Daily Investment Strategy

Daily focus：Li Ning（2331）

Li Ning operational performance in the second quarter of 2025 continued to face pressure. The core Li Ning brand recorded low single-digit year-on-year growth in sales revenue, but offline channels (including directly operated retail and wholesale) showed divergent performance: directly operated retail channels saw mid-single-digit declines, while wholesale channels recorded low single-digit growth. On the other hand, e-commerce virtual stores performed strongly, achieving mid-single-digit growth. Looking ahead to the second half of the year, the operating environment remains challenging, with intense industry competition. Brand promotion and discounting will continue to be major sources of pressure. Although the company maintains guidance for flat full-year revenue and high single-digit net profit margins, market consensus generally expects it will be difficult to meet these targets.

China Q2 GDP Growth Slows, but beats expectations

China's GDP grew by 5.2% yoy in Q2 of this year, slowing down from 5.4% in the previous two quarters, but still slightly above the market expectation of 5.1%. Policies introduced in mainland China during the China-US trade war supported economic performance. Overall, during the trade war period, China's net exports were weighed down, while consumption growth only slightly slowed; Gross Capital Formation recorded growth. However, in June, affected by weakening domestic demand, the effectiveness of the policy encouraging trade-in of old consumer goods will further diminish, and overall demand is accelerating its slowdown, indicating that the economy is still on a downward trend month by month.

Hong Kong Stock Connect recorded a net inflow of HK$3.82bn on Tuesday, of which Meituan (3690) had the largest net inflow of HK$650mn, followed by CSPC Pharmaceutical Group (1093). Tencent Holdings (0700) recorded the largest net outflow of HK$830mn, followed by Xiaomi (1810).