Credit Suisse lifted its target price for Li Ning (02331) to HK$23.6 from HK$22.6 and maintained its "outperform" rating.
The research house said Li Ning's 1H results were in-line with previous profit alert. Positive surprises came from (1) accelerating wholesale sales growth at 45% (versus 12% in 2H 2018), (2) margin improvement on lower rebate, operating leverage and cost discipline, and (3) strong balance sheet.
Credit Suisse expects 2H revenue growth to moderate to 26%, but still ahead of management guidance. Moreover, Credit Suisse sees ample room for margin expansion beyond 2019 supported by improving brand equity, operating leverage, and supply chain optimization.
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