Get started

Luckincoffee

Luckin Coffee Settles USD 175 Mn Class Action Lawsuit Over FraudLuckin denied wrongdoing in agreeing to settle while its U.S.-based lawyer did not immediately respond to media requests for comment on Tuesday. After their founding in 2017, Luckin Coffee's hype and share price peaked around early 2020 as they broke out to rival global coffee icon Starbucks. Then Muddy Waters Research dropped a bombshell claim of falsified revenue on behalf of the company to inflate share prices. The internal probe found that its chief operating officer and other staff fabricated about USD 310 million of sales in 2019, or about 40% of annual sales projected by analysts. The SEC stated that Luckin raised more than USD 864 million from equity and debt investors while the fraud was taking place. The Securities and Exchange Commission consequentially delivered accounting fraud civil charges and fined Luckin USD 180 million last December. Then came the fall from grace. Within two months their share price sank more than 80%. Shares are now trading around USD 15 as the stock is up an impressive 220% in the past year. Their unaudited financials for the first half of 2021 show that they achieved a 16% store-level profit margin and that net revenues increased over 106% resulting from higher net selling prices and an increase in items sold. They've still managed to achieve positive revenue growth amidst all of the settlement fees and negative publicity. Luckin Coffee also still manages to operate around 5,259 stores in China maintaining a firm presence. Things should be looking up for Luckin as the clouds clear while investors can capitalize on their refocus.
OTC:LKNCY
by EqualOcean
Luckin Coffee: Back on Track?The tech-powered coffee chain may soon be ready for another public listing. The Chinese coffee pioneer went on to achieve positive revenue growth despite the expected surge in its settlement fees and continued operating losses. More financial data from Luckin will be worth paying attention to in the near future. Unexpected revenue improvement On September 21, 2021, Luckin Coffee (LKNCY:US) filed its annual report of 2020 with the US Securities and Exchange Commission (SEC), which took much longer than many market participants anticipated. Although the fraud in 2019 astonished the China tech world and the company was expected to experience a wide range of store closures and steep revenue decline, its 2020 results surprisingly improved. In the consolidated financial statement, the previous inflated revenue of CNY 5.10 billion in 2019 was adjusted to CNY 3.02 billion. The net revenue in 2020 reached CNY 4.03 billion, a 33.3% growth rate year-on-year. Operation expenses rose by 6.2%, which was largely contributed by the CNY 475 million of losses related to fabricated transactions and restructuring, reaching a total of CNY 6.62 billion. The company continued to be loss-making, with a net loss of CNY 5.59 billion. Yet, the figure includes CNY 2.40 billion of provisions for settlements (for SEC & equity litigants). The non-GAAP net loss, which ignores the above-mentioned expenses, was CNY 1.97 billion, an improvement from a CNY 2.79 level in 2019. Business expanded despite upheavals Another surprise came from Luckin's growing store number under the cloud of fraud, COVID-19 lockdowns, delisting and management team upheavals. As of July 31, 2021, the firm had 4,030 self-operated stores and 1,293 partnership stores. The former store type almost stayed unchanged (from 3,929 in 2019) in terms of numbers while the latter increased by 47.9% from 2019. The report also shows that the coffee chain closed many under-performing stores, most of which were self-operated. This might be a hint for the brand's determination on cost-saving and a switch to a franchise model. With the closing of stores, Luckin was no longer larger than Starbucks, but the coffee brand is still the second-largest since no other coffee chain can surpass it yet, in terms of the number of stores. Amid intensifying competition, self-operating store expansion failed to improve per-store revenue Though it was actively scaling up its business in previous years, evidence shows this strategy did not lead to improvement in per-store revenue for Luckin. In 2020, this problem was still haunting the coffee brand, as its intensive growth factor for self-operated stores (revenue per store per day) significantly underperformed, going negative (-10.1%). Nonetheless, the company's structural adjustment to focus on franchising might be promising, as the intensive growth factor (+106.5%) for partnership stores approached the extensive growth factor (+146.6%), implying that the brand's attempts in opening more partnership stores was advancing side by side with improvement in unit economics. Chinese consumers, especially those from first- and second-tier cities, have developed a habit of drinking coffee, providing a fertile ground for the enlargement of the fresh-brewed coffee market. Interestingly, brought up by the trend the success of Luckin created, novel domestic coffee brands such as Manner have started to emerge, and foreign coffee houses such as Tim Hortons that covet China's coffee 'blue sea' have entered as well. Soon, Luckin should expect an even more competitive industry landscape. In addition, the company was relying heavily on its coupons to acquire customers and expand its business. In the short term, this strategy is cash-burning and requires a vast capital backup, and in the long term it may be unsustainable if their products are not favored by the target consumers, especially now that company is delisted, short of fingertip capital support. Last notes Yet, Luckin's omnipresence in China is still unchallenged by other native and international brands except for Starbucks. Business-wise, it seems the firm is also reacting to the sustainability problem by cutting down its coupon expenses. In 2020, its sales and marketing expenses took up only 13% of the total expenses compared to 20% in 2019 and 31% in 2018. With opportunities yet to be explored in this coffee blue sea, it would be interesting to track the future release from this troubled Chinese coffee leader that survived all the internal and external adversities. For the full article with the charts, please visit the original link. [/ b]
OTC:LKNCY
by EqualOcean
1
LK -Luckin Coffee Fundamental AnalysisThere is not to say a lot regarding Technical Analysis. Fundamental Analysis: Bad News: For the Quo Vadis Capital president John Zolidis, Luckin Coffee has failed to generate sustained operating profits during its short life as a public company -- and with its mounting losses, it's possible it could descend into bankruptcy before it's ever able to do so. Kind of a good news: HONG KONG (Reuters Breakingviews) - An ice-cold Luckin could reheat the competition for China’s coffee drinkers. The reeling chain, once worth $12 billion, is being kicked off the Nasdaq for fraud. Its brand may be toxic, but some of its assets – and ideas – will be of interest to Yum China, Tim Hortons or homegrown Heytea. With deeper pockets, these rivals could present an even more formidable challenge to $91 billion Starbucks.
L
by Mauriello
1