LI NING(02331) 长江证券·2024-11-01 08:43Investment Rating - The investment rating for the company is "Buy" and is maintained [3][4]. Core Views - The company's Q3 2024 revenue data was in line with expectations, with a year-on-year decline in direct sales and franchise sales, while e-commerce sales showed growth [3][4]. - Inventory levels remain manageable despite a slight increase in discounting, with expectations for a recovery in inventory turnover ratio by year-end [4]. - The establishment of a joint venture with Sequoia Capital to expand overseas business reflects confidence in international growth opportunities [4]. Summary by Sections Revenue Performance - Q3 all-channel revenue showed a year-on-year decline, with direct sales and franchise sales down, while e-commerce sales increased [3][4]. - The company anticipates a revenue growth acceleration in Q4 due to a low base effect, maintaining a stable growth outlook for the year [4]. Inventory and Discounting - The company expects a slight increase in discounting, with an inventory turnover ratio of approximately 5 months, which is expected to improve to a healthier level of 4-5 months by year-end [4]. - Despite the anticipated pressure on discounts in Q4, the overall gross margin is expected to show slight improvement due to better performance in H1 [4]. Joint Venture and International Expansion - The joint venture with Sequoia Capital involves an investment of HKD 58 million, with the company holding a 29% stake, indicating a strategic move to enhance overseas market presence [4]. - The company retains the right to reclaim its stake in the joint venture, showcasing confidence in the potential of international markets [4]. Profit Forecast and Valuation - The company is projected to achieve net profits of CNY 3.187 billion, CNY 3.031 billion, CNY 3.411 billion, and CNY 3.739 billion for 2024-2026, reflecting a year-on-year growth of -5%, +13%, and +10% respectively [4][6]. - Corresponding P/E ratios are expected to be 12, 11, and 10 for the same period [6].