Chinese sportswear maker Li Ning’s shares jump to nine-year high as former Uniqlo executive Kosaka Takeshi appointed joint CEO

Zhang Shidong

Li Ning, the Chinese sportswear maker whose shares have more than quadrupled in the past two years, may get another boost to its stock-market performance.

The Beijing-based company, which was founded by the Olympic gold medal-winning gymnast of the same name, said it has hired Kosaka Takeshi from Japanese clothing retailer Uniqlo as its joint chief executive officer, alongside Li Ning himself.

Kosaka, a Japanese-Chinese, was formerly the chief operating officer of the Chinese unit of Uniqlo, Asia’s biggest clothing retailer. Before that, he was CEO of the company’s South Korea operation.

The appointment, effective from Monday, will put Kosaka, a veteran with 15 years of experience in the Chinese market, in charge of Li Ning’s operations including supply chain, products and retail management, according to a company statement.

Li Ning’s shares jumped by as much as 5 per cent in Hong Kong to HK$24.50 on Monday, their highest level in nine years. Investors including Hengsheng Asset Management said the move would bring better management expertise to the company and strengthen its brand image among consumers in the long run.

“That will do good for the company’s development as [Kosaka] is supposed to be very experienced in that area,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “Li Ning is better known among Chinese consumers than any other domestic brand name such as Anta, because of the fame of the founder. The company still has growth potential with better operations.”

Shares of Li Ning, which began trading in Hong Kong in 2004, have been on a roll for the past two years, as the company has overhauled its business operations. It has added more physical stores to bolster brand recognition and ramped up the e-commerce business that makes up about a fifth of its sales.

Li Ning, the retired Chinese gymnast and entrepreneur who founded the sportswear company that bears his name. Photo: Simon Song

The revamp has borne fruit. The company returned to profitability in 2017 after five straight years of losses. Net income jumped 196 per cent from a year earlier in the first half of this year, accelerating from a 39 per cent increase in 2018. Profit will probably increase 87 per cent this year, according to Bloomberg data.

Li Ning’s shares are the most expensive among China’s major sportswear makers. The stock traded at 39.5 times estimated earnings for this year, compared with the multiple of 28 times for Anta Sports Products and 12.5 times for Xtep International Holdings, the data showed.

Chinese Olympian Li Ning on the challenges of taking on Nike and Adidas

Despite the turnaround, Li Ning is still a laggard in terms of market share in China. Its 6.1 per cent market share is well behind Nike’s 23 per cent and Adidas’ 20 per cent, according to Euromonitor. Even Anta’s was much higher at 15 per cent.

Li Ning “will continue to implement the strategy of ‘single brand, multi-categories, diversified channels”, and build-up the core competitiveness on the platform of experience value creation and pursuit,” the namesake chairman said in the statement. He would focus on strategic planning afterwards.

Li won six medals in gymnastics at the 1984 Olympics in Los Angeles, the first games China had taken part in since 1952.

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