Core Viewpoint - Li Ning's Q2 2025 operational performance shows mixed results, with adult sales under pressure due to a challenging consumption environment and store closures, while e-commerce sales growth has slowed compared to Q1 [1][2][3] Group 1: Sales Performance - Adult sales in Q2 2025 experienced low single-digit year-on-year growth, with offline channel sales declining low single digits and e-commerce sales growing in the mid-single digits [1] - Direct sales channels faced pressure with a year-on-year decline in Q2 2025, attributed to a significant number of store closures in the second half of 2024, resulting in 1,278 direct stores by the end of H1 2025, a net closure of 19 stores compared to the beginning of the year [1] - Wholesale channel sales grew low single digits year-on-year, with 4,821 wholesale stores by the end of H1 2025, indicating a stable performance and potential acceleration in store openings in the second half of the year [1] Group 2: E-commerce and Children's Segment - E-commerce sales growth in Q2 2025 slowed compared to Q1, attributed to a weaker overall sales performance during the 618 shopping festival, with Q2 e-commerce sales growing in the mid-single digits compared to low double digits in Q1 [2] - Li Ning's children's clothing segment, Li Ning YOUNG, is expected to outperform adult sales with steady growth, having 1,435 stores by the end of Q2 2025, a net closure of 33 stores since the beginning of the year [2] Group 3: Financial Outlook - The company is projected to have flat revenue growth in 2025, with a 21% decline in net profit attributable to shareholders, primarily due to increased marketing expenses [3] - Li Ning is focusing on product and marketing strategy optimization, including signing with the Olympic Committee for brand marketing, which may enhance brand influence [3] - The company aims to strengthen its core categories of running and basketball while expanding into other sports categories, which is expected to support long-term growth [3]

Company Overview - In Q2 2025, the retail revenue of the Li Ning brand (excluding Li Ning YOUNG) grew at a low single-digit percentage year-on-year, with a net increase of 11 retail points during the quarter [1] - The wholesale channel continued to outperform direct sales, with healthy inventory levels despite pressure on discounts due to market fluctuations [1] - The retail revenue from offline direct sales declined at a mid-single-digit percentage year-on-year, with a net decrease of 13 retail points, while the offline wholesale channel saw low single-digit growth and a net opening of 24 retail points [1] Product Performance - In terms of product categories, the running category saw high single-digit year-on-year growth, although the growth rate slowed compared to Q1 2025, which benefited from sponsorship of events like the Beijing Marathon [1] - The fitness category continued to perform well with high single-digit year-on-year growth, while the sports lifestyle category stabilized with flat year-on-year performance [1] - The basketball category experienced a decline in line with industry trends, while emerging categories such as outdoor and badminton maintained healthy growth [1] Discount and Inventory Management - Discounts in both online and offline channels deepened year-on-year at a low single-digit percentage, but the company maintained a healthy inventory level, with a channel inventory-to-sales ratio of approximately 4x as of the end of June [1] Future Outlook - Since July, retail has continued to fluctuate, with pressure on offline revenue and discounts for the Li Ning brand [2] - In the second half of the year, the company plans to increase marketing and product investment around the theme of "Olympics and Technology," including activities related to Olympic sponsorship and new product launches in various categories [2] - The management maintains guidance for 2025 revenue to be flat year-on-year and a high single-digit net profit margin [2] Earnings Forecast and Valuation - The company maintains its EPS forecasts for 2025 and 2026 at 0.92 and 1.07 HKD respectively, with the current stock price corresponding to 16x and 14x the 2025 and 2026 P/E ratios [2] - The target price remains at 20.82 HKD, implying a 30% upside potential compared to the current stock price, corresponding to 21x and 18x the 2025 and 2026 P/E ratios [2]

