Core Insights - The importance of the "14th Five-Year Plan": The upcoming "14th Five-Year Plan" is expected to significantly impact China's economic and social development over the next five years, shifting focus from production to a balance between production and consumption due to the current issue of insufficient effective demand [1] - Strengthening consumption policies: Starting in 2024, consumption policies will be significantly enhanced, including the allocation of special government bond funds to support consumption upgrades. Continued funding is expected in 2025 and 2026 [1] - Potential of service consumption: China's service consumption still lags behind developed economies, indicating a substantial opportunity for growth in this sector to stimulate consumer interest and optimize the consumption environment [1] - Rise of technology consumption: With a rapid technological development and an engineering talent surplus, products like robotic vacuum cleaners and drones are gaining market attention, likely creating new consumer demand [1] - Optimization of the overall consumption mechanism: Measures such as consumption tax reform will encourage local governments to transition from production-oriented to service-oriented, promoting the internationalization of quality consumption companies and enhancing residents' consumption capacity [1] Investment Recommendations - Food and Beverage: Recommended companies include Dongpeng Beverage and Lihigh Food, with a focus on Youran Dairy and Bairun Co [2] - Service Sector: Recommended companies include Guming, Mixue Group, and Bubugao, with a focus on Zhongsheng Holdings [2] - Light Industry: Companies to watch include Hengfeng Paper and Xilinmen [3] - Trendy Toys: Recommended companies include Pop Mart and Blokus [4] - Home Appliances: Recommended companies include Midea Group, Haier Smart Home, TCL Electronics H, Roborock, and Ecovacs, with a focus on Yingshi Innovation [5] - Agriculture: Recommended companies include Zhongchong Co, Petty Co, Muyuan Foods, and Haida Group [11] - Textile and Apparel: Recommended companies include Anta Sports, Xtep International, 361 Degrees, and Hailan Home, with a focus on Li Ning and Sanfu Outdoor [11] Report Content Analysis - Expanding consumption share: The report emphasizes that expanding consumption share is essential for achieving Chinese-style modernization, as China's consumption rate is significantly lower than that of developed countries [9] - Shift in fiscal spending: During the "14th Five-Year Plan" period, fiscal spending will shift from material investments to human capital investments, increasing support for education, healthcare, and housing [9] - Promotion of common prosperity: The report highlights the need for income distribution reform and the promotion of the Zhejiang common prosperity model to achieve balanced development [9] - Consumption tax reform: The report suggests that consumption tax reform will help local governments transition from production-oriented to service-oriented, enhancing the consumption environment [9] - Transition from traditional to new consumption: The report analyzes the maturation of traditional consumption markets and the rise of new consumption, which is characterized by a focus on quality and personal satisfaction [9] - Stimulating interest in service consumption: The report indicates that the shift from physical to service consumption is crucial for expanding domestic demand, with growing demand for events and performances benefiting local consumption [9]

(Incorporated in the Cayman Islands with limited liability) （於開曼群島註冊成立之有限公司） Stock Codes: 2331 (HKD counter) and 82331 (RMB counter) 股份代號：2331 (港幣櫃台) 及 82331 (人民幣櫃台) Dear Non-registered Shareholder (Note) As a non-registered shareholder, if you wish to receive Corporate Communications from the Company pursuant to the Listing Rules, you should liaise with your bank(s), broker(s), custodian(s), nominee(s) or HKSCC Nominees Limited through which your shares are held (collectively, the "Intermediaries") and pro ...

(Incorporated in the Cayman Islands with limited liability) （於開曼群島註冊成立之有限公司） Stock Codes: 2331 (HKD counter) and 82331 (RMB counter) 股份代號：2331 (港幣櫃台) 及 82331 (人民幣櫃台) Pursuant to Rule 2.07A of the Rules Governing The Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") under the expansion of paperless listing regime and electronic dissemination of corporate communications that came into effect on 31 December 2023, the Company is writing to inform you that the Company has ado ...

[About Li Ning Group](index=2&type=section&id=%E9%97%9C%E6%96%BC%E6%9D%8E%E5%AF%A7%E9%9B%86%E5%9C%98) Li Ning Group is a leading Chinese sports brand enterprise, focusing on professional and casual sportswear, equipment, and accessories, with a comprehensive operational ecosystem [Company Overview](index=2&type=section&id=2.1%20%E5%85%AC%E5%8F%B8%E6%A6%82%E8%A7%88) Li Ning Company Limited is a leading Chinese sports brand, specializing in professional and casual sportswear, equipment, and accessories, with robust R&D, design, and distribution capabilities - Li Ning Company Limited is a leading Chinese sports brand enterprise, primarily engaged in professional and casual sports footwear, apparel, equipment, and accessories under the Li Ning brand[4](index=4&type=chunk)[5](index=5&type=chunk) - The Group possesses comprehensive R&D, design, manufacturing, marketing, distribution, and retail management capabilities, supported by an extensive retail distribution network and supply chain management system in China[4](index=4&type=chunk)[5](index=5&type=chunk) - In addition to its core Li Ning brand, the Group also operates Double Happiness table tennis products, AIGLE outdoor sports products, and Kason badminton products[4](index=4&type=chunk)[5](index=5&type=chunk) [Company Information](index=4&type=section&id=2.2%20%E5%85%AC%E5%8F%B8%E8%B3%87%E6%96%99) Key company information