Analysts, investors, good morning. Welcome to Li Ning Company Limited's 2025 annual results announcement.

Let me introduce to you our management: Executive Chairman and Joint CEO, Mr. Li Ning; Executive Director and Joint CEO, Mr.

Qian Wei; Group Vice President and CFO, Mr. Zhao Dongsheng.

Today, our agenda is that Mr. Zhao will go through the 2025 financial review, and then the Chairman will talk about strategic direction, followed by Mr.

Qian on operational highlights. Then there will be a Q&A.

Mr. Zhao, please.

Good morning, everyone. I am Zhao Dongsheng.

Now I will walk you through our 2025 financial review. In 2025, we deepened our focus on our core business and strengthened our foundation, achieving the following results.

Financially, our revenue was up 3.2%, reaching 29.598 billion RMB. Gross margin decreased by 0.4 percentage points to 49%.

Our company concentrated our resources on core business segments, strengthened brand value delivery, and continuously optimized cost efficiency through channel integration and refined operations, ultimately achieving net profit of 2.936 billion RMB and net profit margin of 9.9%. Overall liquidity remained strong, with net operating cash flow of 4.852 billion RMB.

Average working capital as percentage of revenue was 7.7%. Cash conversion cycle was 37 days, an increase of 2 days compared to same period last year, maintaining a healthy level.

The Board of Directors proposed a final dividend of 23.36 cents per share. Combined with the interim dividend of 33.59 cents per share already paid, total annual dividend is 56.95 cents per share, with dividend payout ratio maintained at 50%, and showing consistent shareholder returns.

For operations, retail sell-through for Li-Ning core brand remained flat year-on-year across all channels. New product sell-through in physical stores accounted for 83% of total physical store sales, maintaining a reasonable level with healthy product efficiency.

At year-end, omni-channel inventory-to-sales ratio was 4 months, with inventory levels and aging structure remaining healthy. Our group's revenue increased by 3.2% year-on-year, primarily driven by impressive growth in specialty categories, which fueled overall revenue growth.

Among these, the running category maintained strong momentum, with revenue growing by over 10%. Badminton category achieved a 30% revenue increase, supported by growing brand mindshare in the specialty market and ample production capacity.

In 2025, the share of revenue across all channels remained balanced and healthy. Specifically, e-commerce revenue accounted for 31%, remaining stable.

Direct retail revenue declined by 1 percentage point to 23% due to store structure optimization. Wholesale revenue was up 1 percentage point to 46%.

New product sales from offline channels within the past 6 months accounted for 83% of total offline sales, remaining at a healthy and reasonable level. In terms of channels, the total number of POS in 2025 was 7,609, up 24 year-on-year.

Among these, the number of Li-Ning brand stores decreased by 26, while number of Li-Ning YOUNG POS was up 50. During the year, overall domestic consumer demand remained in a gradual recovery phase, with offline sales continuing to face pressure, while e-commerce business also faced challenges of slowing growth and intensifying competition.

Overall, sell-through remained flat year-on-year, with e-commerce sell-through growing mid-single-digit year-on-year. Offline sell-through declined by low-single-digit year-on-year, with average offline retail price slightly down year-on-year.

Offline discount deepening by about 1 percentage point. Average unit price down low-single-digit, while sales volume remained stable year-on-year.

Li-Ning's wholesale business, excluding Li-Ning YOUNG, saw a year-on-year increase of 33 POS, with full-year revenue growing by 7% year-on-year. Revenue from specialty stores such as badminton and table tennis was up 22%, driving growth in wholesale revenue.

During the year, based on actual operating conditions at the retail level, our company reasonably adjusted the sell-in schedule for distributors, and wholesale channel maintained healthy. Excluding revenue from shipments to specialty channels, wholesale revenue was up low-single-digit percentage, while wholesale sell-through declined a low-single-digit percentage in a challenging consumer environment.

Our core strategy is to make long-term investments in our distributor network. By establishing a distribution model and strengthening systematic management, we empower our partners to enhance operational quality and efficiency in key areas such as channels, merchandise, and retail, thereby creating sustainable value returns for the company.

