Group 1: Market Trends - The sports market is shifting towards passive growth, with Anta and FILA brands reporting low single-digit positive growth in retail sales for Q3 2025 [1] - Li Ning's retail sales, excluding Li Ning YOUNG, experienced a mid-single-digit decline, with offline channels seeing a high single-digit drop [1] - Nike's revenue in Greater China fell by 10%, amounting to approximately $1.512 billion [1] - Peak's domestic direct sales segment has been continuously losing money, with losses exceeding 130 million yuan from January to July 2025 [1] Group 2: Company Strategies - Anta is exploring more segmented markets, with its "other brands" category, including DESCENTE and KOLON, achieving a retail sales growth of 45-50% [2] - Anta is increasing its R&D investment by establishing partnerships with universities to create specialized programs in sports shoe design [3] - Li Ning has invested over 3 billion yuan in R&D over the past decade [4] Group 3: Competitive Landscape - The current situation indicates a more intense competition among major players in the sports market [5]

Core Insights - The sports market is shifting towards a passive growth phase, with major brands experiencing varying degrees of sales performance [1][5] Group 1: Company Performance - Anta Sports reported low single-digit year-on-year growth in retail sales for its brand products in Q3 2025, while FILA also saw similar growth [1] - Li Ning experienced a decline in retail sales, with a mid-single-digit drop in Q3, particularly in offline channels [1] - Nike's revenue in Greater China fell by 10% to $1.512 billion (approximately 10.775 billion RMB) for the latest fiscal quarter ending August 31, 2025 [1] - Peak's domestic direct sales segment has been continuously losing money, with losses exceeding 130 million RMB from January to July 2025, leading to significant salary cuts [1][2] Group 2: Market Opportunities - Anta is exploring new market segments, with its "other brands" category, including DESCENTE and KOLON, achieving a retail sales growth of 45-50% year-on-year in Q3 [2] - Both Anta and Li Ning are increasing their investment in research and development, with Anta establishing partnerships with universities for sports shoe design education [3][4] Group 3: Competitive Landscape - The current market dynamics indicate a trend towards intensified competition among major players in the sports industry [5]

Investment Rating - The report maintains a Neutral rating for Li Ning (2331 HK) with a target price of HKD 16.28, indicating a potential downside of 7.7% from the current closing price of HKD 17.63 [2][3]. Core Insights - The sales performance in Q3 has weakened, and the recovery pace remains sluggish. The company is expected to experience a slow sales recovery in the second half of the year, with a forecast of low single-digit revenue decline [8]. - The report highlights that the online sales channels outperformed offline channels in Q3, with e-commerce showing high single-digit growth, while offline channels saw a high single-digit decline [8]. - The competitive landscape remains challenging, with increased discount pressures anticipated in Q4 due to key promotional events like Double 11 and Double 12 [8]. Financial Overview - Revenue projections for Li Ning are as follows: - 2023: RMB 27,598 million - 2024: RMB 28,676 million (growth of 3.9%) - 2025E: RMB 29,007 million (growth of 1.2%) - 2026E: RMB 30,103 million (growth of 3.8%) - 2027E: RMB 30,945 million (growth of 2.8%) [7][17]. - Net profit estimates are projected to decline from RMB 3,187 million in 2023 to RMB 2,678 million in 2025E, reflecting a decrease of 20.7% and 5.1% in subsequent years [7][17]. - The report indicates a projected PE ratio of 14 times for 2026, suggesting that the current stock price adequately reflects the sales recovery outlook [8]. Market Position - As of Q3, Li Ning had 6,132 sales points, with a net increase of 33 points from the previous quarter. The company aims to maintain its store opening targets despite the competitive pressures [8]. - The report notes that the inventory turnover ratio is relatively healthy, with a stock-to-sales ratio of 5-6 months as of Q3 [8].

