LI NING(HK:02331) Guoxin Securities·2024-10-23 04:03Investment Rating - The investment rating for the company is "Outperform the Market" (maintained) [1][2][4] Core Views - The company experienced a mid-single-digit decline in sales for the third quarter, but there is an expectation for improvement in the fourth quarter [3][4] - The company has established a joint venture with Sequoia Capital to expand its international business, holding a 29% stake in the new entity [4][6] - Management has guided for low single-digit revenue growth and a low double-digit net profit margin for 2024 [7][8] Summary by Sections Retail Performance - For the third quarter ending September 30, 2024, the company's retail sales (excluding Li Ning YOUNG) recorded a mid-single-digit decline year-on-year, with offline channels experiencing a high single-digit decline and e-commerce showing mid-single-digit growth [4][5] - The total number of sales points in China reached 6,281, with a net increase of 42 points from the previous quarter [4] Joint Venture - The joint venture with Sequoia Capital aims to develop and operate the Li Ning brand overseas, with an investment of HKD 58 million from the company [6] Management Guidance - The management maintains a revenue growth forecast of low single digits for 2024 and a net profit margin in the low double digits [7][8] Financial Projections - The company expects net profits for 2024, 2025, and 2026 to be CNY 31.5 billion, CNY 35.5 billion, and CNY 38.6 billion, respectively, with year-on-year changes of -1.2%, +12.9%, and +8.5% [7][8] - The target price is set between HKD 17.9 and HKD 19.2, corresponding to a PE ratio of 13.5-14.5x for 2024 [7][8]