low single-digit percentage year-on-year, with offline sales declining slightly while online sales grew by 20%-30% [1][2] - The same-store sales (SSSG) decreased in Q1, with direct sales and wholesale down by low single digits and mid-double digits respectively, while e-commerce saw a growth of 20%-30% [1][2] - The inventory turnover ratio improved to around 4.0, with nearly 90% of inventory being new products within six months [1] Business Line Data and Key Metrics Changes - Direct sales performance was better than wholesale, driven by outlet stores, with same-store sales for direct and wholesale both experiencing double-digit declines [1][2] - The total number of stores decreased by 26 compared to the end of last year, with direct stores increasing by 1 and wholesale stores decreasing by 27 [2] Market Data and Key Metrics Changes - The company is focusing on Southeast Asia for overseas expansion, with plans to open stores in markets like Singapore, Malaysia, Thailand, Indonesia, and the Philippines [6][7] - The company aims to maintain a steady growth in the domestic market while exploring overseas opportunities as a supplementary strategy [6][7] Company Strategy and Development Direction - The company plans to enhance its product offerings and marketing strategies, particularly in professional categories like basketball and running, while also focusing on low-tier cities [6][13] - The marketing budget will be directed towards professional categories, leveraging resources from CBA and other events to strengthen brand presence [6][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the annual performance guidance, with expectations of low double-digit net profit margin and mid-single-digit revenue growth [4][5] - The company anticipates a gradual improvement in sales performance in the second half of the year, especially in Q4, due to lower base effects [5] Other Important Information - The company is not planning significant channel expansions this year, with a focus on product upgrades and maintaining healthy inventory levels [9][11] - The new CMO has been instrumental in integrating marketing resources and enhancing brand strategy, with plans for significant promotional activities around the upcoming Olympics [10] Q&A Session Summary Question: What is the status of wholesale revenue and inventory? - Management indicated that both wholesale and direct sales have healthy inventory levels, with a turnover ratio of 4-4.5, and no adjustments to Q2 shipments are planned [3] Question: How are the new product lines performing? - New products like the "Ultra Light 21" and "Red Rabbit 7" have shown good growth, with the "Red Rabbit" series particularly popular among students, achieving nearly 50% growth year-on-year [3] Question: What are the expectations for the semi-annual report? - Management maintained the annual performance guidance, expecting revenue growth to be lower in the first half due to high base effects [4] Question: What is the outlook for the e-commerce channel? - E-commerce performance exceeded expectations in Q1, driven by a return of online traffic and effective price control, with hopes for profit margins to recover to over 20% [12] Question: How is the company addressing competition in lower-tier cities? - The company has a foundation in lower-tier markets and plans to expand product offerings to meet local demand, focusing on running and basketball shoes [6][13]