Investment Rating - The report assigns a "Buy" rating to the company, with a current price of HKD 20.90 and a fair value of HKD 22.30 [8]. Core Insights - The company's offline sales in Q4 showed a narrowing decline compared to Q3, indicating improved performance despite ongoing challenges in the retail environment [8]. - The company is focusing on enhancing efficiency and quality by increasing R&D and marketing investments while controlling other expenses to improve profitability [3][8]. - The introduction of innovative retail formats, such as "Dragon Stores" and outdoor stores, aims to expand the target consumer base [3]. Financial Summary - The company's projected revenue for 2023 is CNY 27.598 billion, with a growth rate of 7.0%. This is expected to increase to CNY 33.331 billion by 2027, with a CAGR of approximately 7.7% [4]. - EBITDA is forecasted to decrease from CNY 5.814 billion in 2023 to CNY 5.205 billion in 2025, before rising to CNY 7.262 billion by 2027 [4]. - The net profit attributable to shareholders is expected to decline from CNY 3.187 billion in 2023 to CNY 2.606 billion in 2025, before recovering to CNY 3.131 billion in 2027 [4]. - The earnings per share (EPS) is projected to decrease from CNY 1.21 in 2023 to CNY 1.01 in 2025, with a slight recovery to CNY 1.21 by 2027 [4]. - The company’s return on equity (ROE) is expected to decline from 13.1% in 2023 to 9.5% in 2025, before gradually improving to 10.3% by 2027 [4]. Market Position and Strategy - The company is expected to leverage the upcoming Los Angeles Olympic cycle to enhance brand visibility and performance [8]. - The introduction of the "Honor Gold Standard" product line targets consumers with commuting, business travel, and light sports needs, indicating a strategic shift towards meeting diverse consumer demands [8].

Investment Rating - The report maintains a "Buy" rating for Li Ning Company [6] Core Views - The signing of the Chinese Olympic Committee in the first half of 2025 marks the beginning of a new product and marketing cycle for Li Ning, with potential for brand strength recovery and performance improvement [1][14] - Despite short-term pressures from fluctuating consumer environments, the company is positioned for a potential upward trend in stock price if revenue or profit improves in the medium to long term [1][4] Company Overview - Li Ning's revenue and net profit for the first half of 2025 are projected at 14.8 billion and 1.7 billion yuan, respectively, reflecting a year-on-year change of +3.3% and -11% [1][15] - The company has faced challenges since 2022, with a decline in brand revenue in the third and fourth quarters of 2025 [1][15] - The current channel structure is primarily wholesale, with revenue contributions of 46% from wholesale, 23% from direct sales, and 29% from e-commerce as of the first half of 2025 [15] Industry Trends - The demand for sports footwear and apparel among residents is resilient, with a projected market size of 260.2 billion yuan by 2024 and a CAGR of 9% from 2025 to 2029 [2] - The diversification and specialization of sports participation are becoming more pronounced, with increased demand for professional products driven by rising participation in running and social sports [2] Competitive Strength - The Olympic cycle is expected to enhance Li Ning's brand power and strengthen sponsorship in niche categories [2][3] - The company is focusing on professional running shoes and outdoor products, which are anticipated to contribute to revenue growth [3][4] Product Insights - In the first half of 2025, the revenue breakdown by category is as follows: running (34%), basketball (17%), training (16%), and sports lifestyle (29%), with running and training categories showing a growth of 15% each [3][15] - Li Ning is emphasizing the development of running shoes and enhancing the technological attributes of its training series [3] Channel Insights - As of the first half of 2025, Li Ning operates 4,821 franchise stores and 1,278 direct stores, with plans to open new store types focusing on Olympic and outdoor series products [3] - E-commerce revenue grew by 7% year-on-year to 4.3 billion yuan, accounting for 29% of total revenue, indicating a stable growth strategy in this channel [3] Profit Forecast and Investment Recommendations - The projected net profits for Li Ning from 2025 to 2027 are 2.742 billion, 2.901 billion, and 3.302 billion yuan, with growth rates of -9%, +5.8%, and +13.8%, respectively [4][5] - The current market capitalization corresponds to a PE ratio of 17 times for 2026, suggesting potential for valuation improvement as the company's Olympic marketing strategy and product optimization continue [4]