Core Viewpoint - The company reported a decline in retail sales for the third quarter of 2025, with a notable increase in e-commerce sales, indicating a shift in consumer purchasing behavior [1][2]. Retail Performance - As of September 30, 2025, the overall retail sales (excluding Li Ning YOUNG) recorded a mid-single-digit decline year-on-year, with offline channels experiencing a high-single-digit decline [1]. - The retail (direct operation) channel saw a mid-single-digit decline, while the wholesale (franchise) channel experienced a high-single-digit decline [1]. - E-commerce virtual store business recorded a high-single-digit growth [1]. Sales Point Numbers - The total number of sales points in China (excluding Li Ning YOUNG) reached 6,132, with a net increase of 33 points from the previous quarter and a net increase of 15 points year-to-date [1]. - Retail business saw a net decrease of 46 points, while wholesale business had a net increase of 61 points [1]. - Li Ning YOUNG sales points totaled 1,480, with a net increase of 45 points from the previous quarter and a net increase of 12 points year-to-date [1]. Market Insights - The company experienced a slowdown in sales decline compared to the first half of the year, with e-commerce sales showing high-single-digit growth [2]. - The discount rate has deepened compared to the previous period, with inventory turnover ratio rising to 5-6 months due to holiday and promotional stockpiling [2]. - The company plans to stabilize store adjustments and expects a concentrated release of new products in the fourth quarter [2]. Financial Forecast - The company maintains its profit forecast, expecting net profits of 2.51 billion, 2.83 billion, and 3.04 billion yuan for 2025-2027, reflecting a year-on-year change of -16.6%, +12.5%, and +7.7% respectively [2]. - The company is viewed positively for its healthy operational foundation and potential for brand growth acceleration through marketing efforts [2]. - A reasonable valuation range of 21.1-22.3 HKD is maintained, corresponding to a 2026 PE of 18-19x, with an "outperform" rating [2].

Core Viewpoint - Li Ning's Q3 2025 operational data shows a marginal decline in overall revenue, with e-commerce and children's apparel performing relatively better [1] Group 1: Financial Performance - In Q3 2025, Li Ning's total revenue (excluding Li Ning YOUNG) decreased by a mid-single-digit percentage year-on-year, with online e-commerce growing at a high single-digit percentage while offline sales declined at a high single-digit percentage [1] - The discount rate has deepened, with a slight increase in inventory turnover ratio due to early stocking, expected to return to 4-5 months by year-end [1] - As of the end of Q3, the inventory turnover ratio was 5-6 months, showing an increase both year-on-year and quarter-on-quarter, attributed to early stocking for the upcoming festivals [1] Group 2: Product Category Performance - Running and fitness categories continue to grow, achieving low single-digit growth driven by professional products, while basketball and lifestyle segments are under pressure, with basketball sales declining over 20% [2] - The outdoor category has seen good growth due to industry trends and new product launches, although its scale remains small [2] Group 3: Channel and Store Expansion - As of September 30, Li Ning had 6,132 sales points (excluding YOUNG), a net increase of 33 from the previous quarter, with a net increase of 15 sales points year-to-date [2] - The company plans to maintain its store opening strategy for the year, with a net closure of 10-20 direct sales stores and a net increase of 50 wholesale stores [2] Group 4: Future Outlook - The company maintains its 2025 performance guidance, expecting revenue to remain flat and net profit margin to be in the high single digits, despite facing some pressure [3] - Upcoming product launches, including the 2026 Winter Olympics gear and new technology platforms, are anticipated to enhance brand competitiveness and sales [3] - The company continues to focus on the sports sector, emphasizing product refinement and brand accumulation for steady growth [3]

Company Overview - The company reported a decline in retail sales for the Li Ning brand (excluding Li Ning YOUNG) in Q3 2025, with a year-on-year decrease in retail revenue in the mid-single digits, while net retail points increased by 33 during the quarter [1] - The weak retail environment in Q3 2025 negatively impacted sales performance, with deeper discounts year-on-year and increased inventory due to preemptive stocking [1] Sales Performance - Retail pressure intensified from July to September 2025, with the direct sales channel benefiting from outlet support and proactive adjustments, resulting in a mid-single-digit decline in retail revenue, which was better than the high single-digit decline in the wholesale channel [1] - Online channel revenue showed a year-on-year increase in the mid-single digits [1] - Key growth drivers included running, fitness, and badminton, with running and fitness achieving low single-digit revenue growth year-on-year, while basketball and lifestyle categories faced relative pressure [1] Inventory and Discount Strategy - To address weak sales, the company proactively adjusted its terminal strategy, resulting in a low single-digit increase in overall channel retail discounts year-on-year, with direct and online channels experiencing a greater increase than wholesale [1] - By the end of September, the inventory-to-sales ratio reached 5-6 times, indicating a healthy inventory structure, with management expressing confidence in returning to a healthy level of 4-5 times by year-end [1] Future Outlook - In Q4 2025, the company plans to focus on the Olympic and sports technology themes to enhance brand momentum and support sustainable growth, while iterating and updating product lines in running, basketball, cross-training, and outdoor categories [2] - The retail side will further balance sales, discounts, and inventory management to maintain a healthy inventory level, despite ongoing sales pressure [2] Earnings Forecast and Valuation - The company maintains its EPS forecasts for 2025 and 2026 at 0.92 and 1.07 CNY, respectively, with the current stock price corresponding to 18 and 15 times the 2025 and 2026 P/E ratios [2] - The company retains an outperform rating and target price of 22.68 HKD, which corresponds to 23 and 19 times the 2025 and 2026 P/E ratios, indicating a 25% upside potential from the current stock price [2]

