LI NING(HK:02331) Soochow Securities·2024-10-22 23:37Investment Rating - The report maintains a "Buy" rating for Li Ning (02331.HK) [1] Core Views - The company reported a decline in overall retail sales for Q3 2024, with a year-on-year decrease in sales volume, particularly in offline channels, while e-commerce showed moderate growth [2] - Li Ning established a joint venture to develop international business, with a total investment of HKD 200 million, aiming to leverage international expertise while focusing on domestic market growth [2] - The company anticipates a sales improvement in Q4 2024, driven by a recovery in the e-commerce environment and positive trends during the National Day holiday [2][3] Summary by Sections Financial Performance - Total revenue for 2022 was CNY 25,803 million, with a year-on-year growth of 14.31%. For 2023, revenue is projected at CNY 27,598 million, reflecting a growth of 6.96% [1] - The net profit attributable to shareholders for 2022 was CNY 4,064 million, with a decline of 21.58% expected in 2023, bringing it to CNY 3,187 million [1] - The report forecasts net profits of CNY 3,129 million, CNY 3,556 million, and CNY 3,911 million for 2024, 2025, and 2026 respectively, with corresponding P/E ratios of 12, 11, and 10 [3] Sales and Inventory - Q3 2024 saw a mid-single-digit year-on-year decline in overall sales, with offline channels experiencing a higher decline compared to e-commerce, which grew in the mid-single digits [2] - Inventory pressure increased, with a stock-to-sales ratio of around 5 months, and the company aims to reduce this to 4-5 months by year-end [2] - Discounts in offline sales deepened slightly year-on-year, while e-commerce discounts improved marginally [2] Guidance and Outlook - The company maintains its guidance for low single-digit year-on-year revenue growth and a low double-digit net profit margin for the full year [2] - The report highlights a positive trend in sales since October, suggesting potential for improved performance in Q4 [3]