20171023-招商证券_香港_-李宁-02331.HK-Weak_3Q17_from_shift_in_holiday,_expect_stronger_4Q17_8页_924kb

报告摘要

Li Ning (2331 HK) Summary Report

Core Content Overview

This report provides an analysis of Li Ning's financial performance and market position, focusing on its 3Q17 results, 2Q18 trade fair, and expectations for future performance. It also includes financial forecasts, valuation metrics, and key data points for investors.

Key Points from the Report

3Q17 Performance

Weak 3Q17: The performance was weak due to a shift in the Mid-Autumn Festival holiday, which occurred in October 2017 (typically in September).
SSSG and Sell-Through: SSSG (Self-operating and Franchise) and sell-through saw a mid-single-digit decline YoY, while e-commerce sales grew by about 30% YoY.
Excluding Holiday Impact: Offline channel sell-through actually saw a mid-single-digit growth YoY when excluding the holiday effect.
Golden Week Performance: The Golden Week holiday (Oct 1–8) showed strong sales growth, with offline channel retail sell-through up high teens YoY.

2Q18 Trade Fair

Low Teens Growth: The 2Q18 trade fair saw a low teens growth in sales value YoY, indicating continual improvement compared to previous quarters.

1Q18E Expectations

Stable 2H17E: Retail operations in 2H17E are expected to be stable but unexciting due to ongoing store relocations and renovations.
Strong 1Q18E: Strong performance is anticipated in 1Q18E due to healthy demand and a low base effect, as 1Q17 was negatively impacted by an earlier-than-usual Chinese New Year.

Investment Recommendation

BUY: Despite the weak 3Q17 performance, the report recommends buying once the share price stabilizes, based on strong 4Q17 expectations.
Target Price (TP): TP is unchanged at HK$7.48, with a potential upside of about 10%.
Valuation: Li Ning is currently at a significant discount compared to Anta Sports (2020 HK), which has a PEG of 1.5x. Li Ning's target PEG is 1.1x, close to the sector average.

Financial Highlights

Revenue Forecast

FY15–FY19E: Revenue is projected to grow steadily from RMB 7,089 million in FY15 to RMB 11,037 million in FY19E.
YoY Growth: The YoY growth rate is expected to remain around 10.8% in FY17E and FY18E, with a slight increase to 12.2% in FY19E.

Revenue Mix by Sales Channel

Direct Sales: Composed of 33.2% of total revenue in FY15, decreasing to 28.0% in FY19E.
Wholesale: Composed of 54.5% of total revenue in FY15, decreasing to 41.9% in FY19E.
E-commerce: Composed of 8.5% of total revenue in FY15, increasing to 27.1% in FY19E.

Gross Margin

Overall GPM: Increased from 45.0% in FY15 to 50.5% in FY19E.
Direct Retail Sales: GPM improved from 58.0% to 63.0%.
Wholesale: GPM increased from 36.0% to 41.0%.
E-commerce: GPM remained relatively stable at 50.0% to 52.0%.

Valuation Metrics

Key Financial Ratios

P/E (x): Decreased from 50.3 in FY16 to 19.6 in FY18E and 14.9 in FY19E.
P/B (x): Decreased from 3.5 in FY15 to 2.3 in FY19E.
ROE (%): Improved from 0.5% in FY15 to 17.4% in FY19E.

Valuation Comparison

Sector Average (HK Listed): P/E around 13.6x, P/B around 2.0x.
Anta Sports (2020 HK): PEG of 1.5x, which is higher than Li Ning's PEG of 1.1x.
Li Ning's PEG: 1.1x, indicating a more attractive valuation relative to the sector.

Shareholding Structure

Li Ning: 25.78% of shares outstanding.
FIL Limited: 7.98%.
Marathon Asset Management: 6.05%.
Blackrock: 4.79%.
Free Float: 79.68%.
No. of Shares Outstanding: 2,178 million.

Market Performance

Share Price: Closed at HK$6.82 on October 23, 2017, near the target price of HK$7.48.
Price Performance (1m/6m/12m): -1.3%, +40.3%, +23.8%.
Hang Seng Index (HSI): 1.3%, +18.4%, +21.9%.

Conclusion

Li Ning's 3Q17 performance was affected by seasonal shifts, but the company is expected to show stronger results in 4Q17 and 1Q18E. The report recommends buying the stock on weakness, citing strong growth expectations and a favorable valuation compared to peers. Financial metrics show a consistent growth trajectory with improving profitability and gross margins, supporting the investment case.

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