LI NING(HK:02331) EBSCN·2024-03-20 16:00Investment Rating - The report maintains a "Buy" rating for Li Ning (2331.HK) with a current price of HKD 21.45 [1]. Core Views - The company experienced a challenging year in 2023, with revenue growth of 7% year-on-year, while net profit declined by 22% [1]. - For 2024, the company aims for revenue growth in the mid-single digits and a net profit margin in the low double digits, focusing on product structure and market expansion [3]. Financial Performance Summary - In 2023, Li Ning achieved a total revenue of RMB 27.598 billion, with a year-on-year increase of 7.0%. The net profit attributable to shareholders was RMB 3.187 billion, down 21.6% year-on-year. The earnings per share (EPS) was RMB 1.23, with a proposed final cash dividend of RMB 0.185 per share, resulting in an annual payout ratio of 45% [1][4]. - The gross margin for 2023 was 48.4%, unchanged from the previous year, while the operating profit margin decreased by 6.0 percentage points to 12.9% [1][7]. - The company’s inventory at the end of 2023 was valued at RMB 2.49 billion, a 2.7% increase year-on-year, with inventory turnover days at 63 days, an increase of 5 days [2]. Revenue Breakdown - Revenue from different channels in 2023 showed a 1% increase in distribution, a 30% increase in direct sales, and a 1% increase in e-commerce [1]. - By product category, footwear, apparel, and equipment accounted for 48.5%, 45.0%, and 6.5% of total revenue, respectively, with year-on-year changes of -0.7%, +15.9%, and +11.3% [1][2]. Future Outlook - The company plans to enhance its product matrix and performance, with a focus on expanding women's, outdoor, and youth categories in 2024 [3]. - The expected EPS for 2024, 2025, and 2026 is RMB 1.36, RMB 1.54, and RMB 1.72, respectively, with corresponding price-to-earnings (P/E) ratios of 14x and 13x for 2024 and 2025 [3][4].