Li Ning (SEHK:2331) - Share price, News & Analysis

Q: What is the Fair Price of 2331 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

2331 (HK$72.7) is trading below our estimate of [[fair value]] (HK$111.23)

2331 fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	5/6
Past Performance	5/6
Financial Health	6/6
Dividends	0/6

2331 Stock Overview

Li Ning Company Limited engages in the research and development, design, manufacture, marketing, distribution, and retail of sporting goods in the People’s Republic of China.

Rewards

Trading at 34.6% below our estimate of its fair value

Earnings are forecast to grow 20.16% per year

Earnings grew by 136.1% over the past year

Risk Analysis

Shareholders have been diluted in the past year

Li Ning Competitors

ANTA Sports Products

SEHK:2020

HK$261.6b

Shenzhou International Group Holdings

SEHK:2313

HK$142.9b

Prada

SEHK:1913

HK$112.5b

Bosideng International Holdings

SEHK:3998

HK$52.6b

Price History & Performance

Summary of all time highs, changes and price drops for Li Ning
Historical stock prices
Current Share Price	HK$72.70
52 Week High	HK$108.20
52 Week Low	HK$48.60
Beta	0.74
1 Month Change	21.17%
3 Month Change	8.27%
1 Year Change	-19.71%
3 Year Change	295.11%
5 Year Change	1,128.04%
Change since IPO	2,993.62%

Recent News & Updates

Jul 01

An Intrinsic Calculation For Li Ning Company Limited (HKG:2331) Suggests It's 31% Undervalued

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Li Ning Company...

May 31

I Ran A Stock Scan For Earnings Growth And Li Ning (HKG:2331) Passed With Ease

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling...

Shareholder Returns

	2331	HK Luxury	HK Market
7D	7.4%	4.9%	0.5%
1Y	-19.7%	-33.6%	-20.3%

Return vs Industry: 2331 exceeded the Hong Kong Luxury industry which returned -33.6% over the past year.

Return vs Market: 2331 matched the Hong Kong Market which returned -20.3% over the past year.

Price Volatility

Is 2331's price volatile compared to industry and market?
2331 volatility
2331 Average Weekly Movement	9.2%
Luxury Industry Average Movement	6.7%
Market Average Movement	6.9%
10% most volatile stocks in HK Market	13.7%
10% least volatile stocks in HK Market	3.3%

Stable Share Price: 2331 is not significantly more volatile than the rest of Hong Kong stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: 2331's weekly volatility (9%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1990	4,019	Ning Li	https://www.lining.com

Li Ning Company Limited engages in the research and development, design, manufacture, marketing, distribution, and retail of sporting goods in the People’s Republic of China. The company offers sporting goods, including footwear, apparel, equipment, and accessories for professional and leisure purposes primarily under the LI-NING brand. It also develops, manufactures, markets, distributes, and/or sells outdoor sports products under the AIGLE brand; table tennis under the Double Happiness brand name; fashionable fitness products for dance and yoga under the Danskin brand; and badminton under the Kason brand name.

Li Ning Fundamentals Summary

How do Li Ning's earnings and revenue compare to its market cap?
2331 fundamental statistics
Market Cap	CN¥162.27b
Earnings (TTM)	CN¥4.01b
Revenue (TTM)	CN¥22.57b

40.5x

P/E Ratio

7.2x

P/S Ratio

Is 2331 overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
2331 income statement (TTM)
Revenue	CN¥22.57b
Cost of Revenue	CN¥10.60b
Gross Profit	CN¥11.97b
Other Expenses	CN¥7.96b
Earnings	CN¥4.01b

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	1.53
Gross Margin	53.03%
Net Profit Margin	17.77%
Debt/Equity Ratio	0%

How did 2331 perform over the long term?

See historical performance and comparison

Dividends

0.7%

Current Dividend Yield

29%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is 2331 undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for 2331?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for 2331. This is calculated by dividing 2331's market cap by their current preferred multiple.
What is 2331's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CN¥162.27b

2331 key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	6.5x
Enterprise Value/EBITDA	26x
PEG Ratio	2x

Price to Earnings Ratio vs Peers

How does 2331's PE Ratio compare to its peers?

2331 PE Ratio vs Peers

The above table shows the PE ratio for 2331 vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	33.4x
2020 ANTA Sports Products	28.9x	14.9%	HK$261.6b
2313 Shenzhou International Group Holdings	36.2x	26.0%	HK$142.9b
1913 Prada	46.8x	24.7%	HK$112.5b
3998 Bosideng International Holdings	21.8x	17.3%	HK$52.6b
2331 Li Ning	40.5x	20.2%	HK$190.0b

Forward PE

Price-To-Earnings vs Peers: 2331 is expensive based on its Price-To-Earnings Ratio (40.5x) compared to the peer average (33.4x).

