In a report released today, Walter Woo from CMB International Securities maintained a Buy rating on Li Ning Company (LNNGF – Research Report), with a price target of HK$19.81.
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Walter Woo has given his Buy rating due to a combination of factors that suggest a positive outlook for Li Ning Company. Despite the conservative guidance for FY25, the company’s recent performance has slightly exceeded expectations, indicating potential for improvement. The management’s focus on maintaining growth in key segments like running and basketball, along with efforts to enhance the lifestyle segment, reflects a strategic approach to sustain sales momentum.
Additionally, the company aims to stabilize gross profit margins through better retail discounts and an improved channel mix, particularly with online sales expected to grow faster. Although operating margins might face pressure from increased advertising and promotional expenses, as well as research and development investments, the closure of underperforming stores and a better channel mix are expected to mitigate some of these challenges. Despite a high valuation, the improving trends in early FY25 and the pricing in of negative news support a continued positive outlook, justifying the Buy rating.
According to TipRanks, Woo is a 3-star analyst with an average return of 2.7% and a 54.26% success rate. Woo covers the Consumer Cyclical sector, focusing on stocks such as Yum China Holdings, ANTA Sports Products, and Xtep International Holdings.
In another report released today, DBS also maintained a Buy rating on the stock with a HK$21.90 price target.