UBS: LI NING (02331) first-quarter sales in line with expectations, management expects sales to accelerate in the second half of the year.

UBS released a research report stating that LI NING (02331) first quarter retail sales of the adult series (excluding LI NING YOUNG) increased year-on-year in single digits, with overall retail sales increasing year-on-year in high single digits, meeting the bank's expectations; LI NING YOUNG saw a growth of over 20% year-on-year. The bank currently rates LI NING as a "buy" with a target price of HK$28.6. During the period, the adult series saw growth in both offline and online channels, with moderate and high single-digit growth respectively. The offline retail growth was mainly driven by double-digit growth in outlets; the data is in line with the annual guidance and is consistent with the performance of ANTA SPORTS (02020) during the same period. UBS believes that Nike's strategy focusing on discounts and supply control is a positive insight for the Chinese sporting goods industry. Additionally, management expects overall company sales to accelerate in the second half of the year, considering the low base effect, as well as new product launches and store expansion plans. On the cost side, management has indicated that costs for this year are locked in, with potential impacts expected to emerge from the first quarter of next year. It is estimated that footwear costs will be affected by 3 to 4 percentage points, while clothing costs, due to lower sensitivity to oil prices, will be less affected.