Produced by Radar Finance and EconomicsMoenmeng, edDeep sea
Li Ning, who has been crowned with the halo of "the first brother of the national tide", has still not been able to completely get rid of the cloud of sluggish stock prices. From February 6 last year to February 6 this year, Li Ning's market value evaporated by more than HK$145.1 billion.
While the capital market is disappointed, Li Ning's recent performance is not very optimistic. On the one hand, Li Ning's revenue growth has been slowing down recently; On the other hand, Li Ning's profit in the first half of last year also declined year-on-year. In the third quarter of last year, Li-Ning's same-store sales across the entire platform recorded a mid-single-digit year-on-year decline.
Looking back on the development of the brand along the way, Li Ning's current achievements are inseparable from the popularity and influence accumulated by its founder who have won glory for the country many times, and Li Ning's cooperation with large-scale sports events has also further strengthened the brand. The New York Fashion Week in 2018 and the rise of the national trend in recent years have once again ushered in a stage of rapid development for Li Ning.
However, in the process of impacting the high-end, the continuous improvement of Li Ning's products and the frequent activities of the brand to destock seem to be a bit "behind the efforts to overcome the problem of high-end branding, Li Ning's current product strength has not been able to effectively support the continuous development of products, and the relatively low R&D investment has also made Li Ning's high-end pace appear to be not stable enough."
While the stall of the main business made investors unable to raise much spirit, the news that Li Ning went to Hong Kong to buy a property in December last year had an impact on the company's stock price. Although the company subsequently announced a ** repurchase plan worth HK$3 billion, it is difficult to fundamentally improve Li Ning's sluggish performance in the capital market.
The stock price is sluggish, the performance is stalled, and the pressure on the "first brother of the national tide" is huge
The Spring Festival of the Year of the Dragon is getting closer and closer, and Li Ning, who is known as the "first brother of the national tide" by the outside world, feels a chill in the capital market.
As of February 6**, Li Ning closed at HK$19 shares, with the latest market capitalization of 491HK$0.5 billion. Compared with a year ago today, Li Ning's share price has fallen by as much as 7472%, during this period, Li Ning's market value evaporated by more than 145.1 billion Hong Kong dollars.
For reference, Anta, which is on the same track as Li Ning, has the latest market capitalization of 2006 as of February 6HK$9.1 billion. Based on this calculation, Anta's latest market value is equivalent to four times that of Li Ning.
The other side of the cold eye of the capital market is the performance of Li Ning's stall. According to the financial report, in the first half of last year, Li Ning recorded a total of 140revenue of 1.9 billion yuan, compared with 124 in the same period last year0.9 billion yuan of revenue compared to 1298% growth.
Although Li Ning's revenue in the first half of last year still maintained a year-on-year growth trend, it was compared with the first half of 2021 and the first half of 2022With a revenue growth rate of 69%, the revenue growth rate reported by Li Ning has declined for two consecutive years. Even if the statistical period is adjusted to the whole year, Li Ning will be 1431% revenue growth compared to 56 in 2021Revenue growth of 13% also slowed.
As for the gross profit indicator, Li Ning's gross profit in the first half of last year was 683.9 billion yuan, compared with 62 in the same period last year0.1 billion yuan of gross profit**1029%。However, unlike the growth of gross profit, Li Ning's gross profit margin fell from 50% in the same period last year to 48 in the first half of last year8%。
At the same time, Li Ning's profit for the period also decreased year-on-year, from 218.9 billion yuan fell to 21 in the first half of last year2.1 billion yuan, a year-on-year decrease of 311%。
In the third quarter of last year, although Li Ning did not disclose specific operating indicators including revenue and profit, the outside world can still get a glimpse of its latest operating conditions in that quarter from the announcement issued by Li Ning. According to the announcement issued by Li Ning on October 25 last year, in the third quarter of last year, the retail turnover of Li Ning points of sale (excluding Li Ning YOUNG) on the entire platform recorded a mid-single-digit year-on-year growth.
