HSBC Global Research maintained its target price for Li Ning (02331) at HK$25.5 unchanged, but downgraded its rating to "hold" from "buy".
The research house said Li Ning's 3Q retail sell-through grew at a solid low-30%s, up from a mid-teens percentage a year ago; this was supported in particular by the online channel (growth in low-50%s) and the wholesale business (growth in mid-30%s).
Same-store-sales growth (SSSG) and trade fair orders registered high-teens and low-teens growth, respectively, indicating healthy and solid business growth trends. The number of
points of sales (POS), including LN Young, reached 7,490 as of September 2019, relatively steady from 7,294 in June 2019.
HSBC said the solid operating data support its positive views on the company; this, together with the higher-margin, should drive profit growth. That said, HSBC expects recurring profit growth to slow down to 33% in 2H (from 109% y-o-y in 1H), in part due to the higher base in 2H 2018.
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