Li Ning: Long-Term Growth Story Intact Despite Near-Term Headwinds

Narrow-moat Li Ning’s third-quarter operating performance aligns with our forecast, and we are maintaining our HKD 31 fair value estimate. Despite the recent stimulus-driven rally, Li Ning’s shares remain undervalued in our view, trading at a 50% discount to our valuation and an attractive estimated 2025 earnings multiple of 11 times. While government stimulus could provide a short-term boost to sportswear sales, the industry's long-term growth is ultimately driven by structural factors, such as rising sports participation and the increasing popularity of athleisure. As a leading domestic brand with its image rooted in its founder's legacy as an Olympic gymnast, Li Ning is well-positioned to capitalize on these secular trends, regardless of specific stimulus measures.