Core Perspective - The collaboration between Li Ning and the Chinese Olympic Committee signifies a new chapter for the brand, aiming to connect Olympic glory with the broader public market through innovative sportswear that embodies both technology and cultural significance [2][5][11]. Group 1: Product Innovation - The newly launched Olympic attire for the 2026 Milan Winter Olympics features a blend of "Chinese Red" and "Snow Mountain White," integrating cultural elements with winter sports aesthetics [2][5]. - The attire showcases advanced sports technology, achieving breakthroughs in "temperature retention, moisture permeability, and protection," highlighting Li Ning's commitment to innovation [5][6]. - The collaboration with the China National Space Administration has led to the introduction of cutting-edge technologies like "space temperature-locking cotton" and "basalt far-infrared," elevating the performance of the Olympic gear [6][10]. Group 2: Cultural Significance - The Olympic attire serves as a "mobile exhibit" that combines professional technology with Eastern aesthetics, representing a new image of Chinese brands on the global stage [5][8]. - The design incorporates the "Double Victory Pattern," symbolizing victory and harmony, reflecting the athletes' unity with their country and the Olympic spirit [6][10]. - The attire not only represents individual athlete achievements but also embodies the collective spirit of the nation, making the Olympic glory tangible for the public [8][11]. Group 3: Brand Positioning - Li Ning's long-standing relationship with the Chinese Olympic Committee underscores its role as a trusted partner in promoting national sports, transcending traditional commercial interests [10][11]. - The brand's history, rooted in the legacy of Olympic champion Li Ning, reinforces its unique position in the sports industry, emphasizing a commitment to both professional excellence and social contribution [10][11]. - The partnership with the Olympic Committee is viewed as a strategic move to enhance Li Ning's professional image and long-term value, integrating technology, brand ethos, and sports culture [11][13]. Group 4: Market Strategy - The collaboration aims to translate elite sports technology into consumer products, allowing the public to experience the innovations of the Chinese sports delegation [13][14]. - Li Ning's focus on connecting national pride with everyday sports activities reflects a broader trend in the industry, where brands seek to resonate with new generations of consumers [14]. - The brand's commitment to professional integrity and cultural depth positions it for sustainable growth in the competitive sports market [14].

Investment Rating - The report maintains a "Buy" rating for Li Ning (2331.HK) with a target price of HKD 21.6, representing a potential upside of 18.7% from the current price of HKD 18.2 [4][21]. Core Insights - Li Ning's management has decided to keep the full-year performance guidance unchanged despite challenges in terminal demand, aiming for revenue to remain flat year-on-year and a high single-digit net profit margin [10][11]. - The company is focusing on enhancing brand strength, with recent sponsorship of the Chinese Olympic Committee and participation in high-profile events to boost brand visibility [10][11]. - The report indicates a downward trend in overall sales, particularly in direct stores and distributor channels, while e-commerce sales have shown growth [10][11]. Financial Performance Summary - For 2025, the estimated revenue is projected at RMB 28,685 million, reflecting no growth compared to 2024, with a core net profit forecast of RMB 2,524 million, a decrease of 24.6% year-on-year [12][17]. - The gross margin is expected to be around 48.5% for 2025, slightly down from 49.4% in 2024 [12][14]. - The report highlights a significant increase in inventory turnover days, indicating potential inventory management challenges [10][12]. Market Expectations - The report notes that the market's expectations for Li Ning's performance are mixed, with a range of estimates for revenue and profit growth varying significantly among analysts [7][22]. - The company is navigating a competitive landscape with increased promotional activities, particularly during the "Double Eleven" shopping festival [10][11]. Strategic Focus - Li Ning is committed to a three-year strategy centered on brand revitalization and product innovation, which is expected to lay a foundation for future performance improvements [10][11]. - The company plans to balance sales revenue, channel inventory, and discount levels to maintain healthy inventory and manageable discount rates [10][11].

