(Yicai) Dec. 12 -- Shares in Li Ning soared as much as 4.9 percent today, following a bloodbath yesterday when the Chinese sportswear company said it was buying an office building in Hong Kong, after Li Ning said that its stock is undervalued and its cash reserves ample enough to repurchase 10 percent of its stock over the next six months.

Li Ning’s share price [HKG: 2331] was trading up 4.7 percent at CNY19.16 (USD2.67) today. Earlier in the day it hit CNY19.22. Yesterday the stock plunged 14.2 percent after Li Ning said that it will splash out HKD2.2 billion (USD282 million) on a 24-story building in Hong Kong that will serve as its regional headquarters.

Li Ning will repurchase around 10 percent of its shares for up to HKD3 billion (USD380 million) over the next half year, the Beijing-based company said today. The Board of Directors believes Li Ning’s stock price is below market value and the firm can afford to buy back stock. The repurchase will hike earnings per share and will not affect Li Ning’s operations or cash flow, it added.

Li Ning failed to meet market expectations in the third quarter as sales expanded at a single-digit rate from a year ago, according to the firm’s latest financial report released on Oct. 25. And revenue from online sales contracted slightly, it added.

Li Ning performed worse than its biggest rival Anta Sports Products in the first half, with net profit dipping 3 percent to CNY2.1 billion (USD292.4 million) while revenue jumped 13 percent to CNY14 billion (USD1.9 billion).

Editor: Kim Taylor