Main points of investment
The company announced the operation of 2022Q3: 2022Q3 Li Ning Co. Ltd. (excluding Li Ning Co. Ltd. young) omni-channel retail pipeline increased by 10-20% in the middle of the same period last year, and same-store sales increased by a high number of units compared with the same period last year. By the end of 22Q3, Li Ning Co. Ltd. (excluding Li Ning Co. Ltd. young) had a total of 6101 sales points / a net increase of 164months / this year's net increase of 166points, and Li Ning Co. Ltd. 's young outlets had a total of 1238 points of sales / a net increase of 63 / 36 points of sale this year.
The company's Q3 performance as a whole is in line with our expectations.
Q3 all-channel flow recovery, endogenesis and extension have increased. With the weakening of the impact of the domestic epidemic, 22Q3 Li Ning Co. Ltd. (excluding young) omni-channel flow returned to the middle of 10-20% year-on-year growth compared with Q2 (direct marketing / wholesale / e-commerce increased 20-30% low / 10-20% low / 20-30% respectively), and endogenous extension contributed: 1) in terms of endogenous same-store sales, omni-channel same-store sales returned to high unit growth. Among them, direct sales / wholesale / e-commerce same-store sales are respectively year-on-year growth in the number of units / high units / 10-20% in the middle. The rapid recovery of e-commerce and the growth of same-store sales are lower than the overall flow of e-commerce due to the fact that the new platform (such as Kuaishou Technology live broadcast, acquired goods) is not included in the same-store base; offline, the single-digit growth of same-store sales is still positive under the influence of the epidemic year-on-year decline, mainly from the improvement of customer unit price and joint and several rate, on the one hand, the hanging price of products has increased significantly, on the other hand, the joint and several rate has increased with the improvement of the product matrix. 2) in the aspect of extension, we should continue to open large stores & high-value stores and open stores against the trend. By the end of 22Q3, there were 6101 Li Ning brand stores, 164,164than Q2 (direct business 79 + wholesale 85), 166net stores than at the beginning of the year (179 & wholesale-13), and + 5.1% compared with the same period last year (direct operation + 17% & wholesale-0.1%). By the end of 22Q3, the proportion of Li Ning stores increased by 2.4pct to 22% compared with the same period last year, and now it has reached a more satisfactory proportion. In addition, the growth rate of Li Ning Co. Ltd. yong pipeline is relatively high. By the end of 22Q3, there were 1238 young stores / 63 more Q2 stores / 36 more net stores than at the beginning of the year, which was + 8.9% year on year, superimposed by the same store contribution. Q3 pipeline increased by more than 50% year-on-year.
The discount is deeper than the same period last year in single digits, and the inventory ratio is slightly higher than the same period last year. 1) in terms of inventory-to-sales ratio, 22Q3 inventory-to-sales ratio is 4-5 months, slightly higher than the same period last year, and month-on-month increase (22H1 inventory-to-sales ratio is 3.6 months), which is mainly affected by seasonal factors and maintains high operational efficiency as a whole. 2) in terms of discount rate, 22Q3 offline discount is 6.5-30% discount, which is deeper than the same period last year and slightly deeper than the previous year (22H1 overall offline discount 6-30% discount high segment, new product discount about 20% discount within three months). At present, peers generally face inventory pressure, and Q4 is expected to eliminate inventory by deepening discounts, thanks to the fact that the company attaches great importance to inventory management, Q2 adjusts inventory through discounts in time, and the current inventory pressure is relatively small. Q4 is not expected to significantly deepen discounts.
Profit forecast and investment rating: the company is the leader of domestic sportswear, Q3 recovery is in line with expectations, the company balances the flow and inventory performance through discounts, and opens stores against the trend to promote the relatively stable performance of running water under the epidemic, and the inventory is still at a relatively healthy level. Since September, there have been repeated epidemics in many places in China, which has had a certain impact on overall consumption. The company will continue to maintain dynamic management and strive to achieve the annual growth target (income growth of 10%, 20%, 20%, 20%, 30%, low, high, double-digit, net profit margin).
We slightly downgrade the 22-24 year-on-year homing net profit to 14.9%, 25.0%, 21.6%, and 2.67 yuan per share, respectively, and the corresponding PE is 27, 22, and 18X, maintaining the "buy" rating.
Risk hint: the impact of public opinion is greater than expected, and the epidemic situation is repeated.