In terms of channels, in the third quarter of last year, Li Ning's offline channels (including retail and wholesale) recorded high single-digit growth, of which the retail (direct operation) channel recorded a low-single-digit growth of 20% to 30% and the wholesale (franchisee) channel recorded low-single-digit growth, but Li Ning's e-commerce virtual store business recorded a low-single-digit decline.
However, in terms of same-store sales-related indicators, Li Ning's performance is hardly outstanding. Li Ning disclosed in the announcement that if the Li Ning sales points that have been put into operation at the beginning of the third quarter of 2022 (excluding Li Ning Young) are calculated, as of the third quarter of last year, the same-store sales of Li Ning's entire platform recorded a mid-single-digit year-on-year decline.
In terms of channels, Li Ning's retail channel recorded mid-single-digit growth and the wholesale channel recorded a low-end decline of 10% to 20%, while Li Ning's e-commerce virtual store business decreased by single digits year-on-year during the same period.
The market doesn't seem to buy the operational report card handed over by Li Ning in the third quarter of last year. On the second day of the announcement (October 26, 2023), Li Ning's stock price was **20 in a single day7%, the biggest one-day drop in recent years.
For CICC**, Li-Ning's revenue in 2023 will increase by 5% year-on-year to RMB27.1 billion, while net profit is expected to increase by 23% year-on-year to RMB3.1 billion.
On January 15, JPMorgan Chase & Co. issued a report that lowered Li-Ning's profit** from fiscal 2023 to fiscal 2025 by 7% to 20% to reflect factors such as declining sales growth and increased expenses in the current macro environment.
J.P. Morgan's report pointed out that there are growing concerns about Li Ning's near-term fundamentals as demand growth slows in the mainland. In addition, the increasing competition may increase the uncertainty of Li Ning's sales and profitability, as well as increase the investment in operating expenses.
J.P. Morgan believes that a single-brand strategy faces more uncertainty than a well-executed multi-brand portfolio against a backdrop of macro and industry-wide challenges. As a result, Li Ning was downgraded from "overweight" to "**" and placed on the negative catalyst watch list.
Li Ning, who has eaten the dividends of the national tide, what happened?
As the "Prince of Gymnastics" who has shined in the Olympic Games, Li Ning can actually be regarded as one of the most successful representatives of crossing the border from athletes to the business world. Li Ning, who broke out of the Olympic arena, has also built a brand that has formed a lot of fate with large-scale sports events.
In 1990, China hosted the Asian Games for the first time, and at that time, Li Ning won the clothing sponsorship of the Beijing Asian Games torch relay with 2.5 million yuan. Li Ning, who won the first game, has provided award-winning clothing for the Chinese team in four consecutive Olympic Games. With the halo blessing of Li Ning Olympic champions, the in-depth cooperation between the brand and various major sports events, and the national feelings of the Chinese people, the Li Ning brand has gradually gained a firm foothold in the market.
However, for a long time, consumers' evaluation of Li Ning was mainly "close to the people", "simple", "durable", etc., and the word "trend" does not seem to be very close to Li Ning. It was not until 2018 that Li Ning's high-end sub-brand China Li Ning appeared at New York Fashion Week, and the outside world saw a different Li Ning from the past.
At that time, Chinese Li Ning launched tomato scrambled egg costumes, tiger and crane double-shaped sweatshirts, Wudao 2-ACE and other clothing on the runway, and China Li Ning took advantage of this to brush up its presence. After this battle, Li Ning changed his inherent impression in the minds of the public and once again captured the love of many young people. In recent years, with the increasing popularity of domestic consumers for the national tide, Li Ning's identity as the "first brother of the national tide" has been recognized by more and more people in the outside world.
Taking advantage of the national tide fire, Li Ning is also accelerating its high-end layout. One of the manifestations of Li Ning's high-end strategy is the continuous growth of its products. According to the statistics of Guosheng Research Institute, the new price of Li Ning's ultra-light 15 series in 2018 is 499 yuan, the new price of the ultra-light 16 series in 2019 is 539 yuan, and the new price of the ultra-light 20 series in 2023 will reach 599 yuan; The Liejun 4 series is from 699 yuan in 2020 to Liejun 7pro, and in 2023 *** to 1099 yuan.
