Core Viewpoint - Li Ning's performance in H1 2025 exceeded market expectations, with revenue growth driven by wholesale channels and professional products, despite challenges in certain categories [1][2] Financial Performance - In H1 2025, Li Ning achieved revenue of 14.82 billion yuan, a year-on-year increase of 3.3%, and a net profit attributable to shareholders of 1.74 billion yuan, a decrease of 11.0% [1] - The company plans to distribute an interim dividend of 870 million yuan, with a payout ratio of 50% [1] Channel Performance - Revenue from direct sales, wholesale, and e-commerce channels in H1 2025 was 3.38 billion yuan (-3%), 6.88 billion yuan (+4%), and 4.30 billion yuan (+7%) respectively, aligning with overall sales growth [1] - The running and training categories saw significant growth, each increasing by 15% year-on-year, while basketball and lifestyle categories continued to decline, with decreases of 20% and 7% respectively [1] Operational Metrics - Gross margin in H1 2025 was 50.0%, a slight decrease of 0.4 percentage points year-on-year, attributed to deeper discounts and a slight increase in e-commerce sales proportion [1] - Operating profit margin (OPM) was 16.5%, a decrease of 0.2 percentage points year-on-year, but still above market expectations [1] - Advertising and marketing expenses increased by 0.3 percentage points to 9.0% of revenue, with higher spending anticipated in H2 2025 [1] Product and Inventory Management - The inventory turnover ratio remained stable at approximately 4 months, with new products accounting for 82% of sales, a slight decrease of 1 percentage point year-on-year [2] - Professional products contributed over 60% to revenue, with improved discount rates and a sell-through rate maintained between 70%-80% [2] Future Outlook - The company is expected to achieve net profits of 2.59 billion yuan, 2.77 billion yuan, and 2.99 billion yuan for the years 2025-2027, with corresponding price-to-earnings ratios of 17, 16, and 15 times [2] - Increased brand promotion efforts are anticipated to seek growth amidst intensifying competition, with potential recovery in the basketball category due to new product launches [2]

Investment Rating - The investment rating for the company is "Buy" and is maintained [6]. Core Views - The company reported a revenue of 14.82 billion yuan for H1 2025, representing a year-on-year increase of 3.3%, while the net profit attributable to shareholders was 1.74 billion yuan, down 11.0% year-on-year, slightly exceeding expectations. The company plans to distribute an interim dividend of 870 million yuan, with a payout ratio of 50% [2][4]. Summary by Sections Performance Overview - In H1 2025, the company's revenue reached 14.82 billion yuan, with a year-on-year growth of 3.3%. The net profit attributable to shareholders was 1.74 billion yuan, reflecting a year-on-year decline of 11.0%. The performance was slightly better than expected, and the company intends to distribute an interim dividend of 870 million yuan, maintaining a dividend payout ratio of 50% [2][4]. Channel Performance - Revenue from direct sales, wholesale, and e-commerce channels in H1 2025 was 3.38 billion yuan, 6.88 billion yuan, and 4.30 billion yuan, respectively, with year-on-year changes of -3%, +4%, and +7%. The running and training categories were the main drivers of revenue growth, while basketball and lifestyle categories continued to decline [6]. Operational Metrics - The overall operating profit margin (OPM) was 16.5%, slightly down by 0.2 percentage points year-on-year, but better than market expectations. The gross margin decreased by 0.4 percentage points to 50.0%. The company increased its advertising and marketing expenses, which accounted for 9.0% of revenue, up 0.3 percentage points year-on-year [6]. Future Outlook - The company is expected to achieve net profits of 2.59 billion yuan, 2.77 billion yuan, and 2.99 billion yuan for the years 2025, 2026, and 2027, respectively. The current price corresponds to price-to-earnings (P/E) ratios of 17, 16, and 15 times for the respective years [8].