Number of direct retail POS was down 59 year-on-year. Revenue declined by 4% year-on-year.

Decline in direct retail revenue was primarily due to reduction in number of stores resulting from store portfolio optimization. In this challenging environment, we'll continue to focus on establishing a sustainable high-efficiency single-store operating model to drive efficiency improvement in our direct retail channel.

During the year, gross margin was down 0.4 percentage points to 49%, mainly due to the following factors: 1. Direct retail channels: weaker consumer demand led to deeper discounts, causing the group's gross margin to decline 0.3 percentage points.

2. Wholesale business: product mix adjustments and cost optimization contributed to a 0.2 percentage point increase in our gross margin.

3. DTC channels: a decline in the share of total sales caused the group's gross margin to decrease by 0.2 percentage points.

4. Other business units: channel restructuring caused the group's gross margin to decrease by 0.1 percentage points.

The 3.2% increase in revenue resulted in a 333 million RMB increase in gross profit. In terms of expense management, we maintained a focus strategy allocating resources precisely to core growth areas to drive sustained release of long-term value.

Thanks to our effective planning and continuous optimization of channel structure and expansion strategies, sales-related variable expenses decreased by a total of 283 million RMB. Specifically, variable expenses related to direct retail revenue decreased by 265 million RMB, expenses related to e-commerce operations increased by 6 million RMB, expenses related to logistics and new business initiatives down 24 million yuan.

Advertising and marketing expenses increased by 445 million RMB, with expense ratio rising by 1.2 percentage points year-on-year to 10.7%. Rise in marketing expenses was mainly due to new Olympic sponsorship costs.

In 2026, we'll fully enter a full-fledged Olympic marketing year, which will also lead to a further increase in marketing expenses and the expense ratio for 2026. Other expenses increased by 18 million RMB.

Other income and interest income decreased by 73 million, primarily due to lower interest income resulting from declining interest rates. Income tax expense increased by 157 million RMB, mainly due to a combination of factors including exchange rate fluctuations and returns on capital.

We have implemented more rational planning of domestic and overseas capital structure, resulting in the provision of corresponding deferred income tax, which led to an increase in tax rate for the current year. Overall, our operating profit margin rose by 0.4 percentage points from 12.8% in the same period last year to 13.2%.

Net profit margin decreased by 0.6 percentage points from 10.5% last year to 9.9%, with profit margin performing better than expected. Regarding channel inventory, total channel inventory in 2025 increased by mid-single-digit year-on-year, remaining at a reasonable level.

Omni-channel inventory turnover was 4 months, and inventory structure remained healthy. Going forward, we'll continue to strengthen our supply chain responsiveness, and through dynamic adjustments to our inventory strategy, adapt flexibly to rapid changes in market and consumer trends to ensure that omni-channel inventory structure and turnover rates remain healthy.

Regarding our inventory, the cost of inventory before provisions increased by 3% year-on-year in 2025, which is a reasonable increase relative to revenue growth of 3.2%. Overall inventory levels and age structure remain stable and healthy.

This achievement is attributable to our ongoing efforts to advance refined management. Through detailed planning, flexible supply chain, and digital support, we have continuously optimized omni-channel inventory turnover and product lifecycle management, which has effectively supported the business's steady growth.

Regarding trade receivables, compared to a 3.2% increase in revenue, our trade receivables before provisions rose by 36%. This was primarily due to e-commerce platforms making advanced payments in 2024, which led to a decrease in the accounts receivable balance at the end of 2024.

In 2025, payment schedule of e-commerce platforms returned to normal. Receivable days was 15 days, an increase compared to the previous year.

Trade receivables remain at a reasonable and healthy level. Trade receivables due within 90 days maintained a healthy rate of 96%.

Our support for strategic partners has always been grounded in the philosophy of mutual healthy growth. Thanks to our past strategic support for partners and our joint efforts, we have worked together to continuously optimize channel efficiency, helping channel partners maintain healthy operations and making the overall business ecosystem more robust.

