By Yi Wei Wong


Li Ning Co. is trading lower amid a broad selloff in Hong Kong and concerns about the Chinese sportswear company's sales outlook, but that hasn't prompted analysts to rescind their buy calls the stock.

The Beijing-based company's shares fell as much as 8.3% to 48.55 Hong Kong dollars (US$6.18) in early trade Thursday. They were last down 4.1%, taking year-to-date losses to more than 40%, while the broader Hang Seng Index was down 2.1%.

Li Ning said Wednesday that overall same-store sales registered a high, single-digit increase in the third quarter from a year earlier. Retail sales rose by mid-single digits, while wholesale climbed by a high, single-digit percentage and its e-commerce store business registered growth in the mid-teens, it said.

Analysts said growth was within expectations, but highlighted Li Ning's conservative outlook for fourth-quarter sales amid concerns about renewed lockdowns in China. Some flagged fears of stiffer competition after rival Anta Sports Products Ltd. posted quarterly sales growth earlier this week.

"The overall strict lockdown measures will still affect [Li Ning's] sales performance in the fourth quarter," CGS-CIMB's Lei Yang said in a note.

Still, the analyst kept an add rating and target of HK$113.00 on the stock--more than double its current price-- citing a solid third quarter and healthy inventory levels.

Citi analysts Xiaopo Wei and Vincent Yang said in a note that Li Ning's third-quarter retail sales reached the high end of market expectations, and that the retailer sounded more confident than Anta.

"In our view, Li Ning's share price has been over-penalized by market's concerns on competition after Anta's third-quarter earnings call," the analysts said.

Li Ning shares fell 6.5% on Wednesday.

Citi kept a buy rating and target price of HK$98.00 on the company.

Nomura analysts Cathy Xiao and Jizhou Dong said in a report that they remain confident in Li Ning's ability to weather a volatile retail environment, citing strong inventory levels.

"For the fourth quarter, we continue to see a volatile and promotional environment, but we remain confident of the company's sales momentum as it faces relatively less inventory pressure," the analysts said.

The Japanese investment bank has a buy rating and target price of HK$90.10 on the stock.


Write to Yi Wei Wong at yiwei.wong@wsj.com


(END) Dow Jones Newswires

10-19-22 2346ET