Ge Long Hui·2025-10-29 05:13Core 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]