Li Ning Co. jumped the most in five months in Hong Kong trading after Goldman Sachs Group Inc. added China’s largest sportswear company to its “Asia Pacific conviction buy list,” citing a cash infusion last month.
Li Ning surged as much as 16 percent, the biggest intraday advance since Aug. 31, to HK$9.97 before trading at HK$9.88 as of the midday trading break in the city. The benchmark Hang Seng Index dropped 0.5 percent.
Li Ning has gained 47 percent since Jan. 19, when it announced it would sell 750 million yuan ($119 million) of convertible bonds to TPG Capital and Singapore’s sovereign fund to raise money for more stores and product development. Goldman Sachs raised its recommendation on the sportswear maker to “buy” from “neutral” and increased the stock’s target price 68 percent to HK$12.10, it said in a note to clients today.
“Li Ning leads the sector in branding and products,” Goldman Sachs wrote in the research report. “The private equity investment by TPG could potentially improve Li Ning’s execution and is another positive.”
Goldman Sachs also added Li Ning rival Anta Sports Products Ltd. to its “conviction sell list,” citing the company’s “excessive channel inventory” and margin pressure. Anta dropped 2.2 percent to HK$9.51.