| Valuation method | Value, HK$ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | n/a | n/a |
| Intrinsic value (DCF) | n/a | |
| Graham-Dodd Method | 8.20 | -55 |
| Graham Formula | 15.30 | -16 |
Li Ning Company Limited is a leading Chinese sports brand that has established itself as a formidable player in the athletic apparel and footwear market. Founded in 1990 by Olympic gymnast Li Ning, the company engages in the comprehensive research, development, design, manufacturing, marketing, and retail distribution of sporting goods across mainland China. Operating primarily under its flagship LI-NING brand, the company offers professional and leisure footwear, apparel, equipment, and accessories tailored for the Chinese consumer. Li Ning has strategically expanded its portfolio through brand acquisitions including AIGLE for outdoor sports, Double Happiness for table tennis, and Kason for badminton products. With an extensive retail network spanning conventional stores, flagship locations, factory outlets, and multi-brand stores, Li Ning leverages its deep understanding of Chinese consumer preferences and national pride to compete effectively in the rapidly growing Chinese sportswear market. The company's vertical integration from design to retail provides strong control over product quality and brand presentation.
Li Ning presents a compelling investment case as a domestic champion in China's massive sportswear market, trading at a market capitalization of approximately CNY 42.6 billion. The company demonstrates solid financial health with CNY 7.5 billion in cash against modest debt of CNY 1.9 billion, generating robust operating cash flow of CNY 5.3 billion. With revenue of CNY 28.7 billion and net income of CNY 3.0 billion, Li Ning maintains healthy profitability metrics. The company pays an attractive dividend yielding approximately 3.3% based on current share price, providing income support. However, investors should monitor competitive pressures from both international giants and emerging domestic brands, as well as potential economic sensitivity given its consumer cyclical nature. The beta of 0.937 suggests moderate volatility relative to the market. Overall, Li Ning's strong brand recognition, financial stability, and dominant domestic position make it an attractive play on China's growing sports consumption.
Li Ning occupies a unique competitive position as one of China's leading domestic sportswear brands, leveraging strong national identity and deep market understanding against international competitors. The company's competitive advantage stems from its founder's Olympic legacy, which creates authentic athletic credibility and emotional connection with Chinese consumers. Li Ning's vertically integrated business model allows for tighter control over product development, quality, and distribution compared to purely wholesale-oriented competitors. The company has successfully positioned itself in the mid-to-premium segment, offering performance-oriented products at more accessible price points than global luxury sportswear brands while maintaining higher quality perception than value-oriented domestic competitors. Li Ning's multi-brand strategy through AIGLE, Double Happiness, and Kason acquisitions provides diversification across different sports categories and consumer segments. However, the company faces intense competition from both global giants with superior scale and marketing resources, and agile domestic competitors with lower cost structures. Li Ning's extensive retail network across tier 1-3 cities provides strong market penetration, though this requires significant capital investment. The company's innovation in product design and technology, particularly in basketball and running categories, has helped differentiate its offerings and build brand loyalty among performance-focused consumers.