Our working capital remains at a healthy level, accounting for 7.7% of annual revenue, which provides us with ample resources to fuel business growth. Cash flow from operating activities remained robust and ample, with a net cash inflow of 4.852 billion RMB.

Net cash increased by 1.81 billion RMB year-on-year to 19.974 billion RMB. These ample cash reserves provide us with a solid financial foundation and flexible allocation capabilities, enabling us not only to effectively address operational pressures caused by market fluctuations, but also to swiftly capitalize on opportunities as they arise.

In 2025, China's economy continued its overall stable and steadily improving development trajectory, though consumer confidence and demand remained in a phase of adjustment and recovery. Looking ahead to 2026, we will continue to deepen our expertise and strengthen our foundations, driving sustainable business growth through our core product categories, while actively exploring new growth areas to enhance our brand's competitive edge and build momentum for further market share expansion.

Based on this, we anticipate full-year revenue growth of high-single-digit in 2026. As we enter the second year of the Olympic sponsorship cycle, we'll continue to increase investment in brand building and specialized resources, as well as further strengthen our support for China's sports sector.

Consequently, we expect the full-year net profit margin to be in the high-single-digit range. At the same time, we're fully confident in the medium- to long-term development of China's sports footwear and apparel industry, as well as the Li-Ning brand.

That concludes the financial section. Next, please welcome our Chairman to review the key strategic directions for 2025.

Thank you. Thank you, Dongsheng.

In 2025, the nationwide sports craze and the national strategy to build a sports power nation will jointly inject new momentum into the industry, driving continuous upgrading of sports consumption. Li-Ning Group remains committed to professional innovation as its core, continuously building and deepening the Li-Ning experience value.

As a steadfast participant, supporter, and practitioner of Chinese sports, the Li-Ning brand continues to contribute its strength. Throughout the year, we partnered with the Chinese Olympic Committee to support Chinese athletes in shining on the field of play, actively transforming the momentum of this collaboration into brand influence.

At the same time, we helped ignite the nation's passion for sports, driving product and brand development through innovation to consolidate our market leadership and move forward hand-in-hand with China's sports sector. We continue to advance our single-brand, multiple-categories, diversified-channel strategy.

Driven by technological innovation and professional sports resources, we're making comprehensive strides across six core categories: running, basketball, training, badminton, table tennis, and sports casual, while successfully expanding into emerging segments such as outdoor sports, tennis, and pickleball to create new business opportunities. In terms of channels, we are actively exploring new store formats such as long stores and outdoor stores to reach consumers across multiple tiers with diverse needs, resulting in the continuous enhancement of our brand competitiveness and market influence.

In 2025, we continue to go depth of the professional training area and set up more channels and to achieve better result of the retail. Among the running business, it's 10% up, training category 5% up.

It shows our competitiveness of the product capacity in the core business market. Basketball revenue is down 19%.

The reasons are mainly because of the declining enthusiasm of the consumer market. In the meantime, we actively adjusted the market landscape of the market of basketball.

Lifestyle, the casual market, is still impacted by the negative momentum of the market, down 9%. In the future, we will optimize the marketing and the product portfolio in this category and make the best out of that and build up our strength from those weaker area.

In the meantime, we are active in making our positioning in the promising area. Through innovation and development, we are putting our presence in tennis, pickleball, and other emerging category of sports, and we found the really good momentums from those emerging areas.

In 2025, our group continued to make more efforts in the running business, and we enhanced the portfolio of the running shoes and precisely match the demands with different products offerings. For the whole year, professional running shoes sales volume was over 26 million pairs.

Among those sales achievements, Ultra Light, Chitu, and Flash was the key three major product categories and achieve 11 million pairs of sales. Technology development is the driver of our further development.

As the end of last year, Ultra 9 was launched. That was equipped with the capsule technology.

It is the latest development of this category that enabled user to be agile and stable. Among the running business and the professional tournaments, we are making our presence there as well.

We signed the contract with 73 champions, and our products were showed in the podium 145 times. In 2019, we helped 27 277 champions and claimed their medals at the podium 522 times.

