Li Ning’s Strategic Turnaround and Valuation Justify Buy Rating Despite Margin Concerns

In a report released today, Walter Woo from CMB International Securities maintained a Buy rating on Li Ning Company, with a price target of HK$18.95.

Walter Woo has given his Buy rating due to a combination of factors including Li Ning’s strategic efforts for a turnaround and the brand’s inherent value. Despite the company’s retail sales being in line with expectations, there are concerns about margins and a challenging outlook for the second half of 2025. However, the stock’s valuation at 15x FY25E P/E is considered reasonable, especially when compared to its historical average of 25x.
Li Ning’s ongoing initiatives in product innovation, branding, and channel upgrades, along with supportive government policies aimed at boosting consumption, suggest potential for recovery. Although there are headwinds such as sluggish sales trends and increased promotional activities, the company’s stable store count and strategic adjustments provide a foundation for optimism. Walter Woo believes that these factors collectively indicate a likely turnaround, justifying the Buy rating.