LI NING(HK:02331) GF SECURITIES·2024-02-20 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price of 27.8 HKD per share based on a 18x PE for 2024 [4]. Core Views - The company is expected to achieve a healthy inventory turnover ratio by Q4 2023, with inventory issues being addressed through management strategies and upcoming sales events [2]. - Continuous share buybacks have been noted, with a total amount of approximately 961 million HKD since September 2023, indicating management's confidence in the company's long-term prospects [2]. - The company is projected to experience healthy revenue growth in the medium to long term, despite short-term pressures on revenue and profit margins due to inventory management [2]. Summary by Sections Inventory Management - The company aims to control inventory age structure and turnover rates, with expectations for the inventory-sales ratio to decrease further by Q4 2023 [2]. - The resolution of inventory issues is anticipated by mid-2024, which may lead to improved discounting and gross margins [2]. Share Buybacks - The company has been actively repurchasing shares, with plans to utilize up to 3 billion HKD for further buybacks, which is expected to bolster market confidence [2]. Financial Projections - The forecasted net profit for the company is 3.16 billion CNY for 2023, with expected growth to 3.71 billion CNY in 2024 and 4.34 billion CNY in 2025 [3]. - Revenue is projected to grow from 27.37 billion CNY in 2023 to 30.58 billion CNY in 2024, and further to 34.62 billion CNY in 2025, reflecting a compound annual growth rate [3][11]. Market Outlook - The report expresses optimism regarding the overall health of the sports footwear and apparel industry in China, with the company focusing on professional sports categories, suggesting potential for upward profitability [2].