Core Viewpoint - Li Ning reported a low single-digit decline in overall platform revenue for Q4 2025, excluding Li Ning YOUNG, with offline channels experiencing a mid single-digit decline and e-commerce channels remaining flat. The company maintains a "buy" rating with a target price of HKD 24 based on a 20x PE for 2026 [1][2]. Group 1: Revenue Performance - Overall platform revenue (excluding Li Ning YOUNG) recorded a low single-digit decline year-on-year in Q4 2025, with offline channels (including retail and wholesale) showing a mid single-digit decline [1]. - Retail channels experienced a low single-digit decline, while wholesale channels saw a mid single-digit decline, although retail performance was better than initial expectations due to increased clearance and promotional efforts in the second half of the year [1]. - E-commerce channels remained flat, with notable growth in specific platforms such as Douyin (double-digit growth), JD.com (single-digit growth), and Vipshop (key channel for inventory clearance) [1]. Group 2: Product and Inventory Management - In terms of product categories, running shoes recorded a mid single-digit growth, while sports lifestyle and basketball categories experienced negative growth; outdoor products performed well [1]. - The inventory-to-sales ratio for Q4 was maintained at a healthy level of 4-5, but discounts deepened slightly year-on-year and quarter-on-quarter, currently slightly above the mid-60% range, primarily due to the need for increased discounts to clear inventory in a warm winter [1]. - The company plans to improve revenue performance through product adjustments and optimizations [1]. Group 3: Store Expansion and New Store Formats - As of December 31, the number of Li Ning stores (excluding Li Ning YOUNG) was 6,091, a net decrease of 41 stores from Q3, with a net decrease of 26 stores year-to-date; direct retail stores saw a net decrease of 59 stores, while wholesale stores increased by 33 [1]. - The number of children's clothing stores increased by 38 from Q3, totaling 1,518 stores, with a year-to-date net increase of 50 stores, aligning with the company's planning [1]. - The newly launched "Dragon Store" format has been well-received by consumers, targeting a demographic that values quality and social status, and the company plans to continue expanding this store format and enriching its product line [1].

Investment Rating - The report maintains a "Buy" rating for Li Ning with a target price of 24 HKD, based on a 20x PE for 2026 [1][3][7]. Core Insights - Li Ning's overall platform revenue (excluding Li Ning YOUNG) experienced a low single-digit decline in Q4 2025, with offline channels seeing a mid-single-digit decline while e-commerce growth remained flat [2][3]. - The retail performance outperformed wholesale due to increased clearance and promotional efforts in the second half of the year, with notable growth in specific e-commerce channels like Douyin and JD [2]. - The introduction of new store formats, particularly the "Dragon Store," has been well-received, targeting consumers who value quality and brand prestige, indicating potential for future growth [3]. Financial Summary - Revenue projections for 2025-2027 are adjusted to 28.941 billion RMB, 30.559 billion RMB, and 31.889 billion RMB, respectively, with expected EPS of 1.04, 1.08, and 1.17 RMB [5][11]. - The company anticipates a recovery in profitability with a projected net profit of 2.675 billion RMB in 2025, increasing to 2.787 billion RMB in 2026 and 3.006 billion RMB in 2027 [5][11]. - The gross margin is expected to remain stable around 49.4% for the coming years, reflecting effective cost management [5][12].

Group 1 - The core viewpoint of the article indicates that Li Ning's overall retail revenue for Q2 2025 showed low single-digit growth year-on-year, with offline and e-commerce channels experiencing low single-digit decline and mid-single-digit growth respectively [1] - As of the end of Q2 2025, Li Ning's main brand store count reached 6,099, with a net increase of 11 stores compared to the previous quarter, but a net decrease of 18 stores compared to the end of the previous year [2] - The company signed NBA player Yang Hansheng, which is expected to boost basketball category sales, as basketball sales declined by 20% year-on-year in Q2 2025 [2] Group 2 - Li Ning plans to increase marketing and R&D investments related to the Olympics and technology in the second half of 2025 and into 2026, following its partnership with the Chinese Olympic Committee [3] - The company deepened discounts in Q2 2025 to drive sales, and inventory levels improved with a sales-to-inventory ratio of around 4 months [3] - Profit forecasts for 2025-2027 have been adjusted downwards, with net profits revised to 2.31 billion, 2.60 billion, and 2.93 billion respectively, while maintaining a "buy" rating based on long-term brand development potential [3]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company is expected to face challenges in sales in the second half of the year, with discounts and gross margins likely under pressure. However, the partnership with the Chinese Olympic Committee is anticipated to enhance long-term brand development [7] - The company plans to increase marketing and R&D investments related to the Olympics and technology in the second half of the year [7] - The company has deepened discounts to boost sales, and inventory levels have improved, with a good inventory control [7] Financial Forecasts - Total revenue (in million RMB) is projected to be 27,598 in 2023, 28,676 in 2024, 28,834 in 2025, 30,529 in 2026, and 32,074 in 2027, with year-on-year growth rates of 6.96%, 3.90%, 0.55%, 5.88%, and 5.06% respectively [1] - Net profit attributable to the parent company (in million RMB) is forecasted to be 3,187 in 2023, 3,013 in 2024, 2,313 in 2025, 2,598 in 2026, and 2,926 in 2027, with year-on-year changes of -21.58%, -5.46%, -23.24%, 12.31%, and 12.64% respectively [1] - The latest diluted EPS is expected to be 1.23 in 2023, 1.17 in 2024, 0.89 in 2025, 1.00 in 2026, and 1.13 in 2027 [1] - The P/E ratios are projected to be 11.85 for 2023, 12.54 for 2024, 16.33 for 2025, 14.54 for 2026, and 12.91 for 2027 [1]