Group 1 - The core viewpoint of the article indicates that Li Ning's overall retail revenue for Q2 2025 showed low single-digit growth year-on-year, with offline and e-commerce channels experiencing low single-digit decline and mid-single-digit growth respectively [1] - As of the end of Q2 2025, Li Ning's main brand store count reached 6,099, with a net increase of 11 stores compared to the previous quarter, but a net decrease of 18 stores compared to the end of the previous year [2] - The company signed NBA player Yang Hansheng, which is expected to boost basketball category sales, as basketball sales declined by 20% year-on-year in Q2 2025 [2] Group 2 - Li Ning plans to increase marketing and R&D investments related to the Olympics and technology in the second half of 2025 and into 2026, following its partnership with the Chinese Olympic Committee [3] - The company deepened discounts in Q2 2025 to drive sales, and inventory levels improved with a sales-to-inventory ratio of around 4 months [3] - Profit forecasts for 2025-2027 have been adjusted downwards, with net profits revised to 2.31 billion, 2.60 billion, and 2.93 billion respectively, while maintaining a "buy" rating based on long-term brand development potential [3]

Core Viewpoint - Li Ning is experiencing low single-digit growth in terminal sales for Q2 2025, with management maintaining a revenue guidance of flat growth for 2025, but expecting a decline in profitability [1][3] Sales Performance - Q2 2025 overall sales growth for Li Ning is low single-digit, with offline sales declining in low single digits, while wholesale shows low single-digit growth and online sales exhibit mid-single-digit growth [1] - By product category, running and fitness show high single-digit growth, sports lifestyle remains flat, basketball sees a 20% decline, and outdoor categories perform well [1] - By sales channel, lower-tier markets outperform higher-tier markets, and outlet stores perform better than full-price stores [1] Discounts and Inventory - Due to slowing terminal sales growth and the need for inventory clearance, discount pressure is significant in Q2 2025, with continued pressure expected in the second half of the year; however, inventory levels are currently healthy [1] - Li Ning's overall inventory turnover rate has decreased to approximately 4 months [1] Product and Marketing Strategy - The company is focusing on functional upgrades in products while expanding Olympic themes across multiple categories, including protective and stability features in running, women's products in sports lifestyle, and more outdoor gear [2] - As of June 30, 2025, Li Ning has 6,099 sales points (excluding Li Ning YOUNG), a net increase of 11 from the previous quarter, but a net decrease of 18 from the beginning of the year; Li Ning YOUNG has 1,435 sales points, with a net decrease of 18 from the previous quarter and 33 from the start of the year [2] - Marketing efforts will focus on the Olympics and technology, with sponsorships and athlete collaborations to enhance brand influence, alongside continued support for marathon events [2] Financial Forecast and Investment Recommendation - As a leading domestic sports footwear and apparel brand, Li Ning is expected to face revenue and profit pressures due to weak consumer demand and intensified market competition; revenue projections for 2025-2027 are 28.74 billion, 29.96 billion, and 31.11 billion yuan, with growth rates of 0%, 4%, and 4% respectively [3] - Net profit projections for the same period are 2.38 billion, 2.53 billion, and 2.72 billion yuan, with year-on-year growth rates of -21%, 7%, and 7% respectively; the current stock price corresponds to a 25 PE of 15.5X, maintaining a strong buy recommendation [3]

Core Viewpoint - Company reported low single-digit growth in retail sales for the second quarter ending June 30, 2025, with a decline in offline channels and a significant increase in e-commerce sales [1][2][3] Retail Performance - As of June 30, 2025, retail sales points (excluding Li Ning YOUNG) totaled 6,099, a net increase of 11 from the previous quarter but a net decrease of 18 year-to-date, with retail business down by 19 and wholesale business up by 1 [1] - E-commerce virtual store business recorded a mid-single-digit growth, while offline channels saw a low single-digit decline [1][2] Sales and Discounts - The overall sales revenue for Li Ning in the second quarter showed low single-digit growth, with e-commerce performing better than offline sales [3] - Retail discounts increased, leading to pressure on margins, but the inventory-to-sales ratio improved to a four-month high [3][4] Marketing Strategy - Marketing efforts are focused on two main themes: NBA (with player Yang Hansheng) and the Olympics, with a significant increase in marketing expenses expected in the second half of the year [2][3] - The company aims to leverage the NBA and Olympic themes to enhance brand visibility and drive sales growth [3][4] Financial Outlook - 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 year-on-year changes of -16.8%, +12.8%, and +7.6% respectively [2][4] - Target price is set between 17.9 and 19.2 HKD, corresponding to a 2025 PE ratio of 17.2-18.5x, with a rating of "outperform" [2][4]

