LI NING (2331 HK) Profit alert for 1H21, revenue and profit beat July 14, 2021 97

PSR Recommendation: NEUTRAL Status: Downgraded
Target Price: HKDHKD91.82

Investment Summary
Li Ning announced on June 25 that the company expects to record a net profit of no less than
RMB 1.8 billion for the six months ending June 30, 2021, an increase of 163% Yoy, mainly due
to the company’s revenue growth of more than 60% in 1H and the OPM continues to improve.
The Xinjiang cotton incident stimulated the company’s sales growth in 1H. The overall revenue
slightly beat our expectations, and the net profit beat our expectations, mainly due to better
profitability than we expected. (Previously expected: 2021 NPM:12%)
OPM improved significantly, and profit in 1H was better than expected
The company’s revenue in 1H21 recorded a growth of no less than 60% over the same period
last year. The company’s revenue in 1H20 recorded approximately RMB 6.18 billion. Based on
this, the company’s revenue in 1H should be no less than RMB 9.89 billion, mainly due to low
base in the same period last year, and the company was stimulated by events such as Xinjiang
cotton in 1H. In terms of net profit, the company expects to be no less than RMB 1.8 billion,
an Yoy increase of approximately 163.4%. The NPM is estimated to be approximately 18.2%,
an increase of approximately 7.1 ppts over the same period last year.

About the author

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Timothy Chong
Analyst
Research

Timothy Chong received Bachelor’s Degree with first class honor in Banking and Finance from University of Leicester. He is currently studying Master of investment management in Hong Kong Polytechnic University. Before joining Phillip Securities, Timothy worked at BOCOM international and he is equipped with years of experience in the capital market. Timothy is now a licensed research analyst at Phillip Securities and covers Consumer / Property Management sectors.

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