Investment Rating - The report does not provide a specific investment rating for the company [1] Core Insights - The company's overall revenue for Q4 experienced a low single-digit decline, with offline channels showing a moderate decrease while e-commerce remained stable [1] - The company anticipates a slight growth in total revenue for the year 2025, with strong contributions from specialized channels like badminton, which saw over 30% growth in the first three quarters [2] - The company is focusing on core professional sports and outdoor categories for growth, while also optimizing lifestyle products [2] - The sponsorship of the Chinese Olympic Committee is expected to enhance brand confidence and visibility, although translating this into sales will take time [2] Financial Summary - The projected total revenue for 2025 is estimated at 29,046 million, reflecting a 1% year-over-year growth [5] - The expected net profit for 2025 is 2,461 million, representing an 18% decline from the previous year [5] - The earnings per share (EPS) for 2025 is projected to be 0.95, with a price-to-earnings (P/E) ratio of 18.46 [3][5] - The company forecasts net profits of 24.61 billion, 26.83 billion, and 28.44 billion for the fiscal years 2025, 2026, and 2027, respectively [3]

Core Viewpoint - The retail performance of Li Ning in Q4 2025 shows a decline in overall sales, with specific challenges in both offline and online channels, despite some improvements compared to Q3 2025 [4][5]. Group 1: Retail Performance - In Q4 2025, Li Ning's overall retail revenue (excluding Li Ning YOUNG) decreased by a low single-digit percentage year-on-year, with offline and online channels experiencing a mid single-digit decline and flat performance, respectively [4]. - The total number of stores at the end of 2025 was 7,609, reflecting a net increase of 24 stores (+0.3%) from the beginning of the year, with Li Ning brand stores (excluding Li Ning YOUNG) and Li Ning YOUNG stores numbering 6,091 and 1,518, respectively [4]. Group 2: Channel Performance - The performance of various channels in Q4 2025 remained weak, although the decline in offline channels was slightly less severe compared to Q3 2025, with overall revenue decline narrowing from mid single-digit to low single-digit [5]. - The online channel's performance weakened compared to Q3, slowing from high single-digit growth to flat [5]. Group 3: New Initiatives - In 2025, the company became an official partner of the Chinese Olympic Committee and launched the "Honor Gold Standard" series of products in December, along with the opening of a new store format called "Dragon Store" in Beijing [6]. - The company plans to open pop-up stores for the Dragon Store in 17 high-tier cities during January and February 2026 to leverage the Spring Festival sales season [6]. - Additionally, the first independent outdoor store, COUNTERFLOW, was opened in Beijing in November 2025, focusing on outdoor products and enhancing the brand's influence in this category [6]. Group 4: Short-term Challenges - The company faces short-term retail pressure due to a weak overall market environment, with increased discounting and a healthy inventory level compared to Q3 [7].

Summary of Li Ning Company Conference Call Industry Overview - The Chinese sports and outdoor market is experiencing a trend of decentralization in market concentration, with the CR2 dropping from 38% in 2019 to 24% in 2025, and CR10 decreasing from 76% to 68%, indicating rapid growth of niche brands and a shift in market share from international to domestic brands since 2021 [2][5] - The overall performance of the sports and outdoor industry is expected to stabilize in 2025, with growth rates around 6-7%, a decline from the 15-20% compound growth seen from 2014 to 2019. Professional categories are outperforming fashion categories, with running, outdoor, and badminton products showing faster growth [3] Company Performance and Strategy - Li Ning Company has gone through three phases: benefiting from the "Guochao" trend from 2019-2021, facing operational issues from 2022-2024, and starting to show positive signs in 2025, such as recovering direct channel profit margins and increased marketing investments [2][8] - The company has signed with the Chinese Olympic Committee, launched the "Super Pump Capsule" running shoes, increased marketing exposure at marathon events, and opened new stores featuring Olympic elements to improve operations and brand image [2][9] - The Li Ning family increased their stake in the company from 11.23% to 14.27%, involving over 1 billion yuan, and a stock incentive plan was announced with a vesting period from 2026 to 2029, indicating a solid bottom and preparation for a new growth cycle [2][10] Financial Health - Li Ning's financial status is strong, with stable EBITDA, high net cash exceeding 19 billion yuan, and a significant dividend increase reflecting financial strength and shareholder return intentions [4][11] - The revenue forecast for 2025 is estimated between 20.09 billion to 29.3 billion yuan, with footwear accounting for 55%, apparel 35%, and accessories 9% [7] Product Category Performance - The running category has become the largest segment, accounting for 34%, while the sports lifestyle category is at 29%. The basketball category has seen a decline, necessitating a repositioning strategy [4][12] - Li Ning's basketball products face competition from Nike, with the brand's share fluctuating. The running shoes, particularly the "Chitu" series, have shown significant growth, but the basketball segment requires revitalization [6][12] Marketing and Brand Strategy - Li Ning has increased its marketing expense ratio to over 10% to enhance brand image and consumer engagement, leveraging Olympic sponsorships and new product technologies [4][19] - In the recent Shanghai Marathon, Li Ning shoes had a 22.2% usage rate among runners under 3 hours, significantly up from 1.8% the previous year, showcasing effective marketing strategies [20] Future Outlook - The company anticipates a gradual recovery in revenue growth, with predictions of a 10-15% profit increase driven by new product launches and improved gross margins [23] - Li Ning's valuation is projected at 19-20 times earnings, reflecting market expectations for its future growth potential despite current challenges [24]

