Core Insights - The article highlights the positive transformation of Li Ning, a well-established sports brand, as it re-establishes its partnership with the Chinese Olympic Committee (COC) for the 2025-2028 period, marking a significant milestone after 16 years [1][3] - Li Ning's revenue for the first half of 2025 reached 14.817 billion yuan, a year-on-year increase of 3.3%, while net profit attributable to equity holders decreased by 11% to 1.737 billion yuan [1][4] Company Developments - Li Ning has outlined a strategic plan for major upcoming events, including the 2028 Olympics and the 2026 Winter Olympics, to enhance brand visibility and consumer engagement [3][4] - The company has increased its advertising and marketing expenses by 87 million yuan, with a cost ratio rising by 0.3 percentage points to 9%, primarily due to new Olympic sponsorship costs [4][6] Market Environment - The sports consumption market is highly competitive, leading to a slight decline in Li Ning's gross margin by 0.4 percentage points, attributed to intensified promotional discounts [6][8] - Li Ning is adapting to the challenging market by optimizing its offline store structure, reducing the number of stores from 7,585 to 7,534, and exploring new retail formats like pop-up stores [8][9] Product Strategy - Li Ning continues to focus on its core product categories, particularly running, which has seen a compound annual growth rate of over 20% in the past three years, with over 14 million pairs of professional running shoes sold in the first half of 2025 [8][9] - The basketball segment has faced a 20% decline in retail sales, prompting Li Ning to adjust its shipping plans to ensure healthy terminal sales without pursuing low-quality growth [9][11] Future Outlook - The company anticipates a challenging market environment in the latter half of 2025, with preparations in place to navigate potential difficulties [11][12] - Li Ning aims to maintain a cautious approach while solidifying its business foundation and seizing structural opportunities for sustainable long-term growth [12]

Investment Rating - The investment rating for the company is "Buy" and is maintained [8] Core Insights - The company reported a strong performance in its 2024 financial results, with total revenue of 28.68 billion, a year-on-year increase of 3.9%, and a net profit attributable to shareholders of 3.01 billion, a year-on-year decrease of 5.5%. The overall performance met the upper expectations, and after accounting for a new impairment of investment properties of 0.33 billion, the performance was considered to be above expectations [2][6] Summary by Relevant Sections Financial Performance - The gross profit margin improved steadily, with an operating profit margin (OPM) performance exceeding expectations. In 2024, the gross margin increased by 1 percentage point to 49.4%, driven by improvements in e-commerce and direct sales discounts [9] - The OPM for the second half of the year increased by 0.9 percentage points to 8.9%, and when excluding the impairment of investment properties, the OPM increased by 3.3 percentage points to 11.2% [9] Revenue and Growth - The company maintained a healthy growth in channels, with revenue growth aligning closely with sales growth across all channels. The offline new retail accounted for 85% of total sales, and the inventory turnover ratio was stable at four months [9] - The revenue growth trend appears positive, although increased expenses are anticipated. The company expects to see growth in bulk sales, but the divestment of overseas business, which accounts for 2% of total sales, has caused some drag [9] Future Outlook - Short-term revenue growth may be challenging due to significant expense increases related to Olympic sponsorship and associated marketing costs. The company is expected to balance expenses with growth, but short-term revenue growth may not be evident [9] - In the medium to long term, the company is focusing on optimizing operational quality and seeking growth opportunities amid intensified competition. The management has been working on improving operational efficiency, which may lead to a healthier growth trajectory in the future [9]