LI NING(2331.HK):HEALTHY OUTLOOK AFTER A BEAT IN RETAIL DISCOUNTS
LI NING(2331.HK):HEALTHY OUTLOOK AFTER A BEAT IN RETAIL DISCOUNTS
Li Ning may not be our top pick in the sportswear sector. But thanks to potential sequential acceleration in sales growth and decent margin improvement (better discounts and operating leverage), we are still positive on Li Ning and maintain BUY with TP of HK$ 22.17, based on 15x FY24E P/E.
李寧可能不是我們在運動服領域的首選。但是，由於銷售增長可能連續加速，利潤率可觀的提高（更好的折扣和運營槓桿率），我們仍然對李寧持樂觀態度，並根據15倍的 FY24E 市盈率維持買入水平，目標價爲22.17港元。
The 2024 outlook is constructive, as we see some upsides on sales growth and margins. Even though Li Ning is not our top pick in the China sportswear sector, we still think the outlook is positive and sequential improvement should be expected (the base is high for 2Q24E but will get better in 2H24E). 1) There is no change in FY24E guidance (MSD sales growth and low-teen level of NP margin). 2) Thanks to healthy level of channel inventory, management also does not see any needs for trade fair orders to be adjusted/ cut again. 3) The momentum on e-commerce is decent, as the new channels (Poizon and Douyin) are still fast-growing and online sales can react fast and positively to any improvement in marketing activities. 4) The new products (esp. the running shoes like "Super light 21/ 超轻 21", "Red rabbit 7/ 赤兔 7", "Feidian4/ 飞电 4C" are all hot selling) are doing well and we should see more to come (more CBA related products will be launched and Way of Wade 11 will come in May 2024, etc.). 5) We do look forward to its new style of marketing (a new CMO joined last year and the department has been regrouped), an Olympic marketing campaign will be launched in May 2024, which will feature many stores about many athletes. 6) We also see some room for margin improvements, because the retail discounts is healthily improving (esp. in direct retail and e-commerce segment) and the level of operating deleverage could be less than we previously thought.
2024年的前景是建設性的，因爲我們認爲銷售增長和利潤率有一些上行空間。儘管李寧不是我們在中國運動服領域的首選，但我們仍然認爲前景樂觀，連續改善是可以預期的（2Q24E 的基數很高，但 2H24E 會好轉）。1) FY24E 指導方針（默沙東的銷售增長和淨利潤率的低水平）沒有變化。2）由於渠道庫存水平良好，管理層也認爲沒有必要再次調整/削減展會訂單。3）電子商務的勢頭不錯，因爲新渠道（Poizon和抖音）仍在快速增長，在線銷售可以對營銷活動的任何改善做出快速而積極的反應。4) 新產品（特別是 “超輕 21/ 超輕 21”、“赤兔 7/ 赤兔 7”、“Feidian4/ 飛電 4C” 等跑鞋都很暢銷）表現良好，我們應該會看到更多（更多 CBA 相關產品將在 2024 年 5 月推出，等等）。5) 我們確實期待着它的新營銷風格（去年新任首席營銷官加入，該部門已經重組），奧運會營銷活動將於2024年5月啓動，屆時將有許多門店參加運動員。6）我們還認爲利潤率還有一定的提高空間，因爲零售折扣正在健康改善（尤其是在直接零售和電子商務領域），而且運營去槓桿率水平可能低於我們之前的想象。
Improvement in retail discounts is slightly better than expected. Li Ning's retail discounts has narrowed YoY by LSD on both offline and online channel in 1Q24, which is effectively implied a decent improvement vs 4Q23. More encouragingly, the retail discounts improvement was as high as MSD for the direct-retail stores. Overall discounts for offline stores was at 30% to 35% in 1Q24, from 35% off in 1Q23.
零售折扣的改善略好於預期。李寧在24年第一季度線下和線上渠道的零售折扣均按LSD同比收窄，這實際上意味着與23年第四季度相比有了不錯的改善。更令人鼓舞的是，直銷商店的零售折扣改善幅度與MSD一樣高。線下門店的總體折扣從23年第一季度的35％降至24年第一季度的35％，爲30％至35％。
Inventory level has rebounded vs 4Q23 but is still healthy. Inventory to sales ratio was at 4 to 4.5 months in 1Q24, increased from 3.6 months in 4Q23, but it is still at a very healthy range.
庫存水平與 23 年第四季度相比有所回升，但仍然良好。庫存與銷售比率在24年第一季度爲4至4.5個月，高於23年第四季度的3.6個月，但仍處於非常健康的區間。
Maintain BUY but trim TP to HK$ 22.17, based on 15x FY24E P/E (unchanged). We have revised down our FY24E/ 25E/ 26E net profit by 11%/ 8%/ 8% to factor in: 1) lower other gains, 2) lower interest income, 3) higher A&P expenses and 4) potential impairment losses. The current valuation of 13x FY24E P/E may be not be too attractive for an 8% 3-year sales CAGR. However, we do think a turnaround is likely and maintain BUY. The stock is trading at 13x FY24E P/E with 4% yield.
根據15倍的 FY24E 市盈率（不變），維持買入但將目標價下調至22.17港元。我們已將24E/25E/26E的淨利潤下調了11％/8％/8％，以考慮以下因素：1）其他收益減少，2）利息收入減少，3）A＆P支出增加以及4）潛在的減值損失。對於8％的3年銷售複合年增長率而言，FY24E 市盈率爲13倍的當前估值可能不太有吸引力。但是，我們確實認爲可能會出現轉機並維持買入。該股的交易價格爲 FY24E 市盈率的13倍，收益率爲4％。
譯文內容由第三人軟體翻譯。