Li Ning's 3Q Better Than Feared But 4Q Tone Looks Weak — Market Talk

What happened

Li Ning's latest quarter update was better than anticipated, but the tone for the fourth quarter remains weak, Deutsche Bank analyst Sammi Xu said. Deutsche Bank cut its stock target price to 14.70 Hong Kong dollars from HK$15.20 with a hold rating.

Confirmed

Global impact / market context

A lower target price means the analyst sees less future upside, while the weak fourth-quarter tone suggests sales pressure may persist. That combination can limit profit growth and keep expectations modest for the running shoe maker.

Analyst inference

Deeper discounts and lower average selling prices amid intensifying competition weighed on the running shoe market. Basketball, badminton and athleisure were also weak. Total sell-through, which means how much inventory actually sells to shoppers, stayed negative amid continued wholesale pressure.

Analyst inference

What to watch

1. Deutsche Bank cut its stock target price to 14.70 Hong Kong dollars from HK$15.20 and kept a hold rating, which means it does not recommend buying or selling. Confirmed
2. Watch whether deeper discounts and lower average selling prices continue, because they can reduce profit per sale and pressure revenue for Li Ning and its wholesale partners. Analyst inference
3. Track total sell-through and wholesale pressure for signs that inventory is clearing, since improved direct retail and e-commerce channel mix may not offset weak wholesale demand. Analyst inference

Evidence

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