2024-03-25 16:00Investment Rating - The report maintains a "Buy" rating for Li Ning, with a target price of HKD 26.10, representing an expected upside of 27.6% from the current price of HKD 20.45 [2][6]. Core Insights - The company's performance in 2023 met expectations, with revenue increasing by 7.0% year-on-year to HKD 27.6 billion, while net profit decreased by 21.6% to HKD 3.187 billion. The overall gross margin remained stable at 48.4% [5][8]. - The company is cautiously optimistic about 2024, expecting mid-single-digit revenue growth and maintaining double-digit profit margins. Inventory levels have improved, with a channel inventory turnover of 3.6 months at the end of 2023 [9][11]. Financial Summary - For 2023, the company reported a revenue of HKD 27.6 billion, with a net profit of HKD 3.187 billion. The gross margin was stable at 48.4%, while the net profit margin decreased to 11.5% from 15.7% in the previous year [5][7][17]. - The forecast for 2024 estimates revenue of HKD 29.368 billion, with a net profit of HKD 3.336 billion, reflecting a year-on-year growth of 6.4% and 4.7%, respectively [11][17]. - The company's total assets were reported at HKD 34.208 billion for 2023, with total liabilities of HKD 9.801 billion, resulting in a debt-to-equity ratio of 40.2% [16][17]. Shareholder Information - Major shareholders include Viva China Holdings Ltd with 10.29% and BlackRock, Inc. with 5.96% [4]. Market Position - The company has shown strong control over its direct sales channels, with a low double-digit same-store sales growth (SSSG) in direct retail, while wholesale SSSG experienced a slight decline [9][11]. - The company has strategically managed its inventory, with a significant improvement in inventory turnover, indicating effective inventory management practices [5][9]. Future Outlook - The report suggests that the company will continue to focus on optimizing channel health and expanding into lower-tier markets, with a keen eye on inventory control and product mix [6][11]. - The anticipated revenue growth for 2023 to 2025 is projected at HKD 293.7 billion, HKD 324.5 billion, and HKD 353.8 billion, respectively, with corresponding net profits of HKD 33.4 billion, HKD 38.4 billion, and HKD 43.5 billion [11][17].