In Q3 2024, Li Ning's retail sales volume across all platforms (excluding Li Ning YOUNG) and reduced orders. As far as channels are concerned, offline channels (including retail and wholesale) have reduced orders. Among them, retail (direct management) channels have reduced orders, wholesale (authorized dealers) have reduced orders; e-commerce also increased orders.

As of 24Q3, the total number of Li Ning sales outlets (excluding Li Ning YOUNG) was 6281, a net increase of 42 from the end of the previous quarter, and a net increase of 41 so far this year. Of a net increase of 41 point-of-sale sales, there was a net decrease of 14 in retail sales and a net increase of 55 in wholesale sales. The total number of Li Ning YOUNG sales outlets was 1,459, a net increase of 21 over the end of the previous quarter, and a net increase of 31 so far this year.

Establishing a joint venture to lay out overseas markets

On October 22, Li Ning Group announced that it has established a joint venture with Founder Co, HongShan Venture, and HongShan Motivation through an indirect wholly-owned subsidiary, to exclusively develop and operate the Li Ning brand business (including the sale of Li Ning brand products) outside of mainland China.

According to data, the total share capital of the joint venture after establishment was HK$0.2 billion, of which LN Co, Founder Co, HongShan Venture and HongShan Motivation will invest HK$58 million, HK$52 million, HK$62.728 million and HK$27.272 million in cash respectively, accounting for 29%, 26%, 31.36% and 13.64% of the total share capital of the joint venture, respectively .

At the same time, Li Ning Group and founder Li Ning together held 55% of the shares in the joint venture, which can effectively guarantee the reputation of the “Li Ning” brand and maintain sufficient influence over the joint venture. The introduction of Sequoia China allows joint ventures to share Sequoia China's cross-border resources and cross-border business experience, and helps accelerate the pace and efficiency of joint ventures.

Supply chain integration and efficiency to create the cornerstone of product strength

Since expanding production capacity this year, the supply chain has opened up upstream and downstream chains, not only meeting the demand for order growth, but also effectively improving overall efficiency and providing a solid guarantee for product quality. The Group strictly selects suppliers, and in combination with the digital construction of information, the company achieves fine management of production processes and product quality.

At the same time, through strategies such as integrating materials, large-scale procurement, and erroneous production, costs and expenses are effectively controlled, and production efficiency and economic efficiency have been improved, and the company's steady progress in product strength, cost control and operational efficiency has been promoted.

Retail channel innovation and optimization to improve product efficiency

The efficiency of the logistics management platform continues to improve. With the efficient operation of the East China Smart Logistics Center, the Central China, North China and South China logistics centers will be put into use in the short term, further speeding up the flow of goods. The company uses refined logistics plan management, customizes strategies according to the characteristics of the division, and optimizes the product warehousing and delivery process. At the same time, logistics informatization platforms enable dealers to share information in real time, improve store delivery efficiency, and further improve the quality of logistics services.

Adjust profit forecasts to maintain “buy” ratings

Based on 24Q3 retail and discount performance, the macro consumption environment faces some uncertainty and other factors; we adjusted our profit forecast, we expect the company's revenue for 24-26 to be 28.4 billion yuan, 29.8 billion yuan, and 31.8 billion yuan (original value was 29 billion yuan, 31.3 billion yuan, 34.4 billion yuan); net profit to mother for 24-26 was 3.1 billion yuan, respectively. 3.5 billion yuan and 4 billion yuan (original value was 3.2 billion yuan, 3.4 billion yuan, 3.8 billion yuan); 24-26 EPS was 1.2 yuan, 1.4 yuan, and 1.5 yuan respectively; PE was 12x, 11X, and 9X, 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.