Li Ning Faces Cautious Outlook Amid Uncertain Environment

UOB Kay Hian | March 31, 2025

Li Ning’s 2024 Results: Revenue Beat, Profit Missed Expectations

Li Ning, one of the leading sportswear brands in China, reported its 2024 financial results. The company’s revenue beat expectations, growing 3.9% year-over-year to Rmb28,676 million. However, net profit missed the mark, declining 5.5% to Rmb3,013 million.

Flat Sell-Through Performance, Offline Operations Face Challenges

In 2024, the overall retail sell-through for Li Ning’s platform remained flat year-over-year.
The offline channel recorded a low-single-digit decline, with both average selling price (ASP) and sales volume seeing a low-single-digit drop.
E-commerce sales grew by mid-teens, offsetting the offline weakness.
Offline discounts deepened by 0.5 percentage points, while e-commerce discounts improved by low single digits.
By the end of 2024, channel inventory increased by high single digits, and channel inventory turnover months rose to 4.0 from 3.6 at the end of 2023.

Cautious Outlook for 2025, Margin Remains Challenging

Looking ahead to 2025, management remains cautious due to the uncertain external environment, expecting revenue to remain flat.
The company targets a high-single-digit net profit margin, as it plans to increase investments in sports resources to enhance product competitiveness.
Although profitability may remain challenging in the near term, management believes the company can achieve long-term sustainable growth through these efforts and aims for a double-digit net margin in the future.

Earnings Revision and Valuation

We lower our 2025 and 2026 earnings forecasts by 23% and 24%, respectively, to reflect the increased investments and slightly lower gross margin estimates.
We maintain a BUY rating on Li Ning but cut our target price by 7% to HK$19.00, which implies 15.9x 2025 P/E and 14.4x 2026 P/E.

Key Financial Highlights