After delisting, Luckin purged the original fraudulent management, refinanced, settled with US investors, and further approached profitability... The rebirth of the blue fawn is getting closer and closer, and the market view has found that "the domestic coffee that really has an absolute advantage is still Luckin".
Wen 丨 BT Finance Han
Luckin Coffee (PINK: LKNCY) is definitely a sample that can be recorded in the historical record, from its inception to listing, to delisting to rebirth, everything has developed too fast.
First of all, the rapid development, this coffee brand born in 2017 at the beginning of its establishment with the "burning money strategy" quickly attacked the city, the number of stores in China is close to Starbucks. Looking at the listing fast, it landed on the US stock market less than two years after its establishment. Next, the delisting is also fast. After experiencing shorting in muddy waters and exposing financial fraud, it ended dismally after only one year after listing.
But now it seems that Luckin's "resurrection" is also fast enough. When the domestic coffee investment boom rose again, the market found that Luckin was still an inextricable brand.
On June 29, 2020, Luckin Coffee officially suspended trading on the NASDAQ and prepared to delist, and also faced a number of class-action lawsuits representing investors in A number of US law firms.
Luckin first cleaned up the management involved in financial fraud. An internal independent investigation report released by the special committee of Luckin Coffee's board of directors in July 2020 showed that the company's self-disclosed counterfeit transaction began in April 2019, when CEO Qian Zhiya and COO Liu Jian participated in the fraud, and fired 15 employees, including the two.
After the above personnel changes, Luckin ushered in a change of coach: Lu Zhengyao gave way to chairman, and Guo Jinyi succeeded and concurrently served as CEO. Guo Jinyi was Lu Zhengyao's "old general" during the entrepreneurial period of UCAR, and for this reason, it was widely believed that Ruixing was still controlled by Lu Zhengyao.
However, what surprised the market was that in 2021, Luckin exposed "infighting" and dozens of middle and senior managers of Luckin jointly impeached Chairman Guo Jinyi. Later, Guo Jinyi issued a letter to respond to the matter, saying that this report letter was drafted by Lu Zhengyao, Qian Zhiya and other employees who did not know the truth. The above-mentioned back and forth between you and me makes the market feel that Guo and Lu seem to be divided. Later, the Beijing News reported that this infighting was caused by Lu Zhengyao's new entrepreneurial project to poach the Luckin technical team, but was stopped by Guo Jinyi, so guo was "forced to the palace".
Judging from the results, as of now, the management led by Guo Jinyi still manages the company.
In April 2021, Luckin continued to raise $250 million to become a major event in the investment circle again, and people were surprised that the blue fawn was not abandoned and was given another blood transfusion. The round of financing, which is jointly participated by the company's old shareholders, Dapu Capital and Joy Capital, plans to use the new investment to promote offshore restructuring and fulfill the settlement agreement with the US Securities and Exchange. Rumors about Luckin's refinancing also blew in August, when the Financial Associated Press reported that the new financing participants included industrial capital of five-star holding group. However, on August 12, Interface reported that Luckin said that the company had no financing arrangements in the near future.
At present, luckin announced a total of 9 management personnel, namely the company's chairman and CEO Guo Jinyi, CFO and chief strategy officer Reinout Hendrik Schakel, senior vice president Cao Wenbao, senior vice president Wu Gang, chief growth officer Yang Fei, senior vice president Jiang Shan and senior vice president Zhou Weiming. BT Finance noted that in addition to Guo Jinyi, there is also Chief Growth Officer Yang Fei as the "Co-Founder of Luckin Coffee" among the above management.
In terms of shareholders, although Luckin is not "reborn", the major shareholders have changed. Luckin's prospectus at the beginning of its listing in May 2019 shows that Lu Zhengyao holds 30.53% of the shares, Lu Zhengyao's sister holds 12.4%, Qian Zhiya holds 19.68%, Dabo Capital holds 11.9%, and Joy Capital holds 6.75%. Later, through the above-mentioned capital increase in April 2021, Dapu Capital became the largest shareholder of Luckin and the actual controller with 45.2% of the voting rights.
On September 21, Luckin announced the signing of a $187.5 million settlement letter of intent with shareholders in the class action lawsuit, allowing the market to continue to see hope of getting back on track. The China Times reported that Luckin had about 4.8 billion yuan in cash and cash equivalents on its books, which was enough to pay the above compensation amount, but it should be noted that Luckin is still in a state of loss.
