Investment Rating - The report maintains a "Buy" rating for Li Ning with a target price of HK$23.30, indicating a potential upside of 15% from the current price of HK$20.28 [2][3]. Core Views - The report highlights that Li Ning's 1H25 performance met expectations, with revenue of RMB 14.817 billion, a year-on-year increase of 3.3%. The gross margin was 50%, slightly down by 0.4 percentage points due to intensified promotional competition in direct sales channels [5][6]. - The report notes that while direct sales did not meet expectations, e-commerce revenue increased, leading to a rise in related expenses. The net profit for 1H25 was RMB 1.737 billion, down 11% year-on-year, with a net profit margin of 11.7% [5][6]. - The report emphasizes that all product categories and channels are performing well, with footwear revenue up 5% and accessories revenue up 24%, while apparel revenue declined by 3% [6][8]. Summary by Sections Financial Performance - Li Ning's revenue for 1H25 was RMB 14.817 billion, with a gross margin of 50%. The net profit was RMB 1.737 billion, reflecting an 11% decline year-on-year [5][6]. - The report projects revenue for 2025 to be RMB 28.686 billion, with a net profit of RMB 2.403 billion, representing a year-on-year decrease of 20.2% [9][12]. Operational Insights - The report indicates a balanced development between online and offline channels, with e-commerce revenue accounting for 31% of total revenue, up 1 percentage point year-on-year. Direct sales revenue decreased due to a reduction in store numbers [6][8]. - The report mentions that Li Ning plans to enhance its outdoor product lines and expects to introduce approximately 5,000 stores for outdoor categories by the end of the year [7][8]. Valuation and Forecast - The report maintains the earnings forecast for Li Ning for 2025-2027, expecting revenue growth of 0.0% in 2025, 2.0% in 2026, and 1.8% in 2027. The net profit is projected to decline by 20.2% in 2025 but recover slightly in the following years [8][9]. - The report assigns a P/E ratio of 22 times for 2026, raising the target price by 21% to HK$23.30, which still offers a 15% upside from the current price [8][9].

Group 1 - The core viewpoint is that the company is expected to experience a revenue growth of 2% and a decline in net profit attributable to shareholders of 16% in the first half of 2025, indicating a challenging market environment [1][2] - The company maintains a "buy" rating and has raised the target price by 5% to HKD 19.30, corresponding to an 18 times P/E ratio for 2026 [1][2] - The company's revenue for 1H25 is projected to reach approximately 14.63 billion yuan, with a gross margin decline of 0.5 percentage points to 49.9% [1][2] Group 2 - The company has expanded its product width significantly in the previous year, but the risk-reward ratio may decrease this year due to higher bases and increased inventory management challenges [2] - The company plans to enhance its outdoor product lines, particularly in light outdoor categories, with an expected introduction of around 5,000 stores by the end of the year [2] - The forecast for 2025-2027 revenue remains unchanged, with expected revenues of 28.69 billion, 29.25 billion, and 29.79 billion yuan respectively, while net profit estimates have been reduced by 6% to 7% for the same period [2]

Investment Rating - The report maintains a "Buy" rating for Li Ning with a target price of HK$19.30, reflecting a 5% increase from the previous target price [3][6]. Core Views - The report anticipates a 2% year-on-year revenue growth and a 16% decline in net profit for the first half of 2025, with expected revenue of RMB 14.63 billion [1][6]. - The performance of Li Ning's running shoe matrix is strong, but the basketball category remains under pressure, leading to a forecasted retail discount increase in Q2 2025 [1][2]. - The report suggests that the company will continue to expand its product range, particularly in outdoor products, with a goal of introducing approximately 5,000 stores by the end of the year [2]. Financial Summary - Revenue projections for 2025-2027 are maintained at RMB 28.686 billion, RMB 29.249 billion, and RMB 29.787 billion respectively, with a slight decrease in net profit estimates for the same period [3][4]. - The expected net profit for 2025 is revised down to RMB 2.403 billion, reflecting a 20.2% year-on-year decline, with a net profit margin of 8.4% [3][4]. - The report highlights a projected gross margin decrease of 0.6 percentage points to 48.8% for 2025 [7]. Valuation Metrics - The report assigns an 18x P/E ratio for 2026, leading to a target price of HK$19.30, which indicates a 19% upside potential from the current stock price of HK$16.28 [3][6]. - Historical P/E ratios for Li Ning have fluctuated between 10-15x over the past two years, suggesting a continuation of the range trading logic unless there is a fundamental change [2][3].