We worked together with the marathons at different cities like Wuxi, Hangzhou, Shenzhen. In Beijing, for those top runners who finished the game within 1 hour and a half, and the proportion of Li-Ning shoes was definitely the number one.

In Shanghai, among the top three, the Li-Ning was also the most used brands. Basketball is the area we continue the innovation, and we're working together with the top tournaments and the players to transform the enthusiasm to the consumption power and enhance the brand influence.

Within last year, we launched the brand-new series of the products, that is Yushuai 20. This product is enabled by our technology platform, the capsule.

The capacity and the functionality was enhanced, and Yang Hansen, who is now playing at NBA, is also using our products. We are crossing over with different brands and the players to promote our products at different occasions, including the street basketball.

We are working with the NBA China and using the best of the chance in Macau, and we are working with Way of Wade and Jimmy Butler in San Francisco to launch the JB4 basketball shoes. All of those marketing campaigns attract a lot of the attention from the basketball community.

Training category is also enabled by technology, and we developed the aerospace-level thermal technology platform. The winter training outfit is enhanced the humidity and the thermal capsule capacity was enhanced.

For the men's products, the core products make the sales records over 2 million. For the women's products, we are focusing on the urban scenarios, and through our cutting and various style designs, we enhance the vitality of those women sports player, and 80% of our products in this category were sold out in the last year, and the business was enhanced because of those developments.

Casual and lifestyle business is positioned by striking the balance of functionality and aesthetic value, and we cross over with the classic culture and Chinese culture. Together with the table tennis player Wang Chuqin, we make the latest products that is showing the Chinese culture and the aesthetic value, and also building up the confidence among the young people in China.

We are making the Chinese festival and Chinese culture occasion to do our marketing campaigns and incorporate the Forbidden City and other traditional Chinese culture elements into the design of the products. We continue to do R&D of our technology.

Technology is the foundation, and the ultra-lifestyle is the application scenario. We have four IP sets on apparels.

Wanlongjia is enabled by the stormproof, waterproof, and humidity management functionality. It is a breakthrough of the function of this kind of the jackets that enable the user to use it in the very harsh conditions.

Longhe series is designed by new functionality to make the demand for the windproof and rainproof. For the boots, we can use our boots at different occasions like the hiking and the forest so that we have something to offer for different function and the demands.

Together with the Chinese Olympic Committee, we have the mission that is to build up the national pride through our brand power. In 2025, in the October of last year, Chinese Olympic Committee together with Li-Ning, we launched the 2026 Winter Olympics Chinese athletes' official suits.

In February 2026, the Chinese athletes wearing Chinese Li-Ning's products and the equipment showing our appearance and outfit at the opening ceremony of the Winter Olympics. It's showing the design and the technology from China.

In 2025, the end of last year, we launched the Long Store and also the Rongyao products series where we have the crossover with the National Olympic Committee with the brand of China with Li-Ning, and then we can penetrate our brand awareness into the public and also meet the demands for the general public on daily uses. In 2026, the earlier this year, for the second again, we launched our products in Milan Fashion Show and launched our winter series of 2026, and the starting point was the historical legacy of the brand that we took a hindsight of the past design, and we redeveloped the traditional designs of our brand and transform the sports functionality to the fashion elements, and we launched the professional equipment for skiing.

Looking forward to the future, Ning will continue to develop the Chinese sports development. Together with the Olympic Committee and the athletes of China, we will go together with them from hands in hands, and bringing the cutting-edge sports technology with the latest design from China.

We are helping the Chinese athletes to achieve the best out of their performance. Now I pass the floor to my colleague to give us the latest about the strategic development.

I'm Qian Wei. Good morning.

Now I'd like to give you a review of the operation in 2025. In 2025, the foundation of the operation has been consolidated.

As the partner of the Chinese Olympic Committee, we have the sponsorship and the franchising, also the marketing campaigns. Then the brand has been enhanced in the awareness.

Then the revenue was up 3.2% to 29.5 billion. The net profit margin is 9.9%, is in line with the expectations.