includes board members, committee structures, registered and operational offices, auditor, legal counsel, and principal bankers - Board members include Executive Directors Li Ning (Executive Chairman and Co-CEO), Takeshi Kosaka (Co-CEO), Li Qilin, and Independent Non-executive Directors Koo Fook Sun, Wang Ya Fei, Chan Chun Bun, and Wang Ya Juan[7](index=7&type=chunk) - The Audit Committee is chaired by Koo Fook Sun, the Remuneration Committee by Wang Ya Fei, and the Nomination Committee by Li Ning[7](index=7&type=chunk) - The company's registered office is in the Cayman Islands, its principal place of business in Hong Kong is on Electric Road, Fortress Hill, and its operational headquarters is in Beijing, China[7](index=7&type=chunk)[8](index=8&type=chunk) - The auditor is Ernst & Young, and legal counsel includes Messrs. Yeung & Chung, Solicitors LLP (Hong Kong law) and Tahota Law Firm (Mainland China law)[9](index=9&type=chunk) [Five-Year Financial Summary](index=8&type=section&id=%E4%BA%94%E5%B9%B4%E8%B2%A1%E5%8B%99%E6%91%98%E8%A6%81) This section summarizes Li Ning Group's key financial data from 2021 to H1 2025, including turnover and profit attributable to equity holders, highlighting half-year and full-year trends H1 2021-2025 Turnover and Profit Attributable to Equity Holders (RMB Million) | Indicator | H1 2025 | H1 2024 | H1 2023 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | :--- | | Turnover | 14,817 | 14,345 | 14,019 | 12,409 | 10,197 | | Profit Attributable to Equity Holders | 1,737 | 1,952 | 2,121 | 2,189 | 1,066 | - H1 2025 turnover was **RMB 14,817 million**, an increase from H1 2024's RMB 14,345 million[13](index=13&type=chunk) - H1 2025 profit attributable to equity holders was **RMB 1,737 million**, a decrease from H1 2024's RMB 1,952 million[13](index=13&type=chunk) [Management Discussion and Analysis](index=9&type=section&id=%E7%AE%A1%E7%90%86%E5%B1%A4%E8%A8%8E%E8%AB%96%E8%88%87%E5%88%86%E6%9E%90) This section analyzes the Group's financial performance, business operations, and future outlook for the reporting period [Financial Review](index=9&type=section&id=3.1%20%E8%B2%A1%E5%8B%99%E5%9B%9E%E9%A1%A7) H1 2025 saw revenue grow 3.3% to RMB 14.817 billion, but profit attributable to equity holders declined 11.0% to RMB 1.737 billion, impacted by lower gross margin, higher tax rates, and increased administrative expenses H1 2025 Key Operating and Financial Indicators (RMB Thousand) | Indicator | H1 2025 | H1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | 14,816,763 | 14,345,288 | 3.3 | | Gross Profit | 7,414,803 | 7,235,602 | 2.5 | | Operating Profit | 2,438,485 | 2,401,895 | 1.5 | | Profit Attributable to Equity Holders | 1,737,422 | 1,952,032 | (11.0) | | Basic Earnings Per Share (RMB cents) | 67.43 | 75.80 | (11.0) | | Gross Profit Margin (%) | 50.0 | 50.4 | -0.4pp | | Operating Profit Margin (%) | 16.5 | 16.7 | -0.2pp | | Effective Tax Rate (%) | 33.3 | 25.3 | +8.0pp | | Profit Margin Attributable to Equity Holders (%) | 11.7 | 13.6 | -1.9pp | | Return on Equity Attributable to Equity Holders (%) | 6.5 | 7.8 | -1.3pp | | Staff Costs to Revenue Ratio (%) | 7.7 | 8.5 | -0.8pp | | Advertising and Marketing Expenses to Revenue Ratio (%) | 9.0 | 8.7 | +0.3pp | | Research and Product Development Expenses to Revenue Ratio (%) | 2.3 | 2.2 | +0.1pp | | Average Inventory Turnover Days | 61 | 62 | -1 day | | Average Trade Receivables Turnover Days | 14 | 15 | -1 day | | Average Trade Payables Turnover Days | 44 | 46 | -2 days | | Debt to Equity Ratio (%) (2025/06/30 vs 2024/12/31) | 35.4 | 36.8 | -1.4pp | | Net Asset Value Per Share (RMB cents) (2025/06/30 vs 2024/12/31) | 1,054.73 | 1,013.56 | +41.17 cents | - Revenue increased by **3.3%** year-on-year to **RMB 14.817 billion**, primarily driven by a **7.4%** increase in e-commerce channel revenue and a **4.4%** increase in franchised dealer revenue[17](index=17&type=chunk) - Retail channel revenue decreased by **3.4%** year-on-year, mainly due to adjustments in directly operated store layouts and shifts in consumption scenarios[17](index=17&type=chunk) - Gross profit margin decreased by **0.4 percentage points** to **50.0%**, primarily due to channel structure adjustments (lower proportion of direct-to-consumer channel revenue) and intensified promotional competition in directly operated stores[23](index=23&type=chunk) - Administrative expenses increased by **0.5 percentage points** year-on-year to **5.2%**, mainly due to the full impairment of goodwill of **RMB 72.387 million** from the acquisition of Kason brand in 2009, recognized in the current period[25](index=25&type=chunk)[26](index=26&type=chunk) - The effective tax rate significantly increased to **33.3%** (2024: 25.3%), primarily due to comprehensive factors such as exchange rate fluctuations and capital yield rates, leading to the provision for withholding income tax[31](index=31&type=chunk) - Net cash generated from operating activities decreased year-on-year, mainly due to reduced collections from lower retail revenue and increased tax payments[36](index=36&type=chunk)[37](index=37&type=chunk) - As of June 30, 2025, cash and cash equivalents amounted to **RMB 11.798 billion**, a net increase of **RMB 4.299 billion** from the end of 2024[36](index=36&type=chunk) [Revenue Breakdown](index=11&type=section&id=3.1.1%20%E6%94%B6%E5%85%A5%E6%98%8E%E7%B4%B0) H1 2025 revenue grew 3.3%, driven by footwear and equipment sales, while apparel revenue slightly declined, with e-commerce and franchised dealers showing strong growth Revenue Breakdown by Product Category (RMB Thousand) | Product Category | 2025 | % of Total Revenue | 2024 | % of Total Revenue | Revenue Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | Footwear | 8,230,716 | 55.6 | 7,844,159 | 54.7 | 4.9 | | Apparel | 5,192,797 | 35.0 | 5,375,222 | 37.5 | (3.4) | | Equipment & Accessories | 1,393,250 | 9.4 | 1,125,907 | 7.8 | 23.7 | | Total | 14,816,763 | 100.0 | 14,345,288 | 100.0 | 3.3 | Percentage of Revenue by Sales Channel | Sales Channel | 2025 % of Revenue | 2024 % of Revenue | Change (%) | | :--- | :--- | :--- | :--- | | Sales to Franchised Dealers | 46.5 | 46.0 | 0.5 | | Direct Operating Sales | 22.8 | 24.4 | (1.6) | | E-commerce Channel Sales | 29.0 | 27.9 | 1.1 | | Other Regions | 1.7 | 1.7 | – | | Total | 100.0 | 100.0 | – | Revenue Breakdown by Region (RMB Thousand) | Region | 2025 | % of Revenue | 2024 | % of Revenue | Revenue Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | | North | 7,034,893 | 47.5 | 6,841,952 | 47.7 | 2.8 | | South | 7,531,794 | 50.8 | 7,255,024 | 50.6 | 3.8 | | Other Regions | 250,076 | 1.7 | 248,312 | 1.7 | 0.7 | | Total | 14,816,763 | 100.0 | 14,345,288 | 100.0 | 3.3 | [Cost of Sales and Gross Profit](index=12&type=section&id=3.1.2%20%E9%8A%B7%E5%94%AE%E6%88%90%E6%9C%AC%E5%8F%8A%E6%AF%9B%E5%88%A9) H1 2025 cost of sales was RMB 7.402 billion, resulting in a 50.0% gross profit margin, a 0.4 percentage point decrease due to channel adjustments and direct retail competition - Total cost of sales was **RMB 7,401,960,000** (2024: RMB 7,109,686,000)[23](index=23&type=chunk) - Overall gross profit margin was **50.0%** (2024: 50.4%), a year-on-year decrease of **0.4 percentage points**[23](index=23&type=chunk) - The decline in gross profit margin was primarily due to channel structure adjustments (decreased revenue proportion from direct-to-consumer channels) and intensified promotional competition in directly operated stores, leading to increased discounts by the Group[23](index=23&type=chunk) [Selling and Distribution Expenses](index=12&type=section&id=3.1.3%20%E9%8A%B7%E5%94%AE%E5%8F%8A%E7%B6%93%E9%8A%B7%E9%96%8B%E6%94%AF) H1 2025 selling and distribution expenses were RMB 4.293 billion, 29.0% of revenue, a 0.8% decrease, driven by closing inefficient stores and strategic marketing investments - Total selling and distribution expenses were **RMB 4,292,730,000** (2024: RMB 4,326,883,000), representing **29.0%** of total revenue (2024: 30.2%)[24](index=24&type=chunk) - Selling and distribution expenses decreased slightly by **0.8%** compared to the same period last year, primarily by reducing operating costs through closing inefficient directly operated stores[24](index=24&type=chunk) - To strengthen brand competitiveness and long-term growth momentum, the company strategically increased marketing investments, focusing on sports marketing and high-end brand building[24](index=24&type=chunk) [Administrative Expenses](index=13&type=section&id=3.1.4%20%E8%A1%8C%E6%94%BF%E9%96%8B%E6%94%AF) H1 2025 administrative expenses were RMB 777 million, 5.2% of revenue, a 0.5 percentage point increase, primarily due to the full impairment of RMB 72.387 million goodwill from the 2009 Kason acquisition - Total administrative expenses were **RMB 776,642,000** (2024: RMB 680,297,000), representing **5.2%** of total revenue (2024: 4.7%), a year-on-year increase of **0.5 percentage points**[25](index=25&type=chunk) - The increase in administrative expenses was mainly due to the full impairment of goodwill of **RMB 72,387,000** arising from the acquisition of Kason brand in 2009, recognized in the current period[26](index=26&type=chunk) [Share of Profits of Joint Ventures and Associates](index=13&type=section&id=3.1.5%20%E4%BA%AB%E6%9C%89%E5%90%88%E7%87%9F%E4%BC%81%E6%A5%AD%E5%8F%8A%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E7%9A%84%E6%BA%A2%E5%88%A9%E4%BB%BD%E9%A1%8D) H1 2025 share of profits from joint ventures and associates increased to RMB 134 million from RMB 111 million in the prior year - Share of profits of joint ventures and associates was **RMB 133,724,000** (2024: RMB 110,860,000)[27](index=27&type=chunk) [EBITDA](index=13&type=section&id=3.1.6%20%E6%81%AF%E7%A8%85%E5%89%8D%E5%88%A9%E6%BD%A4%E5%8A%A0%E6%8A%98%E8%88%8A%E5%8F%8A%E6%94%A4%E9%8A%B7(EBITDA)) H1 2025 EBITDA for the Group increased by 2.0% year-on-year to RMB 3.513 billion - Earnings before interest, tax, depreciation, and amortization (EBITDA) was **RMB 3,512,607,000** (2024: RMB 3,443,608,000), a year-on-year increase of **2.0%**[28](index=28&type=chunk) Reconciliation of EBITDA to Profit for the Period (RMB Thousand) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Profit for the period | 1,737,422 | 1,952,032 | | Income tax expense | 869,094 | 661,098 | | Finance income | (193,993) | (221,238) | | Finance expenses | 159,686 | 120,863 | | Depreciation of property, plant and equipment | 344,022 | 470,250 | | Impairment of property, plant and equipment | 48,430 | 18,389 | | Amortisation of land use rights and intangible assets | 33,236 | 31,145 | | Impairment of intangible assets - trademark rights | 4,041 | – | | Depreciation of right-of-use assets | 250,817 | 319,210 | | Impairment of right-of-use assets | 104,311 | 50,820 | | Depreciation of investment properties | 49,603 | 41,039 | | Impairment of investment properties | 105,938 | – | | EBITDA | 3,512,607 | 3,443,608 | [Net Finance Income](index=14&type=section&id=3.1.7%20%E8%9E%8D%E8%B3%87%E6%94%B6%E5%85%A5%EF%BC%8D%E6%B7%A8%E9%A1%8D) H1 2025 net finance income decreased to RMB 34.307 million, mainly due to higher exchange losses and reduced interest income from lower rates - Net finance income was **RMB 34,307,000** (2024: RMB 100,375,000)[30](index=30&type=chunk) - The year-on-year decrease in net finance income was primarily due to increased exchange losses and lower interest income resulting from declining interest rates in the current period[30](index=30&type=chunk) [Income Tax Expense](index=14&type=section&id=3.1.8%20%E6%89%80%E5%BE%97%E7%A8%85%E9%96%8B%E6%94%AF) H1 2025 income tax expense was RMB 869 million, with an effective tax rate of 33.3%, a significant increase due to withholding tax provisions from capital structure planning - Income tax expense was **RMB 869,094,000** (2024: RMB 