LI NING(HK:02331) EBSCN·2024-08-16 11:39Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance in the first half of 2024 was generally in line with expectations, with revenue of 14.35 billion HKD, a year-on-year increase of 2.3%, and a net profit of 1.95 billion HKD, a year-on-year decrease of 8.0% [1] - The decline in net profit was primarily due to an increase in expense ratios exceeding the growth in gross profit margins, with operating profit margin decreasing by 1.0 percentage points to 16.7% and net profit margin decreasing by 1.5 percentage points to 13.6% [1] - The company adjusted its revenue guidance for 2024 to low single-digit growth, previously expecting mid-single-digit growth, while maintaining a low double-digit net profit margin guidance [4] Summary by Sections Financial Performance - For the first half of 2024, the company reported a revenue of 14.35 billion HKD, with a year-on-year growth of 2.3% and a net profit of 1.95 billion HKD, reflecting an 8.0% decline [1] - Earnings per share (EPS) for the period was 0.76 HKD, with a proposed interim cash dividend of 0.378 HKD per share, resulting in a payout ratio of 50% [1] - The gross profit margin improved by 1.6 percentage points to 50.4%, mainly due to better product discount management and an increase in the proportion of high-margin direct sales [1][3] Revenue Breakdown - Revenue by category for the first half of 2024 was distributed as follows: footwear (54.7%), apparel (37.5%), and equipment and accessories (7.8%), with respective year-on-year growth rates of 4.4%, -4.7%, and 30.3% [1] - Revenue by channel showed a decline in distribution and retail store sales by 2.0% and an increase in e-commerce sales by 11.4% [1] Market Strategy - The company is focusing on enhancing market efficiency in high-tier markets and expanding into emerging markets, while also strengthening its product offerings in categories such as outdoor and youth apparel [4] - The company plans to manage inventory effectively and improve its flexible response capabilities to market changes [4] Future Outlook - The company has adjusted its net profit forecasts for 2024-2026 downwards by 8%, 6%, and 5% respectively, with expected EPS of 1.25, 1.45, and 1.63 HKD for the respective years [4][5] - The price-to-earnings (P/E) ratios are projected to be 10, 8, and 7 for 2024, 2025, and 2026 respectively [5]