Jingu Financial News | CICC Research Institute pointed out that li ning (02331) 3Q24 overall omni-channel revenue decreased year-on-year in the mid-single digits, slightly better than market expectations of a high-single-digit decline. Among them, offline channel revenue declined year-on-year by a high single digit, better than market expectations of a low double-digit decline. The offline self-operated stores' 3Q24 revenue decreased year-on-year in the mid-single digits, slightly better than the performance of franchisee offline stores (which had a high single-digit decline). Excluding the impact of outlet stores, the revenue performance of offline self-operated regular-priced stores and franchise stores was basically the same. Management indicated that with the deepening of the discount rate in regular-priced stores, the 3Q24 outlet store revenue was basically flat year-on-year, a slight decrease from the 1H24 level. The 3Q24 e-commerce revenue grew year-on-year in the mid-single digits, basically meeting market expectations.

The bank pointed out that if the revenue growth rate continues to maintain the trend from October to 4Q24, the company is expected to meet the management's August guidance for the full-year 2024 performance by the end of the year: revenue growth in the low single digits year-on-year, and net margin maintaining a low double-digit level. However, management also mentioned that terminal demand in the industry has not shown a clear improvement, and there are still certain pressures from short-term inventory and discounts. There remains significant uncertainty in the subsequent revenue and performance in 4Q24 (including singles' day sales).

The bank stated that despite li ning's 3Q24 revenue performance being slightly better than market expectations, it still lags significantly behind the major domestic competitors. At the same time, management mentioned during the conference call that there is increased short-term channel inventory pressure in the company and emphasized that there is significant uncertainty in the revenue performance of 4Q24. The bank believes that although the certainty of li ning's 2024 performance has increased, investors should remain cautious about li ning's stock performance as there are no clear signs of significant recovery in the company's brand strength, fundamentals, and terminal sales trend, and it is not advisable to easily bottom fish in this situation.

The bank maintains its profit forecast unchanged but rolls over the valuation to 2025, thereby slightly raising li ning's target price to HK$15.94 (based on 12x2025 EP/E). It maintains a "hold" rating on li ning.