Within 2025, professional sports continue to contribute their revenue is accounting 56% of the total. Professional running shoes technology is involved, and more portfolio has been launched, the more resources has allocated.

Therefore, the revenue is up 10%. The total consumption amount is over 26 million.

Among that, the related key IP make the sales revenue 11 million pairs. Traditional comprehensive training expanded the coverage to women and other professional users, and we also give more applications in the men's business.

Badminton is showing the great results. The rackets sales volume was over 5.5 million, and the badminton shoes portfolio is enhanced.

The reputation is building up. The revenue is up over 30%.

Because of the strong competition and the weaker demand, basketball and the casual sports business is under pressure. We, on one hand, controlling the shipment amount of the basketball and making more efforts in marketing and the development of the sales.

On the other hand, we will do the adjustment on the portfolio of the products to make our products more competitive. In the last year, the efficiency of operation was rather stable, and the sold-out rate for the new products was around 70% to 80%.

Discount rates for the new arrivals was 0.4 percentage points more. In the future, we will do more process management and have a better results in discount rate and the sold-out rate.

The inventory-sales ratio was around 4 months, and the self-owned inventory cost is up by single-low-digit, and the age of the inventory is rather healthy and in line with the expectation of the company. In the last year, the offline revenue was down by the low-single-digit, and the traffic is also down low-single-digit, and the digit was down 1 percentage.

The per-unit price was down by low-single-digit, and we are still facing challenges. While on one hand, we are enhancing the efficiency of the stores, but we are opening up new stores, new projects to boost the confidence and the experience of the consumers, we have better conversion rates.

In 2026, we will be prudential to face the uncertain market conditions and make the best out of the current situation. We will be more comprehensive, more better prepared, and then we can deliver the targets.

In 2025, we will continue to optimize the structure of the channels and also bring something new. We will close down the low performers and reformed 479 stores by the end of last year.

The average store area was 240 square meters. The efficiency was 220- 284 million, and we have 91% for the presence of the core business area that shows our competitiveness in the high-end market.

We're also working with the top outlets groups, and we achieved the landscape and the planning of the outlets. We are also working with the Forbidden City and to work together on the IP development, the brand power will be enhanced.

We will bring more new types of the stores, and we have the independent stores at the outdoor and the Long Store. The image of the store will be leveled up, and the larger store, we have 1,455, and for the generation-9 store, we have 1,834.

In the future, we will continue to optimize the structure of the channels and continue to bring something new and to improve the efficiency of the stores. E-commerce, as we all know, that the e-commerce competition in 2025 was getting more fierce, and we are setting up more channels and collaborating between online and offline.

Overall speaking, the e-commerce performance was rather in line with the expectation. The traffic was growing up in the middle-single-digit.

On the efficiency of operation, we have the operation of the content and all-channel O2O conversion and association rate. Then the traffic is up 12%.

The business conversion rate was stable, and discount rate was added 1 percentage point. The key IP sales and the incubation of new IPs are both ongoing.

In 2025, Ultra Light 2025 basketball shoes, DBook 1, and Titan, and the running shoes, those new IPs are definitely the hit and the popular products. For those key IP and SME, they are in the pipeline of our development, and we will continue to bring more depth to the key IP sales volume, and the online-offline will have the synergy, and the efficiency of the inventory will also be improved.

Therefore, the healthy level will be maintained for the inventory. For kids' business, we will continue to improve our efficiency and bring better structure of the products.

The shoes is taking 47%, 2.5 percentage more. The overall performance has been enhanced through the operation enhancement and the quality of the management.

We are making the presence in the key market, emerging markets, and the strategic outlets. The offline sales traffic is up to 10% to 20%.

Discount rate is up 0.8 percentage points. The per-unit price was growing up by single low-single-digit.

This is my review of the operation in 2025. Looking forward in 2026, we will continue to get the bottom right and bring more market shares to our company.

We will continue to work on the professional and the innovative business category and the products, and bring our endeavors to the new channels and the new scenarios. Then we can make the company's development healthy and continuous, and even sustainable.

Thank you very much.