However, Li Ning, which once relied on China's Li Ning to launch the first shot of the "first brother of the national tide", is currently facing the dilemma that it is difficult to promote high-end. In the face of the most inexpensive products, some consumers expressed such feelings - "In the past, there was no money to wear Li Ning, but now there is no money to wear Li Ning".
In terms of the company's performance, as mentioned above, in the last few interim reports, the growth rate of Li Ning's revenue has been slowing down; In the third quarter of last year, the same-store sales of Li Ning's entire platform recorded a mid-single-digit year-on-year decline, which to a certain extent indicates that consumers' desire to buy for Li Ning has weakened.
On the other hand, the continuous price increase of new products is the "self-contradiction" of Li Ning's activities to destock and frequently discount. According to ** reports, in 2023, Li Ning will basically launch price reductions including "4% off" and "more than 3% off" on every important festival, but even if the discount is made, many consumers still complain that Li Ning's products are too high.
Regarding the question of the high price of the product, Li Ning himself previously responded in an interview that the positioning of a large number of Li Ning's products is still biased towards the public, but there are different needs and price segments in various categories, and some expensive products actually meet the diversified needs of the market.
Or aware of consumers' complaints about its products, Li Ning's management revealed at the previous exchange meeting that "in 2024, it will sink to the low-level market by broadening the product base, and seize the share of the low-level market in the short and medium term by launching differentiated products in the sinking market."
Some people in the industry believe that if a brand wants to achieve high-end transformation, it should not only rely on the marketing of the concept of national tide, but also work its own product strength. However, judging from the company's financial data, Li Ning's investment in R&D does not have obvious advantages.
According to the data disclosed in Li Ning's financial report, from 2020 to 2022, Li Ning's R&D expenses were 32.3 billion yuan, 42.5 billion yuan, 53.4 billion yuan, accounting for the company's revenue in the same period1%, much lower than the proportion of Nike, Adidas, etc., which is close to 10%. In addition, according to the data disclosed by the Prospective Industry Research Institute, in February 2022, the number of patents in the field of ANTA sports shoes was 590, which is about 35 times.
In the first half of last year, Li Ning's investment in R&D was about 29.1 billion yuan, a year-on-year increase of 2176%, accounting for 2 percent of total revenue1%, but still lower than Anta's 23%, Xtep International's degree of 32%。
It is worth mentioning that in 2022, Li Ning also "overturned" due to controversial product design. At that time, Li Ning held an event called "2022 Dream Chase Airport Show" at Zhanghe Airport in Jingmen City, Hubei Province, but a costume unveiled at this event was accused of "Japanese style", which immediately caused public anger.
After the controversial product design was questioned by consumers, Feng Ye, general manager of Li Ning e-commerce, said in the circle of friends, "Our consumers, for the precipitation of Chinese culture, the inheritance of educational knowledge is still less." However, the voices of Li Ning executives not only failed to calm the anger of netizens, but also added fuel to the flames of this turmoil.
Subsequently, Li Ning issued a statement to apologize, "The design and shape of the related products have brought confusion and doubts to everyone, and Li Ning Company expresses its sincere apologies." Li Ning also said that the most discussed flight cap design originated from ancient Chinese helmets, outdoor protective hats and cotton hats, and the products are presented in a variety of colors and styles, with professional functions such as windproof and warmth, so as to adapt to more outdoor wearing scenarios.
The purchase of the property hit the stock price hard, and Li Ning launched a HK$3 billion repurchase plan
While the main business is facing challenges, Li Ning also released a big move in the last month of last year.
On December 10 last year, Li Ning issued an announcement on the Hong Kong Stock Exchange that its indirect wholly-owned subsidiary, High Match Limited, had signed a sale and purchase agreement with Gallex Resources Limited (an indirect wholly-owned subsidiary of Henderson Land Development) to acquire a company under Henderson Land mainly engaged in property investment.
