According to Citigroup's report, Li Ning's management expects retail discounts to remain under pressure this year, with Anta as the top choice among sportswear stocks

Citi published a research report indicating that Li Ning (02331.HK) management expects sales to achieve low single-digit year-on-year growth in 2025, mainly due to better-than-expected sales of badminton products in non-Li Ning specialty stores. It is also anticipated that the net profit margin will reach the high end of its "high single-digit" guidance (Citi believes this exceeds 9%), due to higher-than-expected "other income" such as government subsidies, and lower-than-expected operating expenses.

However, Li Ning management indicated that the substantial government subsidies and strong badminton sales may not be replicated this year. Although no specific guidance for 2026 was provided, it is expected that retail discounts will continue to be pressured due to intense competition and market uncertainty, and that the ratio of advertising and promotional expenses to sales will rise year-on-year in 2026. Citi maintains the preference order for the relevant sector: Anta (02020.HK) > Tmall (06110.HK) > Li Ning.

Considering Li Ning's sales forecast was raised by 2% and the net profit margin assumption was increased, Citi raised its net profit forecast for Li Ning last year by 9%; due to the likelihood that substantial government subsidies may not continue this year, the net profit forecast for this year was raised by 4%, while the sales forecast was also raised by 2%; based on a projected 18 times price-to-earnings ratio for 2026, the target price was raised from HKD 20.6 to HKD 22; maintaining a "Buy" rating.

Citi published a research report, with investment ratings and target prices for mainland retail stocks listed as follows: