UOB Kay Hian raised its target price for Li Ning (02331) to HK$22 from HK$17 and maintained its "hold" rating.
The research house said Li Ning's 1H revenue beat its profit alert by 10%, with sales accelerating (+33%) on tightened wholesale discount and stronger underlying product performance. Management upgraded its guidance for both sales and profitability.
UOBKH fine-tuned its net profit (recurring) forecasts for 2019-21 by -1%, 0% and 0% respectively. It noted that its sales growth forecast of 26% and a net margin forecast of 8.7% for 2019 are in line with the management's latest guidance.
It sees significant positive momentum for the stock as it continues to deliver both stronger topline, margin expansion and with consensus re-rating upwards. However, UOBKH does caution that valuations are lofty.