661,098,000)[31](index=31&type=chunk) - The effective tax rate was **33.3%** (2024: 25.3%), primarily due to comprehensive factors such as exchange rate fluctuations and capital yield rates, leading the company to make more reasonable plans for its domestic and overseas capital structure, thus providing for corresponding withholding income tax, which resulted in a higher tax rate for the current period[31](index=31&type=chunk) [Comprehensive Profitability Indicators](index=14&type=section&id=3.1.9%20%E7%B6%9C%E5%90%88%E7%9B%88%E5%88%A9%E6%8C%87%E6%A8%99) H1 2025 profit attributable to equity holders was RMB 1.737 billion, with profit margin at 11.7% and return on equity at 6.5%, both declining due to lower gross margin and higher tax rates - Profit attributable to equity holders was **RMB 1,737,422,000** (2024: RMB 1,952,032,000)[32](index=32&type=chunk) - Profit margin attributable to equity holders was **11.7%** (2024: 13.6%)[32](index=32&type=chunk) - Return on equity attributable to equity holders was **6.5%** (2024: 7.8%)[32](index=32&type=chunk) - The decline in comprehensive profitability indicators was mainly affected by a year-on-year decrease in gross profit margin and a significant increase in the income tax rate[32](index=32&type=chunk) [Inventory Provision](index=14&type=section&id=3.1.10%20%E5%AD%98%E8%B2%A8%E6%92%A5%E5%82%99) As of June 30, 2025, cumulative inventory provision reached RMB 188 million, an increase from 2024 year-end, with ongoing focus on inventory age and turnover management - As of June 30, 2025, the cumulative inventory provision was **RMB 187,934,000** (December 31, 2024: RMB 166,817,000)[33](index=33&type=chunk) - The Group will continue to control inventory age structure and turnover rate to maintain them at reasonable levels[33](index=33&type=chunk) [Expected Credit Loss Provision](index=15&type=section&id=3.1.11%20%E9%A0%90%E6%9C%9F%E4%BF%A1%E8%B2%B8%E虧%E6%90%8D%E6%92%A5%E5%82%99) As of June 30, 2025, cumulative expected credit loss provision was RMB 46.484 million, with RMB 41.631 million for trade receivables, emphasizing ongoing monitoring of aging and collections - As of June 30, 2025, the cumulative expected credit loss provision was **RMB 46,484,000** (December 31, 2024: RMB 45,678,000)[35](index=35&type=chunk) - Of this, the cumulative expected credit loss provision for trade receivables was **RMB 41,631,000** (December 31, 2024: RMB 41,658,000)[35](index=35&type=chunk) - The Group will continue to monitor the aging structure and collection status to maintain good performance in trade receivables turnover[35](index=35&type=chunk) [Liquidity and Financial Resources](index=15&type=section&id=3.1.12%20%E8%B3%87%E9%87%91%E6%B5%81%E5%8B%95%E6%80%A7%E5%8F%8A%E8%B2%A1%E6%94%BF%E8%B3%87%E6%BA%90) H1 2025 net cash from operations decreased to RMB 2.411 billion, with cash and equivalents increasing by RMB 4.299 billion, as the Group prioritizes cash flow management and details top-up placement proceeds - Net cash generated from operating activities was **RMB 2,411,101,000** (2024: RMB 2,730,305,000), a year-on-year decrease[36](index=36&type=chunk) - As of June 30, 2025, cash and cash equivalents amounted to **RMB 11,798,043,000**, a net increase of **RMB 4,299,447,000** from December 31, 2024[36](index=36&type=chunk) - **RMB 529,434,000** of net proceeds from the top-up placement remained unused, primarily allocated for investing in infrastructure restructuring and further enhancing the supply chain system, expected to be fully utilized by December 31, 2026[37](index=37&type=chunk) - As of June 30, 2025, the Group's credit facilities amounted to **RMB 14,741,000,000**, with no outstanding borrowings[38](index=38&type=chunk) [Foreign Exchange Risk](index=17&type=section&id=3.1.13%20%E5%A4%96%E5%8C%AF%E9%A2%A8%E9%9A%AA) Operating mainly in China with RMB settlements, the Group holds foreign currency cash and pays some expenses in HKD/USD, but without hedging, exchange rate fluctuations could impact financials - The Group primarily operates in Mainland China, with most transactions settled in RMB, and its reporting currency is RMB[40](index=40&type=chunk) - Some cash and bank deposits are denominated in HKD, USD, EUR, KRW, GBP, MOP, and SGD[40](index=40&type=chunk) - During the period, the Group did not undertake any hedging arrangements for exchange rate fluctuation risks, and any significant exchange rate fluctuations between foreign currencies and RMB may have a financial impact on the Group[41](index=41&type=chunk) [Significant Investments](index=17&type=section&id=3.1.14%20%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87) In January 2024, the Group acquired a Hong Kong property for RMB 2.013 billion to expand international business and serve as its headquarters, with a book value of RMB 1.847 billion as of June 30, 2025 - The Group signed an agreement in December 2023 and completed the acquisition of the entire share capital of Vansittart Investment Limited in January 2024, which primarily invests in a property in Hong Kong comprising 22 floors of commercial/office space and two retail levels[42](index=42&type=chunk)[44](index=44&type=chunk) - The adjusted total consideration for the acquisition was **HKD 2.221 billion** (approximately **RMB 2.013 billion**), funded by net proceeds from the top-up placement and internal resources[42](index=42&type=chunk)[44](index=44&type=chunk) - A portion of the property will serve as the Group's Hong Kong headquarters, with a book value of **RMB 1,847,079,000** after depreciation and impairment as of June 30, 2025, representing approximately **5.0%** of the Group's total assets[44](index=44&type=chunk) [Significant Acquisitions and Disposals of Subsidiaries, Associates, and Joint Ventures](index=18&type=section&id=3.1.15%20%E9%87%8D%E5%A4%A7%E6%94%B6%E8%B3%BC%E5%92%8C%E8%99%95%E7%BD%AE%E9%99%84%E5%B1%AC%E5%85%AC%E5%8F%B8%E3%80%81%E8%81%AF%E7%87%9F%E5%85%AC%E5%8F%B8%E5%92%8C%E5%90%88%E8%B3%87%E4%BC%81%E6%A5%AD) The