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Li Ning Co Ltd 02331

Morningstar Rating
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Stock XHKG Rating as of
HKD 20.90 −0.20 (0.95%)
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As of Delayed Price Closed
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Company Report

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Li Ning Earnings: We Maintain Fair Value Estimate Despite Short-Term Setbacks

Ivan Su

Narrow-moat Li Ning's second-half 2023 results were below our expectations, and management’s guidance for 2024 also fell short. However, we believe management’s weaker-than-expected guidance is more of a reflection of continued effort to manage channel conflict, as opposed to a reflection of a weaker brand. As a result, we fine-tuned our near-term estimates but maintain our HKD 37.50 fair value estimate. With shares trading at just 14 times 2024 earnings, we view Li Ning’s shares as undervalued.

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Price vs Fair Value

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02331 is trading at a 53% discount.
Price
HKD 17.50
Fair Value
HKD 16.80
Uncertainty
High
1-Star Price
HKD 55.92
5-Star Price
HKD 48.10
Economic Moat
Qbsgrqp
Capital Allocation
Hcdysxq

Bulls Say, Bears Say

Bulls

Li Ning's single-brand strategy allows it to maintain focus on improving brand value.

Bears

A sizable portion of Li Ning's sales come from casual wear, making the brand subject to fashion misses.

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News

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Trading Information

Previous Close Price
HKD 21.10
Day Range
HKD 20.75–21.95
52-Week Range
HKD 14.94–56.90
Bid/Ask
HKD 20.90 / HKD 20.95
Market Cap
HKD 54.02 Bil
Volume/Avg
36.0 Mil / 26.6 Mil

Key Statistics

Price/Earnings (Normalized)
13.53
Price/Sales
1.79
Dividend Yield (Trailing)
4.53%
Dividend Yield (Forward)
4.53%
Total Yield
6.63%

Company Profile

Established in 1989, Li Ning is one of the largest sportswear companies in China. Headquartered in Beijing, Li Ning mainly sells professional and leisure footwear and apparel under the Li Ning brand. Despite having a single-brand strategy, Li Ning launched multiple sub-brands (such as China Li Ning and Li Ning 1990) to appeal to different demographics. As of the end of 2021, the company had 7,137 stores in China, of which 1,232 were directly operated, and 5,905 were franchised.
Sector
Consumer Cyclical
Industry
Leisure
Stock Style Box
Large Core
Total Number of Employees
4,672
Website
https://www.lining.com

Competitors

Valuation

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Metric
02331
LULU
ADDYY
Price/Earnings (Normalized)
 13.5328.1742.12
Price/Book Value
 2.0310.748.63
Price/Sales
 1.794.761.88
Price/Cash Flow
 10.5321.8138.70
Price/Earnings
02331
LULU
ADDYY

Financial Strength

Metric
02331
LULU
ADDYY
Quick Ratio
 1.461.560.53
Current Ratio
 1.882.491.22
Interest Coverage
 24.55—1.16
Quick Ratio
02331
LULU
ADDYY

Profitability

Metric
02331
LULU
ADDYY
Return on Assets (Normalized)
 11.80%26.78%0.75%
Return on Equity (Normalized)
 16.16%45.67%2.96%
Return on Invested Capital (Normalized)
 14.01%34.23%2.15%
Return on Assets
02331
LULU
ADDYY
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