Core Viewpoint - Li Ning's Q3 2025 operational performance shows a mixed picture with offline sales declining while e-commerce continues to grow robustly, indicating a shift in consumer purchasing behavior [1][2]. Group 1: Sales Performance - In Q3 2025, Li Ning's overall revenue decreased by a high single-digit percentage year-on-year, with offline channel sales experiencing a high single-digit decline and e-commerce sales growing by a high single-digit percentage [1]. - The wholesale channel saw a significant decline in revenue, with a high single-digit percentage drop year-on-year, while the number of wholesale stores stood at 4,881 by the end of Q3 2025, reflecting a net increase of 61 stores since the beginning of the year [1]. - Direct sales revenue also fell by a mid-single-digit percentage year-on-year, with the total number of direct stores at 1,251, which is a net decrease of 46 stores since the start of the year [1]. Group 2: E-commerce and Young Segment - E-commerce revenue in Q3 2025 increased by a high single-digit percentage, showing an improvement in growth rate compared to the mid-single-digit percentage increase in Q2 [2]. - The children's clothing segment, Li Ning YOUNG, continued its rapid growth, with 1,480 stores by the end of Q3 2025, reflecting a net increase of 12 stores since the beginning of the year, and is expected to achieve double-digit growth in revenue [2]. Group 3: Inventory and Future Outlook - The inventory-to-sales ratio is projected to be between 5-6 at the end of Q3 2025, which is an increase from previous periods, driven by preparations for upcoming holidays and promotional events [2]. - For 2025, the company expects revenue to remain flat year-on-year, while net profit attributable to shareholders is anticipated to decline by 22% [3]. - The company plans to leverage the upcoming Olympic events for marketing activities, which may lead to a new growth phase for the brand in the medium to long term [3]. Group 4: Profit Forecast and Investment Recommendation - The projected net profits for Li Ning from 2025 to 2027 are estimated at 2.366 billion, 2.540 billion, and 2.759 billion yuan respectively, with a price-to-earnings ratio of 18 times for 2025, maintaining a "buy" rating [3].

Core Viewpoint - Li Ning Company Limited reported steady revenue growth for the first half of 2025, with a focus on solidifying its operational foundation and business development strategies [2][4]. Financial Performance - The company's revenue reached 14.817 billion RMB, a 3.3% increase compared to 14.345 billion RMB in the same period of 2024 [2]. - Gross profit was 7.415 billion RMB, up 2.5% from 7.236 billion RMB year-on-year, with an overall gross margin of 50.0%, down 0.4 percentage points from 50.4% [2]. - Profit attributable to equity holders was 1.737 billion RMB, down from 1.952 billion RMB in the previous year, with a profit margin of 11.7% [2]. - Basic earnings per share were 0.6743 RMB, compared to 0.7580 RMB in the same period last year [2]. Cash Flow Management - The net cash generated from operating activities was 2.411 billion RMB, a decrease from 2.730 billion RMB in the previous year [3]. - As of June 30, 2025, cash and cash equivalents totaled 11.798 billion RMB, an increase of 4.299 billion RMB from December 31, 2024 [3]. - The total cash balance, including fixed deposits, was 19.190 billion RMB, reflecting a net increase of 1.050 billion RMB [3]. Operational Overview - The company continued to implement its "single brand, multi-category, multi-channel" strategy, focusing on product upgrades, brand marketing, and channel optimization [4]. - Li Ning signed a partnership with the Chinese Olympic Committee for the 2025-2028 period, enhancing its brand image as a supporter of professional sports [4]. - The company is focusing on six core categories: running, basketball, cross-training, badminton, table tennis, and sports leisure, while also exploring new segments like outdoor sports and tennis [4]. Channel Development - Li Ning is enhancing its multi-dimensional channel network, with a total of 7,534 sales points as of June 30, 2025, a net decrease of 51 from December 31, 2024 [5]. - The company is optimizing its retail operations and enhancing collaboration between headquarters and retail outlets to improve efficiency [5]. E-commerce and Supply Chain - The company is focusing on e-commerce growth through online-offline integration and targeted marketing strategies [6]. - Li Ning is optimizing its supply chain with a focus on quality control, delivery assurance, cost optimization, and sustainability [6]. Children's Wear Business - Li Ning YOUNG is making steady progress in product optimization, channel development, and brand marketing, with a total of 1,435 sales points as of June 30, 2025, a net decrease of 33 from December 31, 2024 [7]. Future Outlook - The company plans to continue executing its core strategy while enhancing product competitiveness and deepening its partnership with the Chinese Olympic Committee [8]. - Li Ning aims to improve business quality and efficiency through channel, product, and supply chain collaboration [9]. - The company will focus on talent development, financial governance, and digital empowerment to support its growth [9].

