Orient Securities released a research report stating that despite overall pressure on discretionary consumption in 2025, LI NING's (02331) operations are expected to slightly exceed previous market expectations. Should consumption subsequently recover, the company demonstrates relatively greater resilience. The target price is set at HK$25.41 (1 CNY = 1.11 HKD), maintaining a "Buy" rating. Orient Securities' main viewpoints are as follows:
The company recently launched new store formats and products, embarking on a new journey as the Olympic cycle begins. In December 2025, the LI NING brand inaugurated its first global "Dragon Store" at the landmark Sanlitun Taikoo Li shopping district in Beijing and officially launched its new Glory Gold Label product series. This marks another significant event following the company's official partnership with the Chinese Olympic Committee commencing in 2025. The new store format, named "Dragon," will center around three themes—"Podium Moment," "Competition Moment," and "Life Moment"—to create exclusive products and experiences for consumers. The report believes the new Dragon Store will play a positive role in strengthening the brand's profound sporting spirit and sense of national pride.
Accompanying the Dragon Store's launch, the Glory Gold Label series exhibits a distinct difference from the brand's original product style. By integrating professional sports technology with minimalist design, the product line expands into more diversified scenarios such as commuting, business, and light sports, aligning well with the needs of the urban middle class. The report believes that under the new Olympic cooperation cycle, the concentrated launch of new store formats and products is likely to attract new customer segments and generate fresh demand.
Against the backdrop of continued weakness in discretionary consumption throughout 2025, the report anticipates that the company's revenue could achieve slight year-on-year growth, driven by categories like badminton. Concurrently, due to factors such as ongoing channel optimization, the expense ratio for the second half of 2025 is also expected to be slightly better than previously forecast. Consequently, the report estimates that the company's full-year 2025 profits have the potential to modestly exceed prior market expectations. It is particularly noteworthy that, as the company has consistently emphasized operational quality, its inventory structure and inventory-to-sales ratio remain at favorable levels within the industry (as of mid-2025, new products aged 6 months or less accounted for 82% of ending inventory, and the omni-channel inventory-to-sales ratio was only 4 months).
The report further suggests that if consumption gradually recovers in 2026, supported by continued macro-policy efforts, the company's operational performance could exhibit relatively greater elasticity. Continued share purchases by major shareholders throughout 2025 also reflect confidence in the company's long-term development. During 2025, major shareholder Feifan Lingyue increased its stake in the company multiple times, raising its shareholding ratio from 10.53% at the end of 2024 to 14.27% by the end of 2025. The report views this as an indication of the major shareholder's confidence in the company's long-term prospects.
Based on industry competition dynamics and tracking of the company's business, the report has made minor adjustments to its profit forecasts. It now expects EPS for 2025-2027 to be RMB 0.95, RMB 1.07, and RMB 1.22, respectively (previous forecasts were RMB 0.92, RMB 1.05, and RMB 1.20). Using comparable companies as a reference and applying a 2025 P/E multiple of 24 times, the target price is set at HK$25.41 (1 CNY = 1.11 HKD), and the "Buy" rating is maintained.
Risk warnings include: consumption recovery falling short of expectations, intensifying industry competition, and slower-than-expected promotion of new products and new channels.
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