Bocom Intl's research report stated that Li Ning (02331) saw a single-digit decline in overall retail revenue across all channels in the third quarter of 2024. Offline retail performed poorly due to customer traffic pressure, showing a single-digit decline. Online retail recorded a single-digit growth.
The bank pointed out that during the National Day holiday, various channels recovered sequentially, with the e-commerce channel showing a significant growth of 30-40%. Currently, the presale situation for Singles' Day sales meets the company's expectations, and various sales indicators (such as average order value) have improved compared to the previous period, coupled with the low base in the same period last year. The performance in the fourth quarter is expected to be better than the first three quarters. To ensure a stable inventory level (more than 80% of inventory is new products within six months), the company has increased terminal discount efforts. In the third quarter, the offline discount rate deepened by a low single-digit percentage year-on-year, and this discount rate trend is expected to continue into the fourth quarter. Management maintains its expectation of improving the gross margin by approximately 1 percentage point for the full year.
The bank maintains its forecast for the company's full-year financials, with revenue growth in the low single digits and a net income margin in the low double digits. This forecast is in line with market expectations. The target price is maintained at HK$14.89 with a neutral rating.
