Li Ning’s first-half profit beats estimates amid shift to online sales but warns of ‘continued uncertainty’ as Covid-19 lingers
- Li Ning’s first-half profit decreased 14 per cent to 683.3 million yuan (US$98 million), beating consensus estimates of a 28 per cent decline
- Shares rose as much as 10 per cent, reaching an all-time high of HK$32.30
Net income fell 14 per cent to 683.3 million yuan (US$98 million) in the first six months, outperforming the 28 per cent decline expected in Bloomberg’s analyst poll. Sales fell 1.2 per cent to 6.18 billion yuan, performing better than the 5 per cent drop expected by analysts.
Li Ning’s strong performance was due to “a very strong gross margin (flat year-on-year) and expense controls,” wrote Jefferies’ analyst John Chou, who maintained a “buy” recommendation on the stock. “Financial impact from the intensified markdown activities in 1H20 proved to be well under control. This suggests the sharp disappointment in offline retail in June didn't have much impact on Li Ning's channel health.”
Li Ning tweaked its sales strategy to eke out small gains amid the across-the-board slump in consumer activity during the coronavirus outbreak, as consumers were homebound or constrained by social distancing from visiting stores. Revenue from online sales of its athletic wear and footwear via its e-commerce channel rose 23 per cent during the period, said chief financial officer Terence Tsang Wah-fung during an earnings teleconference.
Li Ning’s shares rose as much as 10 per cent in Hong Kong to an all-time high of HK$32.30 after the announcement on Friday. The shares eventually closed 8.4 per cent higher at HK$31.55.
