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李宁(02331.HK):科技创新是李宁品牌的成长主线

Li Ning (02331.HK): Technological innovation is the main growth line of the Li Ning brand

天風證券 ·  May 31

The Li Ning Science and Technology Conference was held to fully showcase the path of science and technology

Recently, Li Ning held the 2024 Li Ning Science and Technology Conference, which was the first time in the history of the Li Ning brand that focused on showcasing Li Ning's history and achievements in scientific and technological innovation.

In-depth deciphering of the six unique innovative technologies: carbon core, fastest curve system, and limit? Silk, super? , GCU, and GCU. Three major innovations were launched: Exquisite 3 generation running shoes, racing running shoes Dragon Sparrow, and rainstorm-proof dual-penetrating nanotechnology to promote the development of professional sports technology. At the same time, more than 20 in-depth interactive devices were prepared on site to provide the audience with an immersive live experience.

In 1988, Li Ning was the first Chinese sports brand to establish an independent design and development center; in 2006, the brand products were the first Chinese basketball shoes to be tested by the American Professional Basketball League; in 2009, Li Ning's badminton R&D center was established in Shishi, Fujian; in 2012, the brand launched the latest material shock absorption technology “Li Ning Cloud”; in 2019, “Li Ning?” Big tech launch; 2024? Silk Technology platform upgraded to launch “Extreme? “Silk”.

Develop professional functional products to meet diverse needs, and the product line has been fully upgraded. The company has long been committed to investing in R&D innovation, focusing on the iteration and improvement of footwear technology. Li Ning's carbon core helps the system break the conventional midsole design and introduce an innovative “full control?” Integrated molding process with balanced plates. This improvement not only improves shock absorption and rebound efficiency, but also enhances propulsion during sports, greatly improving actual performance on the field. In addition, the company's upgraded full-power GCU floor control system effectively increased wear resistance by 70%, and its anti-slip ability in dry and humid environments was increased by 8% and 30% respectively, allowing athletes to cope more calmly with sudden starts and stops in basketball.

At the same time, the “SAS Synchronous Coordination System” and the “Independent Future EVA System” have also been optimized and applied more widely in the basketball shoe product line, effectively improving the dynamic fit during exercise, enhancing the ability to cope with changing rhythms, protecting the arch of the foot through stable support, and further enhancing the professional protection of athletes.

Furthermore, the company successfully launched the lighter “ComfoamPlus” and the lighter “ComfoamLite” formula, which drastically reduced the overall weight of the shoe and improved wearing comfort. At the same time, the company develops professional products with moisture absorption and quick-drying functions, including yarn-woven fabrics with quick-drying functions in leading industries, first applied to running and training functional tops, and then extended to all categories of products, including sports tops, sports pants, sports towels, etc., fully realizing the application matrix of the yarn technology platform.

Previously, the company announced the 24Q1 operating situation

In 24Q1, omni-channel retail sales also increased and the number of units decreased. By channel, offline channels (including retail and wholesale) reduced the number of units; retail increased the number of units; wholesale decreased the number of units; e-commerce increased by 20% to 30%.

As of March 31, 2024, the total number of main brand stores was 6214, a net decrease of 26 from the end of 23, including a net increase of 1 in retail and a net decrease of 27 in wholesale stores. The total number of Li Ning YOUNG stores was 1,405, a net decrease of 23 from the end of '23.

In 24Q1, same-store sales across all platforms decreased the number of units on a year-on-year basis. By channel, retail sales decreased the number of units, wholesale fell by 10% to 20% in the middle range, and e-commerce increased by 20% to 30% in the lower segment.

Improve the efficiency of store operation, strengthen execution, optimize management, and achieve a closed loop to improve efficiency. The company continuously explores and optimizes the single-store operation model, added a terminal operation execution team, and built four core capabilities in the new retail business field, enabling the company to enhance community interaction and live streaming conversion through standardized content production processes and digital tools, optimize the out-of-store shopping experience, and improve the overall consumer experience.

In terms of the digital construction of logistics systems, the company promotes the layout of regional central warehouses and ensures the transparency of the entire link of product logistics information through logistics informatization. The opening of the East China Smart Logistics Center and the continuous improvement of logistics network quality have greatly improved the quality and timeliness of direct distribution in direct-run and wholesale stores.

The company refined logistics business management and continued to improve the direct distribution ratio of stores and the same box rate, further improving the quality of logistics services.

Maintain profit forecasts and maintain “buy” ratings

The company focuses on the “single brand, multi-category, multi-channel” strategy, continuously strengthens the brand's professional sports product layout, and further enhances retail operation capabilities and channel efficiency.

We expect the company's revenue for 24-26 to be RMB 29.3 billion, RMB 32.1 billion, and RMB 35 billion respectively; net profit to mother will be RMB 3.4 billion, RMB 3.9 billion, RMB 4.4 billion, EPS will be RMB 1.3 per share, RMB 1.5 per share, RMB 1.7 per share, and corresponding PE will be 15/13/11x, respectively.

Risk warning: Fluctuations in raw material and labor prices, steady increases in environmental requirements affect the company's gross profit; sales of new products fall short of expectations; channel layout and market penetration fall short of expectations; intensification of the industry competition pattern, etc.

The translation is provided by third-party software.


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