Investment Rating - The investment rating for Li Ning is "Buy" (maintained) [2][6] Core Views - The report indicates that Li Ning's Q1 performance met expectations, with low discount sales improving and strong growth in running and e-commerce segments. The company focuses on professional sports, increasing resource allocation and expanding new products to cater to niche markets and emerging sectors [6][7][9] Financial Summary and Valuation Metrics - For the fiscal year 2023, Li Ning reported a revenue of 27,598 million HKD, with a year-on-year growth of 7.0%. The projected revenue for 2025 is 28,742 million HKD, reflecting a minimal growth of 0.2% [10] - The net profit for 2023 was 3,187 million HKD, showing a decline of 21.6% year-on-year. The estimated net profit for 2025 is 2,459 million HKD, indicating a further decline of 18.4% [10] - The gross margin for 2023 was 48.4%, with a projected gross margin of 49.8% for 2025. The net margin is expected to decrease from 11.5% in 2023 to 8.6% in 2025 [10] - The price-to-earnings (P/E) ratio for 2025 is projected at 14.6, with a price-to-book (P/B) ratio of 1.4 [10] Operational Insights - In Q1 2025, Li Ning's total store count was 6,088, a decrease of 2% year-on-year. The company plans to close 10-20 direct stores and open 30-40 wholesale stores throughout the year [8] - The report highlights that the running category saw over 20% growth, driven by sponsorship of events and strong performance of new running shoe products [7][9]

Investment Rating - The report maintains a "Strong Buy" rating for the company, with a target price of HKD 18.25 [1][7]. Core Insights - The company reported a revenue of CNY 28.68 billion for 2024, representing a year-on-year increase of 3.9%. However, the net profit attributable to shareholders decreased by 5.5% to CNY 3.01 billion, resulting in a net profit margin of 10.5% [1][3]. - The company declared a final dividend of CNY 0.2073 per share, bringing the total annual dividend to CNY 0.5848 per share, with a payout ratio of 50%, an increase of 5 percentage points year-on-year [1][3]. Financial Performance Summary - **Revenue Growth**: The company achieved a total revenue of CNY 28,676 million in 2024, with a projected growth of 3.5% in 2025 and 1.0% in 2026 [3][10]. - **Net Profit**: The net profit for 2024 was CNY 3,013 million, with a forecasted decline of 9.1% in 2025, followed by a recovery of 10.8% in 2026 [3][9]. - **Earnings Per Share (EPS)**: The EPS for 2024 was CNY 1.17, expected to decrease to CNY 1.06 in 2025, before rising to CNY 1.17 in 2026 and CNY 1.29 in 2027 [3][9]. - **Valuation Ratios**: The price-to-earnings (P/E) ratio is projected to be 11.9 in 2024, increasing to 13.1 in 2025, and then decreasing to 11.8 in 2026 and 10.8 in 2027 [3][9]. Product and Channel Strategy - **Product Focus**: The company is concentrating on core categories, with a 30%-40% increase in product matrix width and a focus on professional products, which accounted for approximately 60% of revenue in 2024 [7]. - **Channel Performance**: - Wholesale channel revenue increased by 2.6% to CNY 12.9 billion, with 4,820 wholesale stores by the end of 2024. - Direct sales channel revenue slightly decreased by 0.3% to CNY 6.9 billion, with 1,297 direct sales stores. - E-commerce channel revenue grew by 10.3% to CNY 8.3 billion, indicating strong online performance [7]. Future Outlook - The management anticipates that revenue will remain stable in 2025, with a high single-digit net profit margin. The company has become the official sportswear partner for the Chinese Olympic Committee and the Chinese sports delegation, which is expected to enhance brand value [7].

Core Insights - The key takeaway from Li Ning's latest financial report is the emphasis on "stability," which the company interprets as a commitment to robust operations rather than conservative management [1] - Li Ning's strategy focuses on "single brand, multiple categories, and multiple channels," leveraging technological innovation to strengthen its brand positioning in professional sports [1][2] Financial Performance - In the fiscal year 2024, Li Ning achieved a revenue of 28.68 billion RMB, representing a year-on-year increase of 3.9% [1] - The gross profit margin improved to 49.4%, up by 1 percentage point compared to the previous year [1] - Operating cash flow increased by 12.4% to 5.27 billion RMB, and the company declared a final dividend of 0.2073 RMB per share, raising the annual payout ratio to 50% [1] Product and Innovation Strategy - Li Ning continues to focus on six core categories: running, basketball, cross-training, badminton, table tennis, and sports lifestyle, with the running category seeing a retail sales growth of 25% [2] - The company has successfully sold over 10.6 million pairs of its core running shoes, showcasing its strong technological capabilities [2] - In the basketball segment, Li Ning has developed a comprehensive shoe matrix that caters to various player needs, with the "Gamma" basketball shoe receiving accolades as the best performance shoe of the year [4] Research and Development - Li Ning has increased its R&D investment by 9.3% in 2024, outpacing revenue growth, which reflects its commitment to enhancing its technological capabilities [4][5] - The company has made significant advancements in its "Li Ning Cloud" technology platform, evolving from a single technology to a multi-faceted platform over the past six years [5] Market Positioning and Strategy - Li Ning's ability to maintain stability in a challenging market is attributed to its deep understanding of the sports industry and its innovative approach to meet consumer demands [7] - The company has implemented effective inventory management, maintaining an industry-leading inventory turnover of 64 days and a sell-through ratio of four months [7] - Li Ning is actively expanding its presence in emerging markets while optimizing operations in higher-tier markets through refined management practices [8] Future Outlook - The company's focus on professional sports and continuous innovation is expected to enhance its brand recognition and financial performance in the future [6][11] - Li Ning is also exploring opportunities in new sports categories such as outdoor activities, tennis, and pickleball, demonstrating its proactive approach to capturing new business opportunities [11]