Core Insights - Li Ning brand showcased at the Tmall Double 11 Super Release event, marking 100 days countdown to the 2026 Milan Winter Olympics, emphasizing Olympic spirit and culture [1] - The event featured the debut of the "Gold Standard" series, promoting high-quality lifestyle products and encouraging personal achievement [1][5] - Li Ning's design for the Chinese sports delegation's award outfits incorporates traditional Chinese patterns and advanced sports technology [2][4] Group 1 - Li Ning, as the official sportswear partner for the Chinese Olympic Committee, integrates traditional Chinese motifs in the design of the 2026 Milan Winter Olympics award outfits [2] - The award outfit design features "Double Victory" patterns and innovative "Double Victory Snowflake" designs, utilizing cutting-edge materials for performance [2] - The color scheme of the outfits combines "Chinese Red" and "Snow Mountain White," showcasing a blend of cultural aesthetics and modern technology [2] Group 2 - The "Gold Standard" series aims to embody the spirit of Chinese sports and provide consumers with versatile, high-quality lifestyle options [5] - Li Ning has consistently supported the Chinese sports community since its inception, collaborating with Alibaba and Tmall to promote Olympic culture [6] - The brand's initiatives, including the revival of the 1992 award outfit and the launch of the "Gold Standard" series, reflect its commitment to advancing winter sports and Olympic values [6]

Core Viewpoint - The overall terminal demand remains challenging, with a decline in revenue for Li Ning in Q3 2025, but it aligns with expectations [1][2] Group 1: Financial Performance - Q3 2025 total revenue (excluding children's wear) decreased by mid-single digits year-on-year, with a month-on-month weakening trend [1] - Direct store revenue fell by mid-single digits, while distributor store revenue dropped by high single digits; however, e-commerce revenue increased by high single digits [1] - The discount rate in Q3 2025 deepened by low single digits year-on-year, with a widening trend compared to the previous quarter [1] - The inventory-to-sales ratio at the end of Q3 2025 rose to 5-6 months, influenced by preparations for the dual festivals [1] - Management expressed confidence in controlling the inventory-to-sales ratio to 4-5 months by year-end [1] Group 2: Management Guidance - Management maintained the full-year performance guidance for 2025, targeting flat revenue year-on-year and a high single-digit net profit margin [2] - Despite the challenging retail environment and increasing discounts, the company aims to balance sales revenue, channel inventory, and discounts to ensure healthy inventory levels [2] - If Q4 2025 revenue trends align with Q3 2025 (mid-single digit decline), and children's wear and professional channels maintain strong growth, Li Ning can still achieve its revenue target for 2025 [2] Group 3: Brand Strategy - Li Ning has focused on enhancing brand strength, recently sponsoring the Chinese Olympic Committee for three years [3] - The company launched the Milan Winter Olympics award outfits, receiving positive feedback and increasing brand exposure [3] - Upcoming marketing activities include participation in "Tmall Super Product Day" and events related to the Milan Fashion Week, emphasizing "Olympics + Technology" [3] - The company is committed to brand revitalization and product development, which is expected to support future performance improvements [4] Group 4: Adjustments and Ratings - The company has slightly adjusted its revenue and gross margin forecasts for the second half of 2025 but maintained expense predictions [4] - The updated 2025 performance forecast aligns with the company's full-year guidance [4] - Despite short-term uncertainties, the company is on the right strategic path, leading to a maintained "Buy" rating and a slight target price adjustment to HKD 21.6, equivalent to 18x 2026 P/E [4]

Core Insights - The company reported a decline in retail sales for the Li Ning brand (excluding Li Ning YOUNG) in Q3 2025, with offline channels experiencing significant drops due to external factors, while online channels maintained high single-digit growth [1] - The company is actively expanding its offline presence, with a net increase of 33 stores in Q3 2025, totaling 6,132 stores for the Li Ning brand [1] - The signing of player Yang Hansheng, who was selected in the first round of the NBA draft, is expected to boost sales of related products and improve the overall market for basketball in China [2] - The company maintains a strong position in the sports apparel sector, focusing on a "single brand, multiple categories, and multiple channels" strategy, with projected net profits of 2.645 billion, 2.843 billion, and 3.101 billion yuan for 2025-2027 [2] Summary by Category Sales Performance - In Q3 2025, the Li Ning brand's retail sales saw a mid-single-digit decline, with offline channels (including retail and wholesale) experiencing high single-digit declines, while online retail sales recorded high single-digit growth [1] Store Expansion - As of September 30, 2025, the Li Ning brand had 6,132 offline stores, with a net increase of 33 stores from the previous quarter, and a total of 1,480 stores for Li Ning YOUNG, reflecting a proactive approach to offline channel expansion [1] Strategic Developments - The recent signing of Yang Hansheng, who was drafted into the NBA, is anticipated to enhance brand visibility and sales of basketball-related products, potentially improving the overall market for basketball in China [2] Financial Outlook - The company is projected to achieve net profits of 2.645 billion yuan in 2025, 2.843 billion yuan in 2026, and 3.101 billion yuan in 2027, supported by its strong brand position and ongoing investment in product development [2]

Investment Rating - The report maintains a strong buy rating for Li Ning (02331.HK) with a target price not specified [2][5] Core Views - In Q3 2025, the company's overall revenue faced pressure due to warmer weather, resulting in a year-on-year decline in total revenue in the mid-single digits. Despite deeper discounts, inventory remains controllable, and the company will continue to optimize channel structure while investing in Olympic marketing and product innovation. Management maintains guidance for flat revenue and high single-digit net profit margin for 2025 [1][5] - The projected net profit for 2025-2027 is estimated at 2.4 billion, 2.71 billion, and 2.96 billion yuan, with year-on-year growth rates of -21%, 13%, and 9% respectively. The current stock price corresponds to a PE of 17X for 2025 and 15X for 2026 [1][5] Summary by Sections Revenue Performance - In Q3 2025, total revenue declined in the mid-single digits year-on-year, with a weakening trend observed month by month from July to September. Offline channels saw a high single-digit decline, while online channels experienced high single-digit growth [5][6] - The overall discount level increased in Q3 2025, with inventory levels remaining healthy and controllable, expected to be within 4-5 months by year-end [5][6] Store Expansion and Product Innovation - The number of main brand stores increased to 6,132 by the end of Q3 2025, with a net addition of 33 stores compared to the previous quarter. The company continues to push for product innovation, with new launches planned in running, basketball, and outdoor categories [5][6] Marketing and Brand Strategy - The company is actively promoting its brand through Olympic marketing initiatives, including the release of the 2026 Milan Winter Olympics Chinese sports delegation award equipment and collaborations in skiing events [5][6] Financial Projections - Revenue projections for 2025-2027 are 28.74 billion, 30.29 billion, and 31.87 billion yuan, with growth rates of 0%, 5%, and 5% respectively. Net profit projections are 2.4 billion, 2.71 billion, and 2.96 billion yuan, with growth rates of -21%, 13%, and 9% respectively [6][9]

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]