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The external environment remains challenging, but the company is expected to benefit from sports resources that will support its long-term development [5] - The company has shown resilience in its e-commerce channel, maintaining high single-digit growth despite external pressures [7] - The company is actively expanding its offline store presence, with a net increase of 33 stores in Q3 2025, totaling 6,132 stores [7] - The signing of player Yang Hanshen, who was selected in the first round of the NBA draft, is anticipated to enhance the company's brand and product sales in the basketball category [7] - The company is projected to achieve net profits of RMB 2.645 billion, RMB 2.843 billion, and RMB 3.101 billion for the years 2025 to 2027, respectively [7] Financial Summary - Revenue projections for the company are as follows: RMB 28,676 million in 2024, RMB 29,027 million in 2025, RMB 30,766 million in 2026, and RMB 32,845 million in 2027, with growth rates of 3.9%, 1.2%, 6.0%, and 6.8% respectively [8] - The company's net profit for 2025 is estimated at RMB 2,645 million, reflecting a year-on-year decline of 12.21% [6][8] - The company's return on equity (ROE) is projected to decline from 11.54% in 2024 to 9.00% in 2027 [8]

Summary of Li Ning's Q3 2025 Earnings Call Company Overview - **Company**: Li Ning - **Date**: Q3 2025 Earnings Call Key Points Industry Performance - Li Ning's overall channel revenue in Q3 decreased by mid-single digits year-on-year, with a weakening trend observed month by month [2][4][6] - The retail environment remains challenging, with expectations for Q4 to be below prior forecasts [2][8] Financial Metrics - As of the end of Q3, the number of main brand stores increased by 15 to 6,132, while direct-operated stores decreased by 46 [2][4] - The company maintained its annual store opening target but adjusted the net opening/closing numbers for various store types [2][5] Sales and Discounts - Discounts across all channels deepened year-on-year, particularly in direct and e-commerce channels, with offline discounts reaching mid-60% levels [2][6] - The company anticipates that the overall terminal performance will remain below expectations, posing challenges to achieving annual financial guidance [2][8] Product Categories - Pressure in Q3 primarily stemmed from basketball and sports lifestyle categories, with running and fitness growth slowing down [2][15] - Children's products and women's products showed better growth compared to men's products, but overall consumer spending remains weak [2][15] Marketing and Promotions - Li Ning plans to leverage upcoming events, including the 2026 Milan Winter Olympics, to enhance brand visibility and support sales growth [4][10][11] - The company is focusing on a comprehensive marketing matrix to support business development and manage costs effectively [3][16] Inventory Management - The company has increased inventory levels in anticipation of the double holiday and "Double Eleven" shopping festival, maintaining a healthy inventory turnover ratio of 4-5 months [6][9] - Despite the increase in inventory, Li Ning aims to control discounts to maintain profitability [9][23] Competitive Landscape - The competitive environment remains intense, with brands focusing on balancing revenue and inventory, leading to increased discounting pressure [8][20] - Li Ning is committed to enhancing its core competitiveness in running and basketball while addressing the challenges posed by competitors like Nike [8][20][21] Future Outlook - The company is currently formulating its 2026 budget, expecting moderate growth in domestic consumption but acknowledging ongoing business pressures [14] - Li Ning's long-term strategy includes focusing on high-value and functional products, as well as tapping into emerging sports trends [14][27] New Product Launches - Upcoming product launches include new running shoes featuring advanced water-repellent technology and collaborations with popular franchises [18][19] - The company is also enhancing its outdoor product line and integrating elements of traditional Chinese aesthetics into its offerings [21][22] Conclusion - Li Ning is navigating a challenging retail environment with strategic marketing initiatives and product innovations aimed at sustaining growth and enhancing brand equity [27]