Core Insights - The textile and apparel industry is expected to see a recovery in performance, particularly in the upstream textile manufacturing sector, with positive trends in wool prices and inventory appreciation benefiting leading companies like New Australia [5] - The report highlights potential growth in the downstream apparel and home textile sectors, driven by the rise of the sleep economy and the recovery of traditional businesses, with companies like Luolai Life and Jinhong Group being key focuses [5] - The textile and light industry sectors have shown mixed performance, with the textile sector rising by 0.91% and light industry by 2.65% during the reporting period [13][18] Textile and Apparel Industry Market Review - The Shanghai Composite Index increased by 2.31%, while the ChiNext Index rose by 3.02% during the period from December 22 to December 26, 2025 [13] - The textile and apparel sector ranked 22nd among 31 primary industries, while the light manufacturing sector ranked 11th [13] - The textile sector's latest PE (TTM) as of December 26, 2025, was 20.32X, with historical highs and lows of 57.80X and 14.44X respectively [15] Textile and Apparel Data Tracking - In the first nine months of 2025, China accounted for 17.10% of the EU's textile and apparel imports, followed by Bangladesh at 14.88% and Turkey at 6.18% [5] - The export values of Chinese cotton socks, zippers, and seamless apparel saw year-on-year declines of -3.40%, -0.65%, and -10.60% respectively in November 2025 [5] Light Industry Market Review - The light manufacturing sector's performance was bolstered by a favorable export environment, with key companies like Xiangxin Home and Yuanfei Pet showing potential for growth [5] - The report emphasizes the importance of monitoring the housing market, with a reported 8.46% year-on-year increase in transaction area for major cities during the period [5] Key Company Valuation and Financial Analysis - Notable companies in the textile and apparel sector include: - Mercury Home Textiles (603365.SH) with a target price of CNY 23.08 and a current PE of 13.38X for 2025E [6] - Anta Sports (02020.HK) with a target price of HKD 105.00 and a current PE of 17.09X for 2025E [6] - Li Ning (02331.HK) with a target price of HKD 20.22 and a current PE of 19.79X for 2025E [6]

Core Viewpoint - Guosen Securities is optimistic about Li Ning's brand momentum recovery, predicting net profit for 2025-2027 to be CNY 2.4 billion, CNY 2.68 billion, and CNY 3.06 billion respectively, driven by new products and marketing strategies [1] Industry Overview - The Chinese sports outdoor footwear and apparel market is expected to reach CNY 440 billion by 2025, with a current growth rate of around 6% after experiencing fluctuations due to the pandemic [1] - The market structure is changing significantly, with professional sports categories growing faster than fashion sports, and the market concentration decreasing from 76% in 2019 to 68% in 2025 [1] Company Performance Review - From 2019 to 2021, the company experienced significant growth, with net profit reaching CNY 4 billion in 2021, a 5.6 times increase from three years prior [2] - Between 2022 and 2024, the company faced challenges due to a cooling of the "national trend" and macroeconomic pressures, leading to a slowdown in revenue growth and a decline in net profit margin to just over 10% [2] - In 2025, the company is expected to see a recovery in operating profit margin through inventory management and channel optimization, alongside securing core marketing resources for the 2028 Olympic cycle [2] Product Cycle - The company's leading categories have shifted from basketball and sports lifestyle to running, which is expected to grow at a rate of 25%-45% in 2023-2024, becoming the largest category at 34% [3] - Basketball shoes have stabilized in price after a decline, while the running shoe matrix continues to expand, with new technology expected to drive growth [3] Channel Strategy - Starting in 2024, the company plans to reduce the number of direct stores and control store sizes, which is expected to improve direct operating profit margins from around 10% in 2023 to mid-double digits by 2025 [4] - The introduction of specialized stores, such as "Dragon Stores" and outdoor stores, aims to tap into niche markets [4] Marketing Efforts - The company plans to increase its marketing expense ratio to low double digits starting in 2025, focusing on securing core Olympic resources and enhancing exposure through marathon events and elite athletes [5] - Social media engagement is also being strengthened, with increases in post frequency, follower count, and interaction metrics [5]