Group made no significant acquisitions or disposals of subsidiaries, associates, or joint ventures in H1 2025 - For the six months ended June 30, 2025, the Group did not undertake any significant acquisitions or disposals of subsidiaries, associates, or joint ventures[45](index=45&type=chunk) [Future Plans for Significant Investments and Capital Assets](index=18&type=section&id=3.1.16%20%E9%87%8D%E5%A4%A7%E6%8A%95%E8%B3%87%E5%92%8C%E8%B3%87%E6%9C%AC%E8%B3%87%E7%94%A2%E7%9A%84%E6%9C%AA%E4%BE%86%E8%A8%88%E5%8A%83) The Group plans a RMB 3.3 billion investment in Guangxi, China, for a smart manufacturing, flexible supply chain, and R&D center, with RMB 1.945 billion invested as of June 30, 2025 - The Group plans to build a supply chain base in Guangxi Zhuang Autonomous Region, China, for the production and packaging of high-end sports equipment, as well as R&D and experience centers, with an estimated maximum investment of approximately **RMB 3.3 billion**[46](index=46&type=chunk) - As of June 30, 2025, the book value of non-current assets in this investment was **RMB 1,945,279,000**, representing approximately **5.3%** of the Group's total assets[47](index=47&type=chunk) - The remaining investment amount will be funded by unused net proceeds from the top-up placement and internal resources[47](index=47&type=chunk) [Pledge of Assets](index=18&type=section&id=3.1.17%20%E8%B3%87%E7%94%A2%E6%8A%B5%E6%8A%BC) The Group had no pledged assets as of June 30, 2025, or December 31, 2024 - As of June 30, 2025, and December 31, 2024, the Group had no assets pledged[48](index=48&type=chunk) [Contingent Liabilities](index=19&type=section&id=3.1.18%20%E6%88%96%E7%84%B6%E8%B2%A0%E5%82%B5) The Group faces a contingent liability of HKD 1.955 billion related to a claimed HKD 500 million short-term loan from Suntime Information (Hong Kong) Limited, which the Group intends to actively defend - The target company received a statutory demand claiming Active Legend had provided a short-term loan with a principal of **HKD 500,000,000**, with an outstanding total of **HKD 1,955,338,833**[50](index=50&type=chunk) - The target company applied for an injunction to restrain the liquidator from commencing winding-up proceedings; the liquidator subsequently withdrew the statutory demand, but Active Legend and Vast Gold have served writs of summons on the target company[50](index=50&type=chunk)[51](index=51&type=chunk) - The Group believes the target company has no obligation to repay the loan and will actively defend against the allegations in the writs of summons[51](index=51&type=chunk) [Business Review](index=19&type=section&id=3.2%20%E6%A5%AD%E5%8B%99%E5%9B%9E%E9%A1%A7) H1 2025 saw Li Ning Group solidify its operations, meeting expectations through product upgrades, brand marketing, channel optimization, and Olympic strategy, driving innovation across key sports categories - The consumer market experienced a moderate recovery in the first half, but consumer confidence fluctuated, and purchasing behavior became more rational, with the Group's performance largely meeting expectations[52](index=52&type=chunk) - The Group firmly implemented its core "single brand, multi-category, multi-channel" strategy, continuously increasing R&D investment and technological innovation, and promoting aerospace technology to empower sports innovation[53](index=53&type=chunk) - In brand marketing, the Group successfully signed as the official sportswear partner for the Chinese Olympic Committee and Chinese Sports Delegation for 2025-2028, and integrated traditional cultural elements into products through collaboration with the Palace Museum[53](index=53&type=chunk)[55](index=55&type=chunk) - In channel optimization, the Group continued to build an omni-channel matrix, promoting online-offline synergistic development, strengthening online governance and control, optimizing single-store efficiency and service quality offline, and advancing AI digital empowerment[54](index=54&type=chunk) [Deepening Olympic Marketing Strategy, Solidifying Professional Sports Brand Positioning](index=20&type=section&id=3.2.1%20%E6%B7%B1%E5%8C%96%E5%A5%A7%E9%81%8B%E7%87%9F%E9%8A%B7%E6%88%B0%E7%95%A5%EF%BC%8C%E5%A0%85%E5%AF%A6%E5%B0%88%E6%A5%AD%E9%81%8B%E5%8B%95%E5%93%81%E7%89%8C%E5%AE%9A%E4%BD%8D) Li Ning Group partnered with the Chinese Olympic Committee for 2025-2028, enhancing its professional image through "Chinese Glory, Li Ning Together" marketing, store refreshes, digital interactions, and integrating aerospace technology into sports equipment - Li Ning Group successfully signed as the official sportswear partner for the Chinese Olympic Committee and Chinese Sports Delegation for 2025-2028[55](index=55&type=chunk) - With "Chinese Glory, Li Ning Together" as the core marketing theme, the brand reinforced its professional image as a steadfast supporter of Chinese sports[55](index=55&type=chunk) - Through nationwide store visual refreshes, joint LOGO displays, exclusive core visual presentations, and the "Glory is Mine, Sports China" mini-program interactive experience, the Group deeply engaged **5,209 stores** nationwide, attracting over **156,000 participants**[55](index=55&type=chunk) - In collaboration with the Aerospace Technology Innovation Application Platform, an aerospace technology innovation application laboratory was established to apply advanced aerospace technology to Li Ning's professional sports equipment, launching "Aerospace Quick-Dry" and "Aerospace Sun Protection" technological achievements[56](index=56&type=chunk) [Deepening "Single Brand, Multi-Category, Multi-Channel" Strategic Layout, Promoting Li Ning Experience Value Upgrade](index=21&type=section&id=3.2.2%20%E6%B7%B1%E5%8C%96%E3%80%8C%E5%96%AE%E5%93%81%E7%89%8C%E3%80%81%E5%A4%9A%E5%93%81%E9%A1%9E%E3%80%81%E5%A4%9A%E6%B8%A0%E9%81%93%E3%80%8D%E6%88%B0%E7%95%A5%E4%BD%88%E5%B1%80%EF%BC%8C%E6%8E%A8%E5%8B%95%E6%9D%8E%E5%AF%A7%E5%BC%8F%E7%B6%93%E9%A9%97%E5%83%B9%E5%80%BC%E5%8D%87%E7%B4%9A) The