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Li Ning Company Limited (HK:2331)
:2331
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Li Ning Company
(2331)
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Rating:76Outperform
Price Target:
HK$19.50
â–²(1.93% Upside)
Li Ning Company's strong financial performance and reasonable valuation are key strengths, supported by a solid earnings call. However, technical indicators suggest potential short-term weakness, and challenges in certain product categories could impact future growth.
Positive Factors
Strong Cash Position
A strong cash position provides Li Ning with the financial flexibility to invest in growth opportunities, manage debt, and weather economic downturns, supporting long-term stability.
Footwear and Accessories Growth
Growth in footwear and accessories indicates strong consumer demand and effective product strategies, contributing to sustained revenue expansion and market share gains.
Strategic Partnerships
Partnerships with major sports organizations enhance brand visibility and credibility, driving long-term brand equity and customer loyalty.
Negative Factors
Decrease in Apparel Revenue
A decline in apparel revenue suggests challenges in product appeal or market competition, potentially impacting overall growth and profitability.
Gross Profit Margin Decline
A declining gross profit margin indicates increased cost pressures or pricing challenges, which can erode profitability if not addressed.
Basketball Category Downturn
A downturn in the basketball category highlights market-specific challenges, potentially affecting segment revenue and necessitating strategic adjustments.
Li Ning Company (2331) vs. iShares MSCI Hong Kong ETF (EWH)
Market Cap
HK$49.25B
Dividend Yield3.85%
Average Volume (3M)15.81M
Price to Earnings (P/E)16.3
Beta (1Y)1.29
Revenue Growth4.12%
EPS Growth-7.17%
CountryHK
Employees5,022
SectorConsumer Cyclical
Sector Strength84
IndustryLeisure
Share Statistics
EPS (TTM)0.74
Shares Outstanding2,584,811,000
10 Day Avg. Volume14,017,045
30 Day Avg. Volume15,805,178
Financial Highlights & Ratios
PEG Ratio-2.71
Price to Book (P/B)1.53
Price to Sales (P/S)1.39
P/FCF Ratio10.58
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
HK$20.70Price Target Upside8.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Li Ning Company Business Overview & Revenue Model
Company DescriptionLi Ning Company Limited, founded in 1990 by former Olympic gymnast Li Ning, is a leading sportswear and athletic footwear company based in China. The company specializes in designing and producing a wide range of products, including sports apparel, footwear, and accessories. It operates primarily in the sportswear sector and has established a strong presence in both domestic and international markets, offering products tailored for various sports and lifestyle activities.
How the Company Makes MoneyLi Ning generates revenue through multiple streams, primarily from the sale of its branded sportswear and footwear. The company operates retail stores, e-commerce platforms, and wholesale distribution channels, allowing it to reach a broad customer base. Key revenue streams include direct sales from its retail outlets, online sales through its own website and third-party platforms, and bulk sales to distributors and retailers. Additionally, Li Ning has secured significant partnerships, including collaborations with international sports organizations and endorsements from high-profile athletes, which enhance brand visibility and drive sales. The company's marketing strategies, focusing on innovation and alignment with popular sports trends, also contribute to its earnings.
Li Ning Company Earnings Call Summary
Earnings Call Date:Aug 21, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Mar 12, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative aspects. The company showed growth in revenue and strong performance in the footwear and accessories segments, particularly in e-commerce and professional running shoes. However, challenges were evident in the apparel and basketball categories, with declining gross profit and net margins. The company's strategic partnerships and strong cash position are positive indicators for future growth.Q2-2025 Updates
Positive Updates
Revenue Growth
Revenue grew by 3.3% to RMB 14.817 billion, and net operating cash inflow stood at RMB 24.11 billion.
Footwear and Accessories Growth
Footwear revenue grew by 5% year-on-year, and accessories revenue increased by 24%, driven by the Badminton category.
E-commerce Performance
E-commerce revenue increased by 1 percentage point to 31% of total revenue, with retail sell-through achieving a high single-digit percentage increase.
Professional Running Shoes Success
Professional running shoes sales exceeded 14 million pairs, with the core running shoes surpassing 5.26 million pairs.
Strong Cash Position
Net cash increased by RMB 1.61 billion year-on-year to RMB 19.191 billion, ensuring strong support for future opportunities.
Strategic Partnerships
Signed a contract to become the official partner of the Chinese Olympic Committee and the Chinese national sports delegation from 2025 to 2028.
Negative Updates
Decrease in Apparel Revenue
Apparel revenue decreased by 3% year-on-year.
Gross Profit Margin Decline
Gross profit margin decreased by 0.4 percentage points to 50% due to intensified promotional competition and channel structure adjustments.
Basketball Category Downturn
Basketball sell-through was down 20%, with the overall basketball market facing a downturn.
Direct Retail Revenue Decline
Direct retail revenue decreased by 4% year-on-year, with a decrease of 217 POS due to store structure optimization.
Net Margin Decline
Net margin decreased by 1.9 percentage points from 13.6% in the same period last year to 11.7%.
