Guotai Junan International: Maintains "buy" rating on LI NING (02331) and raises target price to HK$23.4.

CICC International released a research report stating that in the current strong market sentiment, once LI NING's brand power regains strength and improvements in cash flow become more apparent, its stock price is expected to gain significant upward momentum. As one of the few domestic sports brands with performance turnaround logic, the bank believes that LI NING's stock price elasticity remains higher than its peers. Maintaining a "buy" rating on LI NING, the target price has been raised to HK$23.4 (equivalent to 18x 2026 P/E). CICC International's main points are as follows: The performance in 2025 is expected to be better than the company's initial guidance Management stated that full-channel cash flow for large goods in 2025 is expected to remain flat year-on-year. With the driving force of rapid growth in revenue from children's clothing and professional channels, the full-year revenue in 2025 is expected to slightly increase year-on-year, surpassing the company's initial guidance of "flat year-on-year revenue". In addition, due to government subsidies exceeding expectations, management predicts that the net profit margin in 2025 is expected to be at the higher end of the full-year "high single-digit" guidance. Based on this, the bank predicts that LI NING's full-year revenue in 2025 will increase by 2.5% to RMB 29.4 billion, with a net profit attributable to equity holders reaching RMB 2.75 billion and a net profit margin of 9.4%. Excluding one-time impairment in the first half of the year, the bank estimates that core net profit attributable to equity holders in 2025 will reach RMB 2.93 billion, with a core net profit margin of 10.0%. Future trend improvements are still worth looking forward to It is worth noting that LI NING is one of the few sports brands that showed month-on-month improvement in December cash flow performance. This may be attributed to the launch of the Glory Gold Label product series at the end of last year. The bank believes that short-term cash flow performance is greatly affected by the New Year and Spring Festival holidays and is not indicative. With the approaching Milan Winter Olympics (opening on February 6), LI NING's brand exposure is expected to continue to increase, providing positive help for the improvement in future cash flow trends. How to predict LI NING's development in 2026 and the future? Looking ahead to 2026, management stated that a moderate downward adjustment is needed for the growth expectations of running and badminton, while expecting improved performance in basketball and sports lifestyle, two weak categories in 2026. The bank predicts that over the next two years, LI NING's running category revenue will continue to grow, driving accelerated growth in LI NING's overall revenue. Management stated that the company will continue to increase marketin...