Investment Rating - The report maintains a "Buy" rating for Li Ning [6] Core Views - Li Ning's adult revenue showed low single-digit year-on-year growth in Q2 2025, with offline channel revenue declining and e-commerce revenue growing in mid-single digits [1][2] - The company is focusing on optimizing its product and marketing strategies to establish a foundation for long-term growth, particularly through its partnership with the Olympic Committee [3] - Revenue for 2025 is expected to remain flat year-on-year, while net profit attributable to shareholders is projected to decline by 21% [3] Summary by Sections Revenue and Sales Performance - In Q2 2025, Li Ning's direct sales revenue decreased in mid-single digits, attributed to a significant number of store closures in the second half of 2024 [1] - The wholesale channel revenue grew in low single digits, with the number of wholesale stores increasing to 4,821 by the end of H1 2025 [1] - E-commerce sales growth slowed compared to Q1 2025, with Q2 growth in mid-single digits, influenced by a weaker overall sales environment during the 618 shopping festival [2] Product Segments - Li Ning's children's clothing segment, Li Ning YOUNG, is expected to outperform adult sales, with a steady growth rate and an increase in store count to 1,435 by the end of Q2 2025 [2] - The company is enhancing its product structure and brand promotion for children's clothing to drive long-term growth [2] Inventory Management - Li Ning emphasizes inventory management, with an estimated inventory turnover ratio of around 4 by the end of Q2 2025, indicating a healthy inventory level [2] Financial Projections - The company forecasts revenues of 28.92 billion in 2025, with a net profit of 2.39 billion, reflecting a 21% decline [3] - The projected earnings per share (EPS) for 2025 is 0.92, with a price-to-earnings (P/E) ratio of 16 times [3][5] Market Position and Strategy - Li Ning is focusing on enhancing its brand influence through Olympic-related marketing activities and expanding its product matrix in various sports categories, including running, basketball, badminton, and outdoor sports [3]

Core Insights - Li Ning Group reported a revenue of 28.676 billion RMB for the year ending December 31, 2024, representing a 3.9% increase compared to 27.598 billion RMB in 2023 [1] - The gross profit reached 14.156 billion RMB, up 6.0% from 13.352 billion RMB in the previous year, with an overall gross margin of 49.4%, an increase of 1 percentage point from 48.4% in 2023 [1] Group Strategy and Innovation - The company continues to focus on a "single brand, multiple categories, and multiple channels" core strategy, achieving significant progress in product innovation, brand building, and channel optimization through ongoing R&D and technological innovation [1] - In 2024, the company made breakthroughs in technology R&D, launching a new midsole technology called "Super," which has evolved from a "single technology" to a platform with four major technologies over six years, enhancing the application of sports technology and improving product matrix and series iteration capabilities [1] Product and Marketing Focus - The company remains dedicated to six core categories: running, basketball, cross-training, badminton, table tennis, and sports lifestyle, with the running category experiencing a retail sales growth of 25% [1] - Li Ning Group is actively expanding into emerging sports and niche categories such as outdoor sports, golf, tennis, and pickleball [1] Channel and Retail Operations - The company is consolidating and enhancing operational efficiency in high-tier markets while accelerating expansion into emerging markets [2] - In retail operations, the company is advancing a high-profit, high-efficiency single-store operation model, standardizing and quantifying core store indicators, and aligning them with management goals across various functions to improve overall operational efficiency [2] Children's Apparel Business - The Li Ning YOUNG brand has completed the restructuring of its youth product matrix, focusing on the core competitiveness of clothing and accessories while actively expanding into emerging markets [2] - The company is also committed to improving single-store efficiency, building clearance channels, promoting product turnover, and expanding its customer base [2]