Group focused on six core categories and expanded into new sports segments, leveraging technological innovation, omni-channel marketing, and Chinese cultural heritage to enhance product strength, brand influence, and consumer experience - Focused on running, basketball, training, badminton, table tennis, and sports casual six core categories, while actively expanding into new niche sports categories such as outdoor sports, tennis, and pickleball[57](index=57&type=chunk) - Empowered product upgrades with technological innovation, increased investment in professional sports resources, and strengthened differentiated brand advantages by solidifying professional sports mindset, showcasing athletic fashion aesthetics, and inheriting Chinese cultural values[57](index=57&type=chunk) [Running Category](index=21&type=section&id=3.2.2.1%20%E8%B7%91%E6%AD%A5%E5%93%81%E9%A1%9E) Li Ning's running category, driven by technology, sold over 5.26 million pairs of its three core running shoe IPs, launched the "Jing Hong" women's shoe, and sponsored marathons, securing 44 championships - Total sales of the three core running shoe IPs "Chao Qing," "Chi Tu," and "Fei Dian" exceeded **5.26 million pairs** during the period[59](index=59&type=chunk) - Launched iterated and upgraded products, with the "Fei Dian" family fully upgrading to "BOOM" midsole technology, achieving an energy return rate of up to **89%**[59](index=59&type=chunk) - The "Jing Hong" running shoe, designed for female runners, became a popular choice[59](index=59&type=chunk) - Running apparel introduced the "Long Que" racing vest and the "Chuan Shan Jia" trail running jacket[59](index=59&type=chunk) - Successfully sponsored the "Wuxi Marathon" and "Beijing Half Marathon," helping athletes win a total of **44 championships** in international and domestic competitions during the first half[60](index=60&type=chunk) [Basketball Category](index=22&type=section&id=3.2.2.2%20%E7%B1%83%E7%90%83%E5%93%81%E9%A1%9E) Li Ning's basketball category focuses on professional, "Wade," and "Counterflow" series, boosting brand exposure through leagues and new product launches like "ULTRALIGHT 2025" and "Wade 808 ULTRA," with "Counterflow" targeting outdoor enthusiasts - Focused on three major product series: professional basketball, "Wade" basketball, and "Counterflow" basketball[61](index=61&type=chunk) - Professional basketball enhanced brand exposure through the CBA league and NBA draft, launching the new hit product "ULTRALIGHT 2025," with cumulative sales exceeding **100,000 pairs** across all channels[61](index=61&type=chunk) - "Wade" basketball released the new generation "Wade 808 ULTRA" and launched the signature shoe "DLO1," achieving **100% sell-out** at the Fanatics Fest international stage[62](index=62&type=chunk) - "Counterflow" basketball shoes target Chinese outdoor basketball enthusiasts, launching the "Guerrilla" series, "Pursuit" series, and the all-around outdoor battle shoe "Counterflow," featuring new "BOOM" technology and ultra-durable rubber[63](index=63&type=chunk) [Training Category](index=23&type=section&id=3.2.2.3%20%E7%B6%9C%E8%A8%93%E5%93%81%E9%A1%9E) Li Ning's training category, driven by technology, boosted men's and women's fitness markets with innovative products like "smart protection" windbreakers and "air-conditioning cool-feel T-shirts," achieving millions in functional pants shipments and high sell-through for instant-dry T-shirts - The training category, with technological innovation as its strategic core, successfully built a sports equipment product matrix that combines technological empowerment with market advantages[64](index=64&type=chunk) - Women's products include windbreakers with "smart protection technology" and hoodies/pants offering exclusive softness, as well as "air-conditioning cool-feel T-shirts" certified by aerospace technology[64](index=64&type=chunk) - Men's training products focused on functional technology, with core "functional pants" achieving million-level shipments, and "instant-dry T-shirts" driving performance growth with high sell-through rates[65](index=65&type=chunk) - Marketing fully leveraged the dual endorsement advantages of aerospace technology and professional athletes, achieving leading performance in both online communication volume and interaction[65](index=65&type=chunk) [Badminton Category](index=24&type=section&id=3.2.2.4%20%E7%BE%BD%E6%AF%9B%E7%90%83%E5%93%81%E9%A1%9E) Li Ning's badminton category expanded its influence through tech innovation and product upgrades, with "Zhan Ji 2.0" shoes and "Thunder" rackets driving sales, while marketing efforts solidified its professional image through event sponsorships and athlete endorsements - The badminton competition apparel series applied top-tier fabric technology processes such as integrated weaving and COOLMAX yarn, receiving positive feedback from Indonesian and Singaporean teams[66](index=66&type=chunk) - The "Zhan Ji 2.0" badminton shoe, a key product in the all-around balanced series, continued to sell well in the first half[66](index=66&type=chunk) - Equipment product sales maintained rapid growth, with professional products like "Thunder 80 Light" and "Thunder 90NEW" launched[67](index=67&type=chunk) - Marketing adopted "Good Products, Made by Li Ning, Made in China" as its category communication theme, completing sponsorships for events such as the China (Ruichang) International Badminton Master Tournament and the 2025 Singapore Open, and renewing its contract with the Indonesian national team[67](index=67&type=chunk) [Table Tennis Category](index=24&type=section&id=3.2.2.5%20%E4%B9%92%E4%B9%93%E7%90%83%E5%93%81%E9%A1%9E) Li Ning's table tennis category maintained market leadership through product innovation like "BOOM Silk Technology" footwear and aerospace material