Li Ning Company: A Strong Buy on Strategic E-commerce and Offline Segment Recovery

Li Ning Company (LNNGF – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst John Chou, CFA from Jefferies assigned a Buy rating on the stock and has a HK$52.00 price target.

John Chou, CFA has given his Buy rating due to a combination of factors reflecting Li Ning Company’s recent strategic maneuvers and improved financial health. Chou notes that Li Ning has effectively addressed its e-commerce resell issues, reminiscent of the successful strategy employed in 2016 which led to a significant increase in profit margins. The company has also achieved a healthy level of e-commerce inventory, suggesting a sustainable growth trajectory and an important contribution to future profits.
Further, Li Ning’s offline segment is anticipated to recover, following a strategic reduction in wholesale channel inventory—a move designed to enhance channel health. Drawing parallels to the company’s recovery in late 2015, Chou expects a similar upturn as Li Ning plans to supply more inventory to offline wholesalers from summer 2024. This includes a range of urban outdoor products, signaling a drive to capture additional market segments. The company’s strong cash flow, despite investor concerns from the 2023 performance, fortifies Chou’s confidence in Li Ning’s value proposition and its potential to make significant progress in the coming year.

According to TipRanks, Chou, CFA is an analyst with an average return of -7.6% and a 33.33% success rate. Chou, CFA covers the Consumer Cyclical sector, focusing on stocks such as Li Ning Company, ANTA Sports Products, and Shenzhou International Group Holdings.

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Li Ning Company (LNNGF) Company Description:

Li Ning Co., Ltd. engages in the provision of sporting goods. The company focuses on the research and development, design, manufacture, distribution, and retail of products including footwear, apparel, equipment, and accessories for professional and leisure purposes. It operates through the LI-NING Brand and All Other Brands segments. The company was founded by Ning Li in 1989 and is headquartered in Beijing, China.