Li Ning Has Had Decreased Profits, But Shares Jump After CEO Resigns
Li Ning Co. surged in Hong Kong trading after its CEO stepped down, and private-equity firm TPG Capital said that it "could boost investment in the sportswear retailer if needed," according to Chan & Lee of BLOOMBERG. Li Ning Co. founder and Olympic gymnast Li Ning will help run the company while it searches for a new CEO to replace Zhang Zhi Yong. TPG Capital partner Kim Jin Goon invested in the retailer earlier this year and will be named Exec Vice Chair. Li Ning's profit plunged 65% last year "amid escalating competition" from Nike, adidas and Anta Sports Products. China-based Guotai Junan Securities Co. analyst Jerry Peng said, "TPG has quite strong retail experience and now they're playing a bigger role, so the market has high expectations for next year." Hong Kong-traded Anta reported a 20% sales increase in '11, while Li Ning's sales dropped 5.8% to 8.9B yuan ($1.4B) (BLOOMBERG, 7/5). REUTERS' Donny Kwok reported Li Ning saying that it will "focus more on its business in China." Kingsway Group Research Head Steve Chow said, "Investors put a bet on the new jockey. Kim has a strong track record in retail and comes from the private equity front, and that fuels hopes of better prospects going forward." Kim said, "The first most important focus for us is to build a very clear and strong brand with clear brand strategy that focuses on the core businesses in China." Hong Kong-based Cash Asset Management Managing Dir Patrick Yiu said, It brings new excitement and may help strengthen the management. It brings new hope of a potential breakthrough in a struggling industry" (REUTERS, 6/5).