The company's recent situation
On May 29, Li Ning hosted the 2024 Li Ning Science and Technology Show, which reviewed Li Ning's scientific and technological innovation history over the years, showcased industry-leading technologies such as carbon core, super, GCU, and rainstorm-proof dual-penetration nanotechnology, and launched new technological products such as Dragon Sparrow and Brilliant Picture 3.
reviews
Focus on the core of professional sports and lay out a full range of functional products. Li Ning focuses on professional sports in the five core categories of basketball, running, fitness, badminton, and sports life. Through brand accumulation and product innovation, and the continuous increase in R&D investment, Li Ning demonstrates the professional core of the sports genes of the Li Ning brand, as well as the company's comprehensive innovation capabilities in sports science and technology research and development:
Footwear product innovation continues to catch up with international leaders. The company has established four major technology platforms: 1) Midsole Technology's superior technology density is further reduced by 30-50%; 2) Outsole Technology's ground control system GCU is 5 times more wear-resistant than traditional rubber, while running wet anti-skid/basketball dust+wet anti-slip increases 50%/32% respectively; 3) Shoe surface technology limits silk strength and wear resistance are increased by 700%/240%; 4) Structural technology such as carbon core technology empowers basketball shoe innovation and further expands to the fields of ping pong, running, and golf products; Speed curve system help After-marathon running economy increased by up to 8.4%. Under various innovative technology applications, it is equipped with super
The dragon marathon running shoe with ultra-lightweight technology weighs only 89g (size 8.5), making it the lightest marathon racing shoe in the industry; the self-developed carbon plate equipped with Zhuying 3 has increased toughness by 48%, while the resilience and stability of the running shoes have increased 38%/19%, respectively.
Fabric technology has strengthened the layout, and introduced windproof, waterproof, and rainstorm-proof dual-permeable nanotechnology. It can withstand static water pressure of 10,000 mmH2O or more, and the breathability rate is greater than 1 mm/s, and the garment fabric technology has been further strengthened.
R&D innovation drives future growth, and we look forward to continuing to strengthen our leading position. We believe that the Li Ning brand has leading category expansion capabilities, product matrification capabilities, and series iteration capabilities. The continuous iteration and matrix operation of professional sports equipment has also brought good sales performance. As of 2023, the annual sales volume of the three types of running shoes with different functions, Feiden, Red Rabbit, and Ultralight, has exceeded 9 million pairs. The company further clarified the development direction of R&D and innovation as the driving force for growth, and strives to achieve leading products and leading technology to meet the growing sports needs of consumers.
Profit forecasting and valuation
Keep the company's 2024/25 EPS forecast of 1.25/1.44 yuan unchanged. The current stock price corresponds to 15/13 times the 2024/25 price-earnings ratio, maintaining an outperforming industry rating. Considering the increase in the valuation center of the industry, the target price was raised by 21% to HK$25.33, corresponding to 18/15 times the 2024/25 price-earnings ratio. There is 21% room for growth compared to the current stock price.
risks
Consumer love has declined, industry competition has intensified, and the terminal retail environment falls short of expectations.