Investment Rating - The report maintains an "Outperform" rating for Li Ning [1][6][25] Core Views - Li Ning's second quarter performance aligns with expectations, with overall channel revenue showing low single-digit growth, while offline channels experienced a decline [6] - The company is actively managing risks in a challenging retail environment, with a focus on long-term stability [6] - Marketing efforts are expected to increase due to the endorsement of NBA player Yang Hanshen and the partnership with the Chinese Olympic Committee [6] Financial Data and Profit Forecast - Revenue projections for Li Ning are as follows: - 2023: 276 billion RMB - 2024: 287 billion RMB - 2025E: 288 billion RMB - 2026E: 301 billion RMB - 2027E: 312 billion RMB - Net profit forecasts are: - 2023: 31.9 billion RMB - 2024: 30.1 billion RMB - 2025E: 24.8 billion RMB - 2026E: 26.4 billion RMB - 2027E: 27.8 billion RMB - The expected PE ratios are 12 for 2023, 12 for 2024, 15 for 2025, 14 for 2026, and 13 for 2027 [5][6][16] Company Performance Insights - The inventory level is healthy, with a stock-to-sales ratio of approximately 4 months, although discount rates are under pressure due to weak industry demand [6] - Running and fitness categories are leading growth, while basketball products are experiencing a decline of over 20% [6] - The number of sales points for Li Ning (excluding Li Ning Young) is 6099, with a net increase of 11 stores in the second quarter [6] - The company plans to continue opening new stores in the second half of the year, maintaining its annual store opening plan [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is expected to face challenges in sales in the second half of the year, with discounts and gross margins likely under pressure. However, the partnership with the Chinese Olympic Committee is anticipated to enhance long-term brand development [7] - The company plans to increase marketing and R&D investments related to the Olympics and technology in the second half of the year [7] - The company has deepened discounts to boost sales, and inventory levels have improved, with a good inventory control [7] Financial Forecasts - Total revenue (in million RMB) is projected to be 27,598 in 2023, 28,676 in 2024, 28,834 in 2025, 30,529 in 2026, and 32,074 in 2027, with year-on-year growth rates of 6.96%, 3.90%, 0.55%, 5.88%, and 5.06% respectively [1] - Net profit attributable to the parent company (in million RMB) is forecasted to be 3,187 in 2023, 3,013 in 2024, 2,313 in 2025, 2,598 in 2026, and 2,926 in 2027, with year-on-year changes of -21.58%, -5.46%, -23.24%, 12.31%, and 12.64% respectively [1] - The latest diluted EPS is expected to be 1.23 in 2023, 1.17 in 2024, 0.89 in 2025, 1.00 in 2026, and 1.13 in 2027 [1] - The P/E ratios are projected to be 11.85 for 2023, 12.54 for 2024, 16.33 for 2025, 14.54 for 2026, and 12.91 for 2027 [1]

Investment Rating - The report maintains a strong buy rating for Li Ning, with a current stock price of 16.24 HKD and a corresponding PE of 15.5X for 2025 [2][3]. Core Insights - Li Ning's overall revenue growth in Q2 2025 is low single-digit, with pressure on discounts due to weak consumer demand and intensified market competition. The management has kept the revenue guidance for 2025 flat, but profitability is expected to decline. The projected net profit for 2025-2027 is 2.38 billion, 2.53 billion, and 2.72 billion RMB, with year-on-year growth rates of -21%, 7%, and 7% respectively [1][2]. Revenue and Profit Forecast - The expected revenue for Li Ning for 2025-2027 is 28.74 billion, 29.96 billion, and 31.11 billion RMB, with year-on-year growth rates of 0%, 4%, and 4% [2][8]. - The projected net profit for the same period is 2.38 billion, 2.53 billion, and 2.72 billion RMB, with year-on-year growth rates of -21%, 7%, and 7% [2][8]. Sales Performance - In Q2 2025, the revenue growth by category shows high single-digit growth in running and fitness, flat performance in sports lifestyle, and a 20% decline in basketball. Outdoor and smaller categories are performing well [1][7]. - The sales performance by channel indicates that lower-tier markets are outperforming higher-tier markets, with outlet stores performing better than full-price stores [1][7]. Financial Metrics - The total market capitalization of Li Ning is 42 billion HKD, with a total share capital of 2,585 million shares and a net asset value per share of 10.1 HKD [3]. - The return on equity (ROE) is reported at 11.5%, with a debt-to-asset ratio of 26.9% [3][11]. Inventory and Discount Pressure - Due to the slowdown in terminal revenue growth and the need for inventory clearance, there is significant discount pressure in Q2 2025, although inventory levels are currently considered healthy [7][10].

