GOLDEN SUN SECURITIES·2025-07-15 06:56Investment Rating - The report maintains a "Buy" rating for Li Ning [6] Core Views - Li Ning's adult revenue showed low single-digit year-on-year growth in Q2 2025, with offline channel revenue declining and e-commerce revenue growing in mid-single digits [1][2] - The company is focusing on optimizing its product and marketing strategies to establish a foundation for long-term growth, particularly through its partnership with the Olympic Committee [3] - Revenue for 2025 is expected to remain flat year-on-year, while net profit attributable to shareholders is projected to decline by 21% [3] Summary by Sections Revenue and Sales Performance - In Q2 2025, Li Ning's direct sales revenue decreased in mid-single digits, attributed to a significant number of store closures in the second half of 2024 [1] - The wholesale channel revenue grew in low single digits, with the number of wholesale stores increasing to 4,821 by the end of H1 2025 [1] - E-commerce sales growth slowed compared to Q1 2025, with Q2 growth in mid-single digits, influenced by a weaker overall sales environment during the 618 shopping festival [2] Product Segments - Li Ning's children's clothing segment, Li Ning YOUNG, is expected to outperform adult sales, with a steady growth rate and an increase in store count to 1,435 by the end of Q2 2025 [2] - The company is enhancing its product structure and brand promotion for children's clothing to drive long-term growth [2] Inventory Management - Li Ning emphasizes inventory management, with an estimated inventory turnover ratio of around 4 by the end of Q2 2025, indicating a healthy inventory level [2] Financial Projections - The company forecasts revenues of 28.92 billion in 2025, with a net profit of 2.39 billion, reflecting a 21% decline [3] - The projected earnings per share (EPS) for 2025 is 0.92, with a price-to-earnings (P/E) ratio of 16 times [3][5] Market Position and Strategy - Li Ning is focusing on enhancing its brand influence through Olympic-related marketing activities and expanding its product matrix in various sports categories, including running, basketball, badminton, and outdoor sports [3]