Company Guidance
During the call, Li Ning Company Limited provided several key financial and operational metrics for the first half of 2025. The company reported a revenue growth of 3.3%, reaching RMB 14.817 billion, with a net profit of RMB 1.737 billion and a net profit margin of 11.7%. The gross profit margin slightly decreased by 0.4 percentage points to 50%. The company maintained a healthy financial condition, with a net operating cash inflow of RMB 24.11 billion and an average working capital percentage of 7.3% relative to revenue. The Board of Directors proposed an interim dividend of RMB 0.3359 per share, maintaining a dividend payout ratio of 50%. Retail sales for the LI-NING main brand experienced low single-digit growth across all channels, while footwear revenue grew by 5% year-on-year, accounting for 56% of total revenue. In contrast, apparel revenue decreased by 3%, and accessories revenue increased by 24%, driven by the Badminton category, which grew by 38% and contributed 7% to the group's total revenue. Online sales outperformed offline sales, with e-commerce revenue rising by 1 percentage point to 31% of total revenue. The company also noted a slight decrease in direct retail revenue share to 23%, while wholesale revenue share increased by 1 percentage point to 46%. Despite a challenging market environment, Li Ning continued to focus on channel optimization and strategic investment in core product categories and brand development to drive long-term growth.Li Ning Company Financial Statement Overview
Summary
Li Ning Company shows strong financial health with robust revenue growth, high profitability, and a solid balance sheet. Effective cost management and strong cash flow generation enhance its financial position, despite slight declines in net income.Income Statement
Li Ning Company demonstrated strong revenue growth, with a 3.9% increase in the latest year. The gross profit margin remained robust at 49.4%, and the net profit margin was healthy at 10.5%. However, there was a slight decline in net income compared to the previous year. EBIT and EBITDA margins were strong, reflecting effective cost management.85
Very Positive
Balance Sheet
The company maintains a solid balance sheet with a low debt-to-equity ratio of 0.07, indicating low financial leverage. The equity ratio of 73.1% reflects a strong capital structure. Return on equity stood at 11.5%, demonstrating effective use of equity capital.88
Very Positive
Cash Flow
Li Ning's cash flow position is strong, with a 31.1% increase in free cash flow. The operating cash flow to net income ratio is 1.75, showing strong cash generation relative to earnings. The free cash flow to net income ratio is 1.25, indicating efficient cash conversion.82
Very Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 29.15B | 28.68B | 27.60B | 25.80B | 22.57B | 14.46B |
| Gross Profit | 14.34B | 14.16B | 13.35B | 12.48B | 11.97B | 7.09B |
| EBITDA | 6.22B | 6.12B | 6.31B | 6.97B | 6.53B | 3.31B |
| Net Income | 2.80B | 3.01B | 3.19B | 4.06B | 4.01B | 1.70B |
Balance Sheet | ||||||
| Total Assets | 36.78B | 35.71B | 34.21B | 33.65B | 30.27B | 14.59B |
| Cash, Cash Equivalents and Short-Term Investments | 17.05B | 15.76B | 8.94B | 8.03B | 15.15B | 7.19B |
| Total Debt | 1.78B | 1.94B | 2.54B | 2.14B | 1.32B | 1.05B |
| Total Liabilities | 9.61B | 9.60B | 9.80B | 9.31B | 9.17B | 5.90B |
| Stockholders Equity | 27.17B | 26.10B | 24.41B | 24.33B | 21.10B | 8.69B |
Cash Flow | ||||||
| Free Cash Flow | 3.52B | 3.76B | 2.87B | 2.08B | 5.50B | 2.02B |
| Operating Cash Flow | 4.95B | 5.27B | 4.69B | 3.91B | 6.53B | 2.76B |
| Investing Cash Flow | 3.14B | -839.62M | -2.45B | -9.48B | -6.54B | -991.55M |
| Financing Cash Flow | -2.33B | -2.32B | -4.22B | -1.89B | 7.60B | -513.49M |
Li Ning Company Technical Analysis
Positive
19.13
Price Trends
17.41
Positive
17.53
Positive
16.56
Positive
Market Momentum
0.32
Negative
66.70
Neutral
88.77
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:2331, the sentiment is Positive. The current price of 19.13 is above the 20-day moving average (MA) of 17.65, above the 50-day MA of 17.41, and above the 200-day MA of 16.56, indicating a bullish trend. The MACD of 0.32 indicates Negative momentum. The RSI at 66.70 is Neutral, neither overbought nor oversold. The STOCH value of 88.77 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:2331.
Li Ning Company Peers Comparison
UnderperformOutperform
Sector (61)
HK:2331
Li Ning Company
19.13
3.00
18.61%
HK:2020
ANTA Sports Products
82.00
5.11
6.65%
Li Ning Company Corporate Events
Li Ning Reports Mixed Q3 2025 Performance with E-commerce Growth
Oct 24, 2025
Li Ning Company Limited reported a mid-single-digit decline in retail sell-through for the third quarter of 2025, with offline channels experiencing a high-single-digit drop. However, e-commerce saw a high-single-digit growth. The total number of LI-NING POS in China increased by 33 since the previous quarter, while LI-NING YOUNG POS saw a net increase of 45. Despite these changes, the announcement is based on unaudited data, and stakeholders are advised to exercise caution.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.