Morgan Stanley: LI NING's brand and product competitiveness are underestimated, maintaining a "hold" rating.

Morgan Stanley released a research report stating that LI NING's business quality is improving, and its brand and product competitiveness are underestimated by the market. The bank expects a compound annual growth rate of 7% for sales and adjusted net profit from 2026 to 2028. Management has given guidance for high single-digit sales growth, but the bank, in response to macro uncertainties, only assumes a 6% sales growth in 2026. The target price is maintained at HK$26 with a "hold" rating. Morgan Stanley stated that LI NING's product portfolio has significantly improved from three to four years ago. After achieving high-speed growth in the badminton business in 2024-2025, it is expected to maintain a compound annual growth rate of around 10% from 2025 to 2027. The new "Glory Series" and outdoor product lines contributed a high single-digit percentage of sales in the second half of last year, with related specialty stores just beginning to expand, which will help boost clothing sales. Considering the strong performance of retail channels and "LI NING YOUNG," the bank raised revenue forecasts for 2026 and 2027 by 1% each, raised gross margin forecasts for 2026 by 0.3 percentage points, and reduced operating expense ratio forecasts for 2026 and 2027 by 0.5 and 0.3 percentage points, respectively. Therefore, the net profit forecast for 2026 was raised by 1%.