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HSBC lifts Li Ning (02331) to HK$7.7; "buy"
HSBC Global Research lifted its target price for
Li Ning (02331) to HK$7.7 from HK$7.3, and maintained its "buy" rating.
  The research house said addition of kids wear segment, better wholesale business and 
improving coverage in Southern China should drive further business recovery. Risk-reward 
profile turned favourable after share price fell 15% from a peak in 4Q 2017 on potentially
higher A&P and staff costs.
  HSBC factored in higher advertising and promotional expenses for FY2018-19 as it sees Li
Ning's intention to strengthen the brand equity for a more sustainable longer-term growth.
Also, accounting for the extra staff costs from the shares and options award scheme
announced in December 2017, the research house cut FY2018 and FY2019 earnings by 10% and 
1%, respectively. 

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