apparel, covering all user levels, and achieved significant marketing success as a WTT series partner, with Weibo topic readership exceeding 16.08 billion - Table tennis shoe uppers adopted breakthrough "BOOM Silk Technology," achieving a perfect balance of lightweight and strong support; innovatively developed partitioned midsole system integrated multiple core technologies[69](index=69&type=chunk) - Apparel products utilized aerospace material technology and original yarn antibacterial processes to enhance moisture-wicking and quick-drying performance[69](index=69&type=chunk) - In product portfolio strategy, a multi-level product matrix was built, covering professional athletes (Champion Series), advanced users (Elite Series), and entry-level enthusiasts (Rookie Series)[69](index=69&type=chunk) - As an official partner of the WTT series, it deeply engaged with **18 international top-tier events**, achieving breakthrough results in the Doha World Table Tennis Championships marketing campaign, with Weibo topic readership exceeding **16.08 billion**[70](index=70&type=chunk) [Sports Casual Category](index=25&type=section&id=3.2.2.6%20%E9%81%8B%E5%8B%95%E4%BC%91%E9%96%92%E5%93%81%E9%A1%9E) Li Ning's sports casual series, rooted in Chinese culture, launched successful co-branded collections, saw steady growth in footwear like "Bu Ou" and "Cat Claw," and "China Li Ning" expanded international influence through collaborations with trendy brands, while "LI-NING 1990" upgraded its golf offerings - With Chinese culture as its core anchor, deeply integrating traditional aesthetics with modern design, it launched the Forbidden City co-branded series and Disney co-branded series[71](index=71&type=chunk) - Sports casual footwear showed steady growth, with key products "Bu Ou" and "Cat Claw" achieving significant year-on-year sales increases, the "SOFT

Market Overview - The textile and apparel sector has shown resilience in mid-term performance, with the sports segment leading apparel consumption [1][12] - In August, the A-share textile and apparel sector slightly underperformed the broader market, but has shown stable performance since September, with brand apparel outperforming textile manufacturing [1][12] Brand Apparel Insights - Retail sales of clothing in July grew by 1.8% year-on-year, with a slight deceleration compared to the previous month [1] - E-commerce growth in July rebounded significantly, with outdoor sports leading the way; growth rates for various segments included sports apparel at +11%, outdoor apparel at +26%, and home textiles at +10% [1] - Notable brand performances included Decathlon with +63%, Puma with +41%, and Lululemon with +39% in sports apparel; outdoor brands like Kailas and Arc'teryx also showed strong growth [1] Textile Manufacturing Insights - In August, Vietnam's textile exports fell by 4.5% year-on-year, while China's textile exports improved slightly with a growth rate of 1.4% [2] - The export performance of apparel and footwear from China was poor, with declines of 10.1% and 17.1% respectively [2] - The price of cotton showed slight fluctuations in August, with a small decline noted in September [2] Sector Performance Summary - For the first half of 2025, textile manufacturing revenue grew by 7.8% year-on-year, while the apparel and home textile sector faced a decline of 6.4% [3] - The gross margin for the textile manufacturing sector remained stable at 19.4%, while the apparel and home textile sector's gross margin increased slightly to 46.1% [3] - Key players in the apparel sector, such as Anta and Xtep, maintained steady growth in revenue and profit, while non-sports apparel faced significant challenges [3] Investment Recommendations - Focus on undervalued leaders with strong fundamentals in brand apparel, particularly in the sports segment, with recommendations for Anta Sports, Xtep International, and Li Ning [6] - In textile manufacturing, recommend companies with significant rebound potential and strong fundamentals, such as Shenzhou International and Huayi Group [6]

Core Insights - The company reported a revenue of 14.8 billion RMB for H1 2025, a year-on-year increase of 3.3%, while the net profit attributable to shareholders was 1.7 billion RMB, a decrease of 11% [1] - The gross margin was 50%, slightly down year-on-year, and the net profit margin was 11.7%, down by 1.9 percentage points [1] - The company announced an interim dividend of 0.336 RMB per share, with a payout ratio of 50% [1] Segment Performance - **Running Category**: Retail sales increased by 15%, accounting for 34% of total retail sales. The company sold over 14 million pairs of professional running shoes, with key series achieving over 5.26 million pairs sold [1][2] - **Basketball Category**: Retail sales decreased by 20%, making up 17% of total retail sales. Despite the decline, the company continued to invest heavily, signing new athletes and launching new products [1][2] - **Comprehensive Training Category**: Retail sales increased by 15%, representing 16% of total retail sales [2] - **Sports Leisure Category**: Retail sales decreased by 7%, accounting for 29% of total retail sales [2] - **Others (including Outdoor)**: This category accounted for 4% of total retail sales [2] Channel Performance - **Offline Sales**: Revenue from authorized dealers accounted for 46.5%, an increase of 0.5 percentage points year-on-year, while direct sales accounted for 22.8%, a decrease of 1.6 percentage points [2] - **E-commerce**: Revenue from e-commerce accounted for 29%, an increase of 1.1 percentage points year-on-year [2] Profit Forecast Adjustments - The company adjusted its profit forecasts for 2025-2027, expecting revenues of 29.1 billion RMB, 30 billion RMB, and 31.1 billion RMB, respectively [2] - The net profit attributable to shareholders is projected to be 2.5 billion RMB, 2.7 billion RMB, and 2.9 billion RMB for the same years [2] - Earnings per share (EPS) are expected to be 0.98 RMB, 1.06 RMB, and 1.14 RMB, respectively [2]

