Citi has released a research report maintaining its "Buy" rating and HK$18.1 target price for LI NING (02331).

The company announced after market close on November 5 that it would distribute a special dividend of RMB 2.32 (HK$2.71) per share, significantly exceeding the market expectation of approximately RMB 0.5 per share that the bank had gathered from recent investor meeting feedback.

Citi noted that the total special dividend amounts to approximately RMB 6 billion, equivalent to 31% of the company's net cash of RMB 19.4 billion as of the end of the first half of 2026, 260% of the bank's forecast net profit for 2026, and a dividend yield of approximately 18% based on the closing price on November 5.

The bank expects that this special dividend will not affect LI NING's future business operations or its regular annual payout ratio of 50%.

Citi believes that this special dividend may mark the beginning of a multi-year cash return plan for LI NING, although the company has not yet formally announced such a plan. This is mainly due to the company's advertising and promotion investments, including its Stephen Curry partnership, being largely finalized, strong free cash flow, and no major merger and acquisition plans.