Guosen Securities: Maintaining Li Ning's (02331) "Buy" rating A reasonable valuation range of HK$104.4-107.3

Zhitong Finance APP learned that Guosen Securities issued a research report saying that maintaining Li Ning's (02331) "buy" rating, it is expected that the net profit in 2021-23 will be 36.4/43.7/5.62 billion yuan, an increase of 162.2%/21%/28.7%, corresponding to a PE score of 50.5x/42.1x/32.7x, maintaining a reasonable valuation range of HK$104.4-107.3 (corresponding to 23-year PE37x-38x).

Matters: On October 25, 2021, the Company announced the operation of Q3 2021, and as of the third quarter ended September 30, 2021, Li Ning's point of sale (excluding Li Ning YOUNG) achieved a low-level growth of 40%-50% in the retail turnover of the entire platform year-on-year.

In terms of channels, offline channels (including retail and wholesale) achieved high growth of 30%-40%, of which retail channels recorded 30%-40% mid-segment growth and wholesale channels achieved high-segment growth of 30%-40%; The e-commerce virtual store business achieved 50%-60% mid-segment growth.

As of September 30, 2021, the number of Li Ning points of sale (excluding Li Ning YOUNG) in China totaled 5,803, a net increase of 99 from the end of the previous quarter and a net decrease of 109 units so far this year. Of the 109 points of sale that decreased netly, retail businesses decreased by 56 and wholesale businesses by 53. The number of Young sales points in Li Ning totaled 1137, a net increase of 96 from the end of the previous quarter and a net increase of 116 so far this year.

The main views of Guosen Securities are as follows:

1) Q3 under the pressure of the industry to grow outstanding, better than expected, discount inventory health;

2) The launch of new products in Daxiu, the pre-sale of Double Eleven continues to show the competitive advantage of domestic brands, and the recovery of consumption after the National Day is optimistic about Q4 to maintain excellent growth;

3) Risk warning: weak consumer demand, repeated epidemics or longer than expected; The industry is highly competitive, and the company's inventory and discount control are less than expected.