Li Ning Pins Hopes on High-Tech Gear

While China's broader retail growth crawled in FY 25, the sports sector broke away from the pack with a 15.7% rise. At the center of this transition is Li Ning Company Limited, which is aggressively pivoting from a general apparel brand to a high-performance tech player.

China ditched the couch for the court in 2025.

Despite a shaky economy, where consumer confidence sits at a low 90.6 points in 2025, China’s sports sector sprinted. While overall retail growth slowed to 3.7%—hitting 50.1 trillion Chinese Yuan (USD 7.35 trillion)—the National Bureau of Statistics (NBS) reported that sports and entertainment goods rose by 15.7%.

This momentum is fueled by the 15th 5-Year Plan, which aims to double the industry’s size to CNY 7tn by 2030 and build 100 outdoor destinations. The goal is to evolve from just hosting events to becoming a global leader with internationally recognized domestic brands and elite sports enterprises.

Chinese sportswear and sports equipment company Li Ning is riding this wave with a pivot to elite tech-driven gear to rival global giants. The company is banking on the 2026 Olympic Effect for brand value while executing a store clean-up focused on "quality and efficiency."

The Beijing-headquartered company also launched "COUNTERFLOW Trace" stores to capture the outdoor boom and is using AI-driven infrastructure to fix supply chain issues. Of course, these efforts are beginning to reflect on the company’s financial statements.

A racket of success

In FY 25, Li Ning clocked CNY 29.6bn in revenue, a 3.2% bump from last year’s CNY 28.7bn. Their gross profit also climbed to CNY 14.5bn, up from
CNY 13.9bn y/y. Thanks to rising costs and a tough market, the company had to spend big just to stay in the race. Their net profit margin got squeezed from 10.5% down to 9.9%

The actual performance is a bit of a mixed bag. The Running segment grew 10% y/y and making up nearly a third of their sales. Badminton also crushed it with a 30% y/y surge, especially since the brand pivoted to selling more high-margin gear. On the flip side, Basketball took a 19% y/y dive, which was a deliberate "reset" to clear out old stock and standardize pricing.

While e-commerce managed to save the day with single-digit revenue growth, physical retail felt the pinch. Revenue from direct stores dropped 3.4% y/y as the company strategically shut down 59 underperforming locations to adapt to shifting foot traffic.

On a Like-for-Like (LFL) basis, the numbers were a bit tougher, showing low single-digit declines overall, though online same-store sales managed single-digit growth for the full year as the brand pivoted its digital strategy toward newer platforms.

The valuation verdict

Li Ning’s stock is currently showing some serious momentum, trading at CNY 18.7 after a 39.8% jump over the last year. It’s even hovering near its 52-week high of CNY 20.4. This puts the company’s market cap at CNY 49.4bn (USD 7.3bn).

While its 16.2x P/E multiple based on potential FY 26 earnings is a bit higher than its 3-year average of 14.5x, the market clearly has high expectations.

Investors may also collect a dividend with a projected 3.1% dividend yield for FY 26, which is expected to stay flat in FY 27. The pros are definitely on board, with 26 out of 31 analysts having “Buy” ratings on the stock.

With an average target price of CNY 22.6, there’s still a projected 18% upside from current levels. That said, the company's path to hitting those targets isn't without its obstacles.

Walking the tightrope

First off, the market is incredibly crowded. Li Ning is constantly battling global giants such as Nike and Adidas, plus aggressive local rivals like Anta Sports.

Financially, things have been a bit bumpy. While revenue is still growing, profitability has taken a hit lately due to rising operating costs and heavy marketing expenses. Finally, keeping up with rapid tech changes in materials and e-commerce means they have to keep pouring money into R&D just to stay relevant.