Core Viewpoint - Guosen Securities is optimistic about the brand momentum recovery of Li Ning (02331), predicting net profits for 2025-2027 to be CNY 2.4 billion, CNY 2.68 billion, and CNY 3.06 billion respectively, driven by new products and marketing strategies [1] Industry Overview - The Chinese sports outdoor footwear and apparel market is expected to reach CNY 440 billion by 2025, with a current growth rate of around 6% after experiencing fluctuations due to the pandemic [2] - The market structure is changing significantly, with professional sports categories growing faster than fashion sports, and the market concentration decreasing from 76% in 2019 to 68% in 2025 [2] Company Performance Review - From 2019 to 2021, the company experienced significant growth, with net profits reaching CNY 4 billion in 2021, a 5.6 times increase from three years prior [3] - However, from 2022 to 2024, the company faced challenges due to a cooling of the "national trend" and macroeconomic pressures, leading to a slowdown in revenue growth and a decline in net profit margins [3] - By 2025, the company is expected to recover through inventory management and channel optimization, alongside securing core marketing resources for the 2028 Olympic cycle [3] Product Cycle - The company's leading categories have shifted from basketball and sports lifestyle to running, which is expected to grow at a rate of 25%-45% in 2023-2024, becoming the largest category at 34% [4] - Basketball shoes have stabilized in price after a decline, while the running shoe matrix continues to expand, with new technologies expected to drive growth [4] Channel Strategy - Starting in 2024, the company plans to reduce the number of direct stores and control store sizes, which is projected to improve direct operating profit margins from around 10% in 2023 to mid-double digits by the first half of 2025 [5] - The introduction of specialized stores, such as "Dragon Stores" and outdoor stores, aims to tap into niche markets [5] Marketing Efforts - The company plans to increase its marketing expense ratio to low double digits starting in 2025, focusing on securing core Olympic resources and enhancing exposure for new products through events and athlete endorsements [6] - Social media engagement is also being strengthened, with increases in post frequency, follower count, and interaction metrics [6]

Company Overview - Li Ning opened its first global "Dragon Store" in Beijing's Sanlitun Taikoo Li on December 14, showcasing a new brand image linked to traditional culture and emphasizing its status as an official partner of the Chinese Olympic Committee [1] - The store features three themes: "Award Moment," "Competition Moment," and "Life Moment," which comprehensively interpret the brand culture and product professionalism for consumers [1] Product Launch - The new "Honor Gold Label" series integrates professional sports technology with daily commuting needs, offering stylish and minimalist designs for urban consumers [2] - This series is expected to enrich Li Ning's product matrix, extending beyond core sports functionality to attract a broader consumer base [2] - Li Ning has also introduced new running shoe midsole technology "Super Capsule" and updated versions of core running shoe products "Feidian" and "Chitu" [2] Performance and Forecast - With the new Olympic cycle beginning, Li Ning is experimenting with new product lines and store formats, which is likely to enhance its brand influence among consumers [2] - The EPS forecasts for 2025 and 2026 are maintained at 0.92 and 1.07 CNY respectively, with the current stock price corresponding to 18 and 16 times the 2025 and 2026 earnings [2] - Due to the launch of new store formats and products, the target price is raised by 4% to 23.61 HKD, implying a 29% upside potential compared to the current stock price [2]

Group 1 - The core viewpoint of the report is that with the new Olympic cycle beginning, Li Ning (02331) is gradually experimenting with new product lines and store formats, which is expected to enhance the brand's influence among consumers [1] - The company maintains its EPS forecast for 2025/26 at 0.92/1.07 HKD, with the current stock price corresponding to 18/16 times the 2025/26 earnings multiple; the target price has been raised by 4% to 23.61 HKD, indicating a 29% upside potential from the current stock price [1] - The report highlights the opening of Li Ning's first global "Dragon Store" in Beijing, which reinforces the company's positioning in the Olympic product matrix [2] Group 2 - The Dragon Store connects Li Ning's representative design symbols with traditional culture and emphasizes its role as the official partner of the Chinese Olympic Committee, showcasing the brand's culture and product professionalism through themes like "Award Moments," "Competition Moments," and "Life Moments" [3] - The newly launched "Honor Gold Label" series integrates professional sports technology with daily commuting needs, providing high-quality options for urban consumers and expanding Li Ning's product matrix beyond core sports functionality [4] - Li Ning has successfully iterated its core products, introducing new midsole technology "Super Capsule" and new versions of key running shoes "Flying Electric" and "Red Rabbit," while sponsored athletes frequently achieve podium finishes in major events, showcasing the brand's strength in the professional sports field [5]