Price to Earnings Ratio vs Industry

How does 2331's PE Ratio compare vs other companies in the HK Luxury Industry?

Price-To-Earnings vs Industry: 2331 is expensive based on its Price-To-Earnings Ratio (40.5x) compared to the Hong Kong Luxury industry average (8x)

Price to Earnings Ratio vs Fair Ratio

What is 2331's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

2331 PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	40.5x
Fair PE Ratio	19.8x

Price-To-Earnings vs Fair Ratio: 2331 is expensive based on its Price-To-Earnings Ratio (40.5x) compared to the estimated Fair Price-To-Earnings Ratio (19.8x).

Share Price vs Fair Value

What is the Fair Price of 2331 when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: 2331 (HK$72.7) is trading below our estimate of fair value (HK$111.23)

Significantly Below Fair Value: 2331 is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: 2331 is poor value based on its PEG Ratio (2x)

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Future Growth

How is Li Ning forecast to perform in the next 1 to 3 years based on estimates from 33 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

20.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: 2331's forecast earnings growth (20.2% per year) is above the savings rate (1.6%).

Earnings vs Market: 2331's earnings (20.2% per year) are forecast to grow faster than the Hong Kong market (16.5% per year).

High Growth Earnings: 2331's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: 2331's revenue (18.1% per year) is forecast to grow faster than the Hong Kong market (10.1% per year).

High Growth Revenue: 2331's revenue (18.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: 2331's Return on Equity is forecast to be high in 3 years time (22.9%)

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Past Performance

How has Li Ning performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

46.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: 2331 has high quality earnings.

Growing Profit Margin: 2331's current net profit margins (17.8%) are higher than last year (11.7%).

Past Earnings Growth Analysis

Earnings Trend: 2331's earnings have grown significantly by 46% per year over the past 5 years.

Accelerating Growth: 2331's earnings growth over the past year (136.1%) exceeds its 5-year average (46% per year).

Earnings vs Industry: 2331 earnings growth over the past year (136.1%) exceeded the Luxury industry 44%.

Return on Equity

High ROE: 2331's Return on Equity (19%) is considered low.

Discover strong past performing companies

Financial Health

How is Li Ning's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: 2331's short term assets (CN¥18.7B) exceed its short term liabilities (CN¥7.7B).

Long Term Liabilities: 2331's short term assets (CN¥18.7B) exceed its long term liabilities (CN¥1.5B).

Debt to Equity History and Analysis

Debt Level: 2331 is debt free.

Reducing Debt: 2331 has no debt compared to 5 years ago when its debt to equity ratio was 19%.

Debt Coverage: 2331 has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: 2331 has no debt, therefore coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is Li Ning current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

0.73%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: 2331's dividend (0.73%) isn’t notable compared to the bottom 25% of dividend payers in the Hong Kong market (2.71%).

High Dividend: 2331's dividend (0.73%) is low compared to the top 25% of dividend payers in the Hong Kong market (7.78%).

Stability and Growth of Payments

Stable Dividend: 2331 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are stable.

Growing Dividend: 2331 is not paying a notable dividend for the Hong Kong market, therefore no need to check if payments are increasing.

Earnings Payout to Shareholders

Earnings Coverage: 2331 is not paying a notable dividend for the Hong Kong market.

Cash Payout to Shareholders

Cash Flow Coverage: 2331 is not paying a notable dividend for the Hong Kong market.

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Management

How experienced are the management team and are they aligned to shareholders interests?

4.1yrs

Average management tenure

CEO

Ning Li (59 yo)

2.83yrs

Tenure

CN¥65,891,000

Compensation

Mr. Ning Li serves as Joint Chief Executive Officer of Li Ning Company Limited since September 02, 2019. Mr. Li serves as Chairman of the Board at Trinity Acquisition Corp. He is the Founder of Li Ning Com...

CEO Compensation Analysis

Compensation vs Market: Ning's total compensation ($USD9.83M) is above average for companies of similar size in the Hong Kong market ($USD1.06M).

Compensation vs Earnings: Ning's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: 2331's management team is considered experienced (4.1 years average tenure).

Board Members

Experienced Board: 2331's board of directors are seasoned and experienced ( 18.1 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 5.4%.

Data	Last Updated (UTC time)
Company Analysis	2022/07/03 00:00
End of Day Share Price	2022/06/30 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31