Core Viewpoint - Li Ning Company has signed a strategic cooperation agreement with Hong Kong Polytechnic University to establish the "Li Ning-Hong Kong Polytechnic University Joint Sports Science Research Center" aimed at advancing research in sports science and ergonomics [1] Group 1 - The collaboration will focus on joint research in the fields of sports science and ergonomics, promoting innovation in the design, functionality verification, and optimization of high-performance sports products [1] - The partnership will also involve the training of research and engineering talents in sports science and technology, enhancing the integration of industry, academia, and research [1] - The initiative aims to improve the application level of technological innovation in the sports health sector and enhance the effectiveness of industrial transformation, achieving comprehensive collaborative innovation goals [1]

Investment Rating - The report maintains a "Buy" rating for several key companies in the textile and apparel industry, including Anta Sports, Li Ning, and Xtep International, with respective 2025 PE ratios of 18x, 19x, and 12x [11][40]. Core Insights - Lululemon's FY2025Q2 revenue grew by 7% year-on-year to $2.5 billion, which was below the company's expectations, primarily due to weak performance in the U.S. market [1][16]. - The report highlights a continued recovery in the consumer environment for apparel, with a focus on the long-term growth potential of the sports footwear and apparel segment [3][24]. - The report emphasizes the importance of product differentiation and brand strength in the jewelry sector, predicting that companies with clear product differentiation will outperform the industry in 2025 [4][24]. Summary by Sections Lululemon's Performance - Lululemon's Q2 revenue was $2.5 billion, with a 7% year-on-year increase, and a 6% increase on a currency-neutral basis. The Americas segment saw a 1% increase, while international revenue grew by 22% [1][16]. - The gross profit increased by 5% to $1.5 billion, but the gross margin decreased by 1.1 percentage points to 58.5% [1][16]. - The company adjusted its FY2025 revenue growth forecast to 2%-4%, with a potential 4%-6% growth on a comparable 52-week basis [1][16]. Regional Analysis - In the U.S., Q2 revenue was flat, with a 1% increase in the Americas segment. The company noted that consumer response to new product colors was below expectations, indicating a potential issue with product lifecycle [20]. - In China, Q2 revenue grew by 24%, driven by the opening of five new stores and various brand-building activities. The company expects a 20%-25% revenue growth in FY2025 for the Chinese market [20][21]. Apparel and Footwear Sector - The report indicates that the sports footwear segment is expected to outperform the overall apparel market, with a healthy inventory turnover ratio of 4-5 [3][24]. - Key recommendations include Anta Sports, Li Ning, and Xtep International, which are expected to show strong performance due to their operational capabilities and market positioning [27][40]. Jewelry Sector - The report notes that the jewelry market is facing weak demand, with gold jewelry consumption down 27% and 24% in Q1 and Q2, respectively. Companies with strong product and brand capabilities are expected to perform better [39][24]. Manufacturing Sector - The textile manufacturing sector is experiencing changes due to new tariff policies, which may impact profit expectations for 2025-2026. Companies with integrated and international supply chains are expected to gain market share [8][25]. - Recommendations include Shenzhou International and Huayi Group, which are seen as having strong performance and competitive advantages [25][40].

Investment Rating - The investment rating for the company is "Buy" with a target price not specified [6] Core Views - The company reported a revenue of 14.8 billion RMB for H1 2025, representing a year-on-year increase of 3.3%, while the net profit attributable to shareholders was 1.7 billion RMB, a decrease of 11% [1] - The gross margin was 50%, slightly down year-on-year, and the net profit margin was 11.7%, down by 1.9 percentage points [1] - The company has successfully signed a partnership with the Chinese Olympic Committee and the Chinese sports delegation for the period of 2025-2028, focusing on the marketing theme "Chinese Glory, Li Ning Together" [1] Summary by Category Product Categories - Running category: Retail sales increased by 15%, accounting for 34% of total retail sales, with over 14 million pairs of professional running shoes sold [2] - Basketball category: Retail sales decreased by 20%, accounting for 17% of total retail sales, despite significant investment in new products [2] - Training category: Retail sales increased by 15%, accounting for 16% of total retail sales [2] - Sports leisure category: Retail sales decreased by 7%, accounting for 29% of total retail sales [2] - Others (including outdoor): Accounted for 4% of total retail sales [2] Sales Channels - Offline: Revenue from authorized dealers accounted for 46.5%, an increase of 0.5 percentage points year-on-year; direct sales accounted for 22.8%, a decrease of 1.6 percentage points [3] - Online: E-commerce revenue accounted for 29%, an increase of 1.1 percentage points year-on-year [3] Adjusted Profit Forecast - The profit forecast for 2025-2027 has been adjusted, with expected revenues of 29.1 billion RMB, 30 billion RMB, and 31.1 billion RMB respectively [4] - The net profit attributable to shareholders is expected to be 2.5 billion RMB, 2.7 billion RMB, and 2.9 billion RMB respectively [4] - The earnings per share (EPS) are projected to be 0.98 RMB, 1.06 RMB, and 1.14 RMB respectively [4]

Group 1 - BlackRock's stake in Li Ning increased from 4.67% to 5.27% as of September 2 [1]