JP Morgan: Upgrade LI NING (02331) rating to "buy" with a target price raised to 25.6 Hong Kong dollars.

JP Morgan released a report stating that they have been closely monitoring two key signals of recovery for LI NING (02331). The first signal is whether they can regain market share after continuous loss since 2022; the second is whether they can achieve effective cost control. JP Morgan has raised their earnings forecast for LI NING for 2026 to 2027 by 9 to 12%. They predict that LI NING will achieve an 8% sales growth and 7% profit growth in 2026, with a target price raised from HK$14.6 to HK$25.6, and a rating upgraded from "underweight" to "overweight". The report points out that LI NING has already shown both of these positive signals. The bank's view on the company has turned positive, with one of the main reasons being a 13% year-on-year profit growth in the second half of 2025, surpassing JP Morgan's forecast by 17% and the market's forecast by 28%. This growth mainly benefited from cost optimization in direct retail channels and higher-than-expected government subsidies, offsetting the increase in advertising and promotion expenses. Additionally, sales guidance for 2026 is positive, with expectations of high single-digit growth. This indicates that LI NING will achieve market share growth in 2026, ending the continuous market share loss since 2022.