2025年第二季度大致一致，过渡正在进行中

FY25EFY26EFY27E28,67630,51832,4853.90.06.46.43,177.93,686.44,267.72,557.52,980.43,470.80.991.151.34(15.1)16.516.514.812.710.91.51.41.31.23.73.23.74.39.610.611.637.140.342.9 Target PriceHK$18.95(Previous TPHK$19.81)Up/Downside18.0%Current PriceHK$16.06China Consumer DiscretionaryWalter WOO(852) 3761 8776walterwoo@cmbi.com.hkStock DataMkt Cap (HK$ mn)42,021.7Avg 3 mths t/o (HK$ mn)52w High/Low (HK$)20.85/12.92Total Issued Shares (mn)Source: FactSetShareholding StructureViva China HoldingsGIC Pte Ltd.Source: HKExShare PerformanceAbsoluteRelative3.7%3.7%7.1%Source: FactSet12-mth Price PerformanceSource: FactSetRecent Reports:Topsports (6110 HK)-Prudent guidancebut strong cash flow & yield(23May25)Xtep(1368HK)-Inline 1Q25 results anda moderate outlook(18Apr25)Anta Sports (2020 HK)-Acquisition ofJack Wolfskin finally announced(14Apr25)Li Ning (2331 HK)-Conservativeguidance but quite expected(31Mar25)Anta Sports (2020 HK)-Prudent targetsbut the trend is encouraging(20Mar25)Xtep (1368 HK)-Building a more all-round company in long run(19Mar25) 307.02616.511.3%5.0%1-mth2.4%3-mth-8.2%6-mth-15.0% 1 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE2Q25 retail saleswereroughly inline with expectations.Li Ning’sretail salesgrew by LSD (about 1, according to management) in 2Q25, roughly inline with CMBIestimatesof 3% and investors’ expectations (esp. after a fairly weak Jun 2025). Sucha growth rate is below Li Ning’s internal target, because of: 1) low consumerspending appetite, 2) intensified industry competition, 3) decline in offline foot traffic,4) weaker-than-expected 618 sales and 5) lack of product innovations. Retail salesin the offline channelhavefallen by LSD (MSD drop for direct retail, due to quite anumberofstore closures last year, LSD increases for wholesale) while e-commercechannel retailsaleshaveincreased by MSD. In terms of sports categories, retailsales growth for running (HSD increase) remained strong, but lifestyle was moderate(flattish) and basketball was extremely weak (around 20% drop), while other sportslike outdoor and badmintonhave allshownrather healthy growth. Performance inthe lower tier cities has outpaced that in the higher tier cities. Retail sales growthwas also faster in outlets, than that in regular price stores.Inventory level remained healthy, but retail discounts definitely a miss in 2Q25.Inventory to sales ratio was very healthy at around 4 months in 1Q25, improvedremarkablyfromthat of5 months in 1Q25.However, the retail discountshavenotonly widened QoQ but also decreased YoY in 2Q25, for both offline and onlinechannel. This is inline with CMBIestimatesbut still somewhat weaker than theCompany’s guidance announced after the FY24 results in Mar 2025.Yang Hansen, abasketball playersponsoredbyLi Ning, has been selected asthe 16th overallpick in the 2025 NBA draft by the Portland Trail Blazers.Thishas made him the 3rd Chinese player ever drafted in the first round, following YaoMing and Yi Jianlian. Li Ning has planned to provide full supportthroughoutYang’sNBA career. The Company will launchrelevant product seriesfeaturinghis personallogos (signature shoes will not be out yet),and conduct marketing campaignsoneach key events such as the summer league, NBA regular seasons and the All-StarGame, etc. However, even though this iscertainly a positive surprise for Li Ning, wedo think it is just way too early to generate anymaterialsales and profit contributionfor the group or even for the basketball segment.Earnings revisionFigure1: Earnings revisionNewOldRMBmnFY25EFY26EFY27EFY25EFY26EFY27EFY25ERevenue28,67630,51832,48528,67630,51832,4850.0%Gross profit14,08015,05416,02514,22315,18616,165-1.0%EBIT3,1783,6864,2683,3333,8124,381-4.7%Net profitatt.2,5582,9803,4712,6733,0773,560-4.3%Diluted EPS (RMB)0.991.151.341.031.191.38-4.3%Gross margin49.1%49.3%49.3%49.6%49.8%49.8%-0.5pptEBIT margin11.1%12.1%13.1%11.6%12.5%13.5%-0.5pptNet profit att. margin8.9%9.8%10.7%9.3%10.1%11.0%-0.4pptSource: Company data, CMBIGM estimatesFigure2: CMBIGMestimates vs consensusCMBIGMConsensusRMBmnFY25EFY26EFY27EFY25EFY26EFY27EFY25ERevenue28,67630,51832,48528,97430,51732,174-1.0%Gross profit14,08015,05416,02514,29715,12316,008-1.5%EBIT3,1783,6864,2683,1723,5994,0320.2%Net profit att.2,5582,9803,4712,6853,0143,356-4.8%Diluted EPS (RMB)0.991.151.341.041.171.30-4.9%Gross margin49.1%49.3%49.3%49.3%49.6%49.8%-0.2pptEBIT margin11.1%12.1%13.1%10.9%11.8%12.5%0.1pptNet profit att. margin8.9%9.8%10.7%9.3%9.9%10.4%-0.3pptSource: Company data, CMBIGM estimates PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGEOperating numbersFigure3: Historical sales growth trend, by brandSource:Company data, CMBIGM estimates, *Nike's year end is at May (e.g. 4Q18 calendar year = 2Q19 fiscal year = Sep-Nov 2018)Operating numbers1Q222Q22Nike China sales-8%-20%Adidas China sales-35%-35%Anta brand's SSSGAnta brand's retail sales+ve High-teens-ve MSD+ve MSDCore brand+ve Mid-teens-ve Low-teens+ve