BOCOM International·2026-01-19 05:45Investment Rating - The report maintains a Neutral rating for Li Ning (2331 HK) with a target price adjusted to HKD 19.50, indicating a potential downside of 0.3% from the closing price of HKD 19.55 [2][5][8]. Core Insights - The fourth quarter saw a narrowing decline in retail sales, but recovery momentum remains uncertain. The overall operations are still in a bottoming phase, with management indicating that the previously provided guidance for slight revenue growth and high single-digit net profit margin for 2025 is expected to be achieved [3][8]. - The company is benefiting from effective cost control and government subsidies, which support the maintenance of profit forecasts for 2025-2027. The upcoming sports events in 2026 are expected to enhance brand marketing and market attention, potentially increasing long-term brand value [8]. - Offline channels continue to face pressure, with discount levels deepening to around 60%, reflecting competitive industry dynamics. The e-commerce channel's growth has weakened compared to previous quarters [8]. Financial Overview - Revenue projections for Li Ning are as follows: - 2023: RMB 27,598 million - 2024: RMB 28,676 million (7.0% YoY growth) - 2025E: RMB 28,929 million (3.9% YoY growth) - 2026E: RMB 30,286 million (0.9% YoY growth) - 2027E: RMB 31,206 million (4.7% YoY growth) [4][10]. - Net profit estimates are: - 2023: RMB 3,187 million - 2024: RMB 3,013 million - 2025E: RMB 2,664 million - 2026E: RMB 3,007 million - 2027E: RMB 3,370 million [4][19]. - The company’s earnings per share (EPS) are projected to be: - 2023: RMB 1.23 - 2024: RMB 1.17 - 2025E: RMB 1.03 - 2026E: RMB 1.17 - 2027E: RMB 1.31 [4][21]. Market Position and Strategy - As of the end of Q4 2025, the inventory turnover ratio has returned to a healthy level of 4-5 months, achieving the company's target. The total number of Li Ning stores (excluding Li Ning YOUNG) decreased by 41 to 6,091 [8]. - The company is actively optimizing its store network, with the first "Dragon Store" model launched in December [8].