Li Ning Company Limited (02331 HK) released its audited results for the year ended 31 December 2025.
Financial Performance • Revenue increased 3.2% year on year to RMB 29.60 billion, driven mainly by a 6.3% rise in franchised-distributor sales and a 5.3% expansion in e-commerce. • Gross profit grew 2.4% to RMB 14.49 billion; gross margin eased 0.4 percentage points to 49.0% as higher promotional intensity and channel-mix shifts outweighed cost controls. • Selling & distribution expenses were largely stable at RMB 9.19 billion, equivalent to 31.0% of revenue (-1.1 ppt). Administrative expenses rose 14.2% to RMB 1.63 billion, reflecting higher staff costs and a RMB 72 million goodwill impairment. • Operating profit improved 6.0% to RMB 3.90 billion, but net finance income fell sharply to RMB 33.12 million (2024: RMB 175.10 million) on lower deposit yields, leading to a 2.6% decline in net profit attributable to shareholders to RMB 2.94 billion. Net margin slipped to 9.9% (2024: 10.5%). • EBITDA softened 3.4% to RMB 6.16 billion; EBITDA margin stood at 20.8%.
Cash & Balance Sheet • Net operating cash inflow reached RMB 4.85 billion; year-end cash and cash equivalents rose to RMB 16.72 billion, while total cash (including time deposits) was RMB 19.97 billion. • The group remains debt-free with banking facilities of RMB 13.92 billion undrawn. • Debt-to-equity ratio was broadly stable at 36.5% (2024: 36.8%). • Working-capital metrics: inventory turnover held at 64 days; trade receivables turnover lengthened to 15 days; cash conversion cycle extended by two days to 37.
Dividends The board proposes a final dividend of RMB 0.2336 per share. Together with the interim dividend of RMB 0.3359, the full-year payout totals RMB 0.5695 per share, representing a 50% payout ratio. Payment is subject to shareholder approval at the AGM on 11 June 2026.
Operational Highlights • Overall retail sell-through (online and offline) was flat. • Offline new-product sell-through accounted for 83% of offline sales; channel inventory turnover averaged four months. • The store network totalled 7,609 points of sale at year-end, a net increase of 24 outlets. • Footwear contributed 49.5% of revenue, apparel 41.6%, and equipment/accessories 8.9%.
Key Developments & Events • Acquisition: In January 2024 the group completed the HKD 2.22 billion purchase of Vansittart Investment Ltd., owner of a Hong Kong commercial property now serving as Li Ning’s local headquarters; the asset’s carrying value at end-2025 was RMB 1.76 billion after depreciation and impairment. • Impairments: Investment-property impairment of RMB 269 million was booked amid a subdued property market. • Contingent liability: Subsidiary Li Ning Communications (Hong Kong) Limited is contesting a HKD 1.96 billion loan claim filed in June 2025; management believes no repayment obligation exists. • Proceeds utilisation: Of the HKD 10.43 billion raised via a 2021 top-up placement, RMB 0.57 billion was spent in 2025, leaving RMB 0.34 billion earmarked mainly for supply-chain upgrades by end-2026.
Outlook Management plans to deepen “Single Brand, Multi-categories, Diversified Channels”, accelerate technology-led product innovation, leverage Olympic partnerships for brand elevation, and enhance operational efficiency through supply-chain optimisation, digital integration, and disciplined capital management.