Investment Rating - The report assigns a "Neutral" rating to the company, Li Ning (2331 HK), with a target price of HKD 16.28, indicating a potential upside of 1.4% from the current price of HKD 16.06 [1][2][5]. Core Insights - The second quarter saw a slow recovery in sales, slightly below the company's expectations, with retail sales growth in the Li Ning brand (excluding Li Ning YOUNG) showing low single-digit year-on-year growth [5][6]. - The management indicated that the recovery trend in Q2 weakened compared to Q1, and sales and discounts remain under pressure since July [5]. - The report suggests that the company's sales recovery in the second half of the year will be gradual, leading to a downward revision of net profit forecasts for 2025-2027 [5][6]. Financial Overview - Revenue projections for 2025 are set at RMB 29,007 million, reflecting a year-on-year growth of 1.2%. The revenue for 2026 and 2027 is projected to be RMB 30,103 million and RMB 30,945 million, respectively [4][8]. - Net profit estimates for 2025 have been revised down to RMB 2,678 million, with a projected decline in net profit margins due to increased promotional activities and competition [5][7]. - The report anticipates a slight decrease in gross margin for 2025, with a forecasted gross margin of 49.1% [7][8]. Sales Channel Performance - In Q2, online sales outperformed offline channels, with e-commerce showing mid-single-digit growth year-on-year, while offline retail experienced low single-digit declines [5][6]. - The wholesale channel performed better than retail, with low single-digit growth in wholesale and a decline in retail sales [5][6]. Store Optimization and Product Trends - The number of offline stores is undergoing slight adjustments, with a net increase of 11 stores compared to Q1, while Li Ning YOUNG saw a net decrease of 18 stores [6][8]. - Product category growth continued from Q1, with running and fitness categories leading, while basketball products faced significant declines [6][8].

Investment Rating - The report maintains a "Buy" rating for Li Ning [6] Core Views - Li Ning's adult revenue showed low single-digit year-on-year growth in Q2 2025, with offline channel revenue declining and e-commerce revenue growing in mid-single digits [1][2] - The company is focusing on optimizing its product and marketing strategies to establish a foundation for long-term growth, particularly through its partnership with the Olympic Committee [3] - Revenue for 2025 is expected to remain flat year-on-year, while net profit attributable to shareholders is projected to decline by 21% [3] Summary by Sections Revenue and Sales Performance - In Q2 2025, Li Ning's direct sales revenue decreased in mid-single digits, attributed to a significant number of store closures in the second half of 2024 [1] - The wholesale channel revenue grew in low single digits, with the number of wholesale stores increasing to 4,821 by the end of H1 2025 [1] - E-commerce sales growth slowed compared to Q1 2025, with Q2 growth in mid-single digits, influenced by a weaker overall sales environment during the 618 shopping festival [2] Product Segments - Li Ning's children's clothing segment, Li Ning YOUNG, is expected to outperform adult sales, with a steady growth rate and an increase in store count to 1,435 by the end of Q2 2025 [2] - The company is enhancing its product structure and brand promotion for children's clothing to drive long-term growth [2] Inventory Management - Li Ning emphasizes inventory management, with an estimated inventory turnover ratio of around 4 by the end of Q2 2025, indicating a healthy inventory level [2] Financial Projections - The company forecasts revenues of 28.92 billion in 2025, with a net profit of 2.39 billion, reflecting a 21% decline [3] - The projected earnings per share (EPS) for 2025 is 0.92, with a price-to-earnings (P/E) ratio of 16 times [3][5] Market Position and Strategy - Li Ning is focusing on enhancing its brand influence through Olympic-related marketing activities and expanding its product matrix in various sports categories, including running, basketball, badminton, and outdoor sports [3]