pinster asked 1 year ago
Hi Victor,
I’ve done up the checklist for Li Ning https://1drv.ms/x/s!Aqg-DJlteJlhgphNHLAiC4CBMmptKA
Financials is here https://1drv.ms/x/s!Aqg-DJlteJlhgphMmZWO06ZIQVg4Kg
Appreciate your view in this company and also your feedback on whether I’ve filled up the new templates correctly.
Thank you so much.
2 Answers
Victor Chng Staff answered 1 year ago
Hi Pinster,
The company is making negative profits from 2012-2014. Do you know the reasons? Also, If I am not wrong, your valuation chart should have a big spike in valuation in 2021, so instead of using average, you should be using median PE
The company is making negative profits from 2012-2014. Do you know the reasons? Also, If I am not wrong, your valuation chart should have a big spike in valuation in 2021, so instead of using average, you should be using median PE
pinster
replied 1 year ago Hi Victor,
In 2012, the company recalled a batch of shoes after it was found that the soles were not adhering properly.
In 2013, Li Ning was fined by the Chinese government for selling counterfeit products.
In addition, some missteps by the management as they focus on expansion led to a decline in product quality.
I’m using PCF for valuation https://1drv.ms/i/s!Aqg-DJlteJlhgphLk8T8R5NXIYkp-A
Based on the checklist, it seems to suggest the recent 5 years they are doing well with an improved strategy. Am I right to say that?
Victor Chng Staff answered 1 year ago
Hi Pinster,
If I remember correctly, there seemed to be an oversupply of shoes in the market during that period. You are right that the company's past five years have been doing well. My concern is whether they do have a strong moat-like Nike. In 2013, when I was in China, I saw how competitive the shoe industry was when the oversupply issue happened. The salesperson will rush to be fast and shout "Discount, Discount". On top of that, all the shoe company usually will have their store side by side with competitors. All the comment is based on my experience when I was in China. Things may have changed, but I don't have much insight.
If I remember correctly, there seemed to be an oversupply of shoes in the market during that period. You are right that the company's past five years have been doing well. My concern is whether they do have a strong moat-like Nike. In 2013, when I was in China, I saw how competitive the shoe industry was when the oversupply issue happened. The salesperson will rush to be fast and shout "Discount, Discount". On top of that, all the shoe company usually will have their store side by side with competitors. All the comment is based on my experience when I was in China. Things may have changed, but I don't have much insight.
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