By Jiahui Huang


Li Ning's shares fell sharply as investors balked at the Chinese sportswear maker pan to buy a Hong Kong office building for HK$2.21 billion (US$283 million).

The stock was down 14% at HK$18.44 at the mid-day break, taking year-to-date losses to 73%.

The Beijing-based company said Sunday that it will acquire East Harbour tower from property developer Henderson Land Development, using the building in part as its local headquarters. The building includes 22 stories of office space and two stories of retail areas.

Investors don't seem very positive about the use of funds.

"We believe that this property investment is a less optimal capital deployment than special dividends or share buybacks for shareholders' value," Citi analysts Xiaopo Wei and Vincent Yang said.

The move comes after Li Ning missed third-quarter sales expectations and cut guidance for the full year amid rising competition from international brands.

Given Li Ning's current restocking and brands such as Nike and Adidas gaining market share, "we expect more negative sentiments on Li Ning and Chinese sports brands in the short term," the analysts added.

They added that Li Ning will likely need to deliver two or three more consecutive quarters of solid sales before "relieving most market concerns."

Citi has a buy rating on Li Ning shares with a HK$35.50 target price.


Write to Jiahui Huang at jiahui.huang@wsj.com


(END) Dow Jones Newswires

12-11-23 0013ET