Li Ning Co Shares Rose Sharply, Hitting 9 Month High And Two Factors To Help Turn Losses.

HKEx

Company Lining (02331, HK), after three years of losing 2012~2014, will finally turn the corner.

At present, Li Ning Co's share price is only 1/7 of 8 years ago.

Yesterday (January 6th), Li Ning Co announced the Earnings Preview announcement. The company expects that the profit and loss of the company's equity holders will be roughly flat in 2015, and the company's board of directors is also expected.

The company will achieve profitability in 2015.

Li Ning Co shares rose 6.97% yesterday to HK $4.45 a share and hit a 9 month high.

Two factors to help turn losses

In a notice issued yesterday, the Li Ning Co board said that according to the financial information of the first 11 months of 2015, the company expects that the profit and loss of the company's equity holders will be roughly flat in 2015.

In addition, the estimated performance in 2015 did not add to the 10% equity interest in the sale of red double happiness.

The Li Ning Co board said that the expected turnaround of business performance was mainly due to the increase in sales revenue and gross profit in 2015, and the decrease in expenditure ratio.

This is mainly due to the Li Ning Co's efforts to improve the business efficiency and profitability of the shops, strengthen long-term cooperation with channel partners and expand the business of e-commerce.

Reporters noted that in October 25, 2015, Li Ning Co announced the sale.

The 10% stake will generate an income of about $125 million.

Li Ning Co's share of red double happiness dropped from 57.5% to 47.5%, still the biggest shareholder of red double happiness.

Hongkong Qun Yi

After a conference call with Li Ning Co, Lining's brand product orders grew for the 8 consecutive quarter.

Qunyi Securities believes that the Li Ning Co's goal of turning losses into profits in 2015 is not a big problem due to industry recovery and control of operating costs.

And its earnings recovery rate, inventory control and development and other industries slower, the future direction of development is the key.

In addition, QE securities also revealed that red double happiness has IPO listing expectations.

The 10% stake in the sale of red double happiness is due to the growth of red double happiness and the improvement of brand awareness, so as to prepare for the future capital market operation (mainly for IPO listing).

Three years of hard times

At present, it seems that Li Ning Co has no problems in making profits, but in the past few years, the company was at the bottom of the valley and struggling.

Li Ning Co's share price also suffered a big decline over the years.

The company's share price broke through the HK $30 mark in 2007 and 2010 respectively, but the share price declined from 2010 to the end of yesterday, and the share price was only HK $4.45, which was only 1/7 of the peak period.

At present, the market value is only HK $8 billion 400 million.

Reporters noted that in the past few years, the company's management has also changed, and the company also has twists and turns in the direction of development.

First in 2012, in the context of a continuous decline in turnover, Zhang Zhiyong served 20 years as a chief executive officer of Li Ning Co, and no longer served as executive committee member of the board.

Jin Zhenjun, partner of TPG, a well-known investment company, was appointed Executive Vice President and executive director, while Jin Zhenjun was responsible for leading the development and operation of the company's internal affairs.

In March 2014, Jin Zhenjun was appointed the acting chief executive officer.

However, in November 2014, Jin Zhenjun resigned as the acting chief executive officer, and the executive officer was performed by Mr. Lining.

Broker: the turning point of the industry has arrived.

After the adjustment period of the sports industry from the end of 2011 to 2013, with the outbreak of mass sports and fitness campaign, the industry inflection point has emerged and is back to the fast development channel.

According to Guoxin Securities, according to Euromonitor statistics, in 2014, the scale of sports goods industry in China was nearly 150 billion. If the target is 5 trillion in the medium and long term, the medium and long-term demand space for sports goods in China is expected to be calculated on a trillion scale in the balanced structure of sports industry.

In recent years, Anta sports (02020, HK), XTEP International (01368, HK) and so on have successively made efforts to develop new market segments and cultivate new product lines.

Different product lines have great differences in requirements for enterprises, especially for R & D capabilities.

In fact, Anta sports is a good example of recent developments.

Although the company has been adversely affected by 2011~2013 in the industry, the annual net profit of Anta sports since 2010 has been around 1 billion 500 million yuan, and in 2014 it has reached 1 billion 700 million yuan.

The stock price of Anta sports in 2014 fell by 55.47% in the context of a 7.16% drop in the Hong Kong stock market.

CICC said that the sports equipment industry will usher in the turning point and return to the fast growth channel.

China's sports equipment industry has great room for development. It is optimistic about the sports equipment that the popular fitness and popularity will significantly improve.