Goldman Sachs: Slightly lowers the target price for LI NING to HKD 19.2, the turning point is not yet clear

Goldman Sachs published a research report indicating that Li Ning (02331.HK) announced its operational update for the third quarter of 2025 last week and held a conference call for its financial report. Retail sales weakened, decreasing year-on-year to a mid-single-digit percentage, which is a decline from the low single-digit percentage increase in the second quarter. Goldman Sachs believes this aligns with the market's already lowered expectations.

Although Goldman Sachs acknowledges that some investors may expect a potential turnaround for Li Ning in the medium term after a series of efforts in branding and products, they are also encouraged by some early positive signs in product aspects. However, they reiterate that the timeline for Li Ning's turnaround remains unclear in the context of a lackluster industry environment: the slowdown in key growth pillars such as running and training may raise additional concerns among investors, while signs of improvement in basketball and lifestyle segments have yet to emerge.

Goldman Sachs has slightly adjusted its revenue forecasts for Li Ning for 2025 to 2027 to less than 1% and lowered its net profit estimates by 2% to 3%, primarily reflecting the sluggish sales/discount trends in the third and fourth quarters. Goldman Sachs' new 12-month target price is HKD 19.2 (previously HKD 19.8), based on an unchanged price-to-earnings ratio of 16 times for the fiscal year 2026; maintaining a "Neutral" rating