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LI NING CO LTDLI NING CO LTDLI NING CO LTD

LI NING CO LTD

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82331 trade ideas

Is Li Ning going to be privatized?On the morning of March 12, news spread that Li Ning would be privatized. According to relevant media reports, Li Ning, the founder of Li Ning Company, was contacting investment institutions to acquire the company's shares for privatization. It is reported that Li Ning has invited TPG, PAG (Pacific Alliance Investment Group), Hillhouse, etc. to join the privatization acquisition. However, the discussion is still in the early stages and the details have not yet been finalized.
HKEX:2331Long
by ElFarihi
1
SEHK 2331 Li Ning; The Chinese Sportswear WinnerChina sportswear players in 1H20 overall delivered in line or better-than expected results. Li Ning has outperformed its peers (Anta and Xtep) this year with core earnings up 22% y-o-y. This is mainly due to its elevated brand presence and increase efficiencies in the business. Although sales and margins were evidently impacted by Covid-19, I remain extremely optimistic that the China sportswear sector can emerge as a winner in a post-Covid environment. Overall, I believe that Li Ning can emerge a winner in the coming years for a few reasons: 1) With an increasingly affluent and health conscious Chinese population, people are willing and able to pay a premium to stay fit. According to a study by GlobalData, the number of affluent population, including mass affluents (holding liquid assets of US$50,000–1m) and High-net-worth (HNW) population (holding liquid assets of more than US$1m), is expected to grow from 40.13 million in 2018 to 56.67 million in 2022. Thus, Li Ning is positioned to benefit from a trend like this. 2) Li Ning is a pure China play, and therefore is immune to global uncertainties like the US/China tensions. 3) Unlike its peers, Li Ning adopts a single brand strategy, while players like Anta owns separate brands (Fila). Moving forward, I believe this can allow Li Ning to further achieve allocative and productive efficiency, thereby snatching up more market share to emerge as the top Sportswear Brand in China. On the technical chart, Li Ning has shown a pattern of a consistent uptrend with higher highs and higher lows. While it did form a double top, - indicating massive resistance at the $47.7 level - it has found a nice support at $42.1. Today, it has formed a bullish engulfing candle to close the session with technical indicators looking to turn bullish. Overall, I think that it is okay to take a position at this level and to see if Li Ning can break past the resistance at $47.7. I personally see a lot of room for Li Ning to run, with a personal target price of $51 for a swing trade.
HKEX:2331Long
by cletibals