As soon as the news of Li Ning's visit to Hong Kong to buy land came out, it immediately aroused widespread attention in the market. Radar Finance learned that the people behind Henderson Land are the Lee Shau Kee family, and the former is known as the "four major families in Hong Kong" along with Li Ka-shing, Cheng Yutong, and Kwok Tak-sheng.
According to the announcement, the target company acquired by Li Ning is mainly engaged in property investment and is the sole legal and beneficial owner of the property, which is the main asset of the seller. It is reported that the property is a whole building, with a total floor area of about 9,600 square feet and a total construction area of about 144,000 square feet, including 22 floors of commercial office space and two floors of retail area.
This time, in order to pocket this target company, Li Ning needs to spend as much as 22HK$0.8 billion, and the main purpose of Li Ning's transaction is to build it into its Hong Kong headquarters. According to the announcement issued by Li Ning, it wrote in the column of "Consideration Basis" that "it is proposed to use part of the property as the headquarters of the Group (Li Ning) in Hong Kong".
In the view of the Board of Directors of Li Ning, the Group's business in Hong Kong has great potential for development, and the expansion of the Group's business operations in Hong Kong will help expand its international business and is therefore of great strategic significance. As Hong Kong is one of the few international cities in the world and has a long-standing reputation as a business hub, the Group can strengthen its ties with different countries and explore various international business opportunities.
Li Ning also mentioned in the announcement that the purchase of the property for the Group's Hong Kong headquarters through the acquisition demonstrates the Group's confidence in its business prospects in Hong Kong, and marks the implementation of its plan to strengthen its international business development.
However, the target company purchased by Li Ning with a huge amount of money has not been very good in recent years. According to the announcement released by Li Ning, the company recorded 3,513 in 2021 and 2022 respectively130,000 Hong Kong dollars, 4954The revenue of HK$960,000 and the company's after-tax loss for the same period were 1,67660,000 Hong Kong dollars, 8035HK$790,000. In addition, the company's net asset value also increased from 28HK$1.3 billion fell to 27HK$3.3 billion, a year-on-year decrease of 0.HK$800 million.
In fact, the current Hong Kong property market is not very prosperous, so some voices believe that Li Ning bought a house in Hong Kong at this time with the meaning of "picking up leaks" at a low price. However, many people believe that at a time when Hong Kong's property market is weak and housing prices continue to rise, Li Ning's large-scale purchase of real estate is particularly conspicuous and unpredictable. In addition, the company is currently facing difficulties such as declining performance and sluggish stock price, although Li Ning's purchase of real estate may help the company's long-term planning, it will have a further impact on the company's stock price to a certain extent in the short term.
The day after the announcement of the purchase of the property, Li Ning's stock price was affected. At the opening of the day, the share price of Li Ning Hong Kong stocks fell sharply, and as of December 11 last year, the share price of Li Ning was **1429% to 183 Hong Kong dollars shares, with a total market capitalization of 480HK$4.3 billion. At that time, the topic of "Li Ning's stock price fell by nearly 70% during the year" once rushed to the hot search on Weibo.
It is worth mentioning that after the news of buying a house hit the stock price hard, Li Ning announced on December 12 last year that the company would plan to use no more than HK$3 billion to buy back shares in the next six months. Li Ning also stressed in the announcement that the board of directors is full of confidence in the group's business prospects and long-term growth, and the board believes that the company's current stock price is lower than its intrinsic actual value.
Some analysts have pointed out that at a time when consumers are talking about "consumption downgrade", it has become more and more difficult for brands to establish their own high-end image. In this context, if Li Ning wants to realize its high-end strategy and gain the recognition of consumers and the capital market, it needs to continuously consolidate its product strength. With the return of foreign sports brands led by Nike and Adi, as well as the continuous efforts of domestic brands such as Anta, 361, Xtep and Hongxing Erke, Li Ning still cannot be taken lightly if he wants to consolidate his position in the market.