On October 15 (Sunday), when the price of the powder single market continued to rise, the company announced that it would implement anti-acquisition measures for equity dilution. The measure, commonly known as the "poison pill plan," is intended to preserve the control of the company from its current shareholders and management in the face of hostile takeovers.
In July, September and October, Luckin released three financial reports intensively, namely the revised 2019 annual report, the belated 2020 annual report and the first half of 2021 report.
Let's review it according to the timeline - the revised 2019 annual report shows that Luckin recorded revenue of 3.025 billion yuan and a loss of 3.161 billion yuan in 2019. In 2020, Luckin recorded revenue of 4.034 billion yuan, and despite the turmoil, the revenue of this year still increased by about one-third, but the loss also deepened to 5.603 billion yuan. On October 21, Luckin released the first half of 2021 financial report, the revenue growth rate reached 106% recorded 3.183 billion yuan, exceeding the revenue of the whole year of 2019, and the growth of the number of franchised stores also promoted the number of Luckin stores to grow back to 5259.
Luckin's burning rhythm is also slowing down by raising the unit price of customers. According to luckin's financial report data for the first half of 2021, the average price of its single-cup drink has reached 14.5 yuan, which is higher than the average price of less than 10 yuan in 2019.
In terms of consumption, it is not oat milk or cheese milk cover tea that leads the summer fashion in 2021, but Luckin first created raw coconut latte coffee, and many coffee tea brands also followed Luckin to launch raw coconut flavored drinks.
Some consumers even commented that raw coconut latte is a "drink to save Luckin", further reflecting that there is indeed a "performance treasure" in it.
Tencent's "Deep Network" reported that Luckin Coffee's successive series of thick milk, raw coconuts and other explosive products have largely promoted the profit process. Previously, Luckin management predicted that the company will achieve overall profitability in 2021, and the loss narrowed to 84 million in the first half of 2021, if the raw coconut latte that exploded from July to September can effectively boost performance, Luckin has the opportunity to achieve the above 2021 profit target.
It is no accident that Luckin Matsuri was born with a coconut latte. BT Finance noted that if you only look at it from a product point of view, the rhythm of Luckin launching new products almost every week for more than a year does not seem to be disrupted. From the introduction of cherry blossom-themed drinks in spring, the "Rena Ice" smoothie drinks with multiple flavors updated in summer, the osmanthus flavored products in autumn, to the trend of raw coconut flavor and the launch of the poplar manna series following the rhythm of the market... It has to be said that Luckin's counterfeiting in the capital market is inexcusable, but it has been successful in its strategy of continuous intensive new products, betting on a number of explosive products, including raw coconut lattes.
BT Finance found that even if Luckin successfully "resurrects", it is difficult to compete with global giant Starbucks. Here we compare Luckin Coffee, Starbucks (NASDAQ: SBUX) and another domestically produced tea drinking leader, Naisher's Tea (02150.HK).
In terms of market capitalization, Starbucks is far ahead of Luckin Coffee and Naixue's tea with more than 800 billion yuan. It is also worth noting that although Luckin Coffee has been delisted from NASDAQ, with the improvement of the company's operating conditions, its valuation in the powder single market has also climbed all the way, and the current market value has reached more than 20 billion yuan, which is higher than the tea listed in Hong Kong.
Starbucks' far leading market capitalization is still supported by its strong performance. Based on the results of the first half of 2021 (corresponding to the second and third quarters of Starbucks' fiscal year), Luckin Coffee's revenue in the first half of the year was 3.183 billion yuan, higher than Nesher's 2.126 billion yuan, but compared with Starbucks with global revenue of 90 billion yuan, the volume is still not a little bit worse.
Reflected in the net profit, Luckin is still in a state of loss in the first half of 2021, Naixue's tea net profit in the reporting period was 48.2 million yuan, and Starbucks was more than 11.7 billion yuan. Roughly calculated, Starbucks's profit margin is more than 13%, and Neixue is about 2%, and the final accurate data still needs to be subject to the company's annual report.
In the dimension of the number of Chinese stores, Luckin Coffee still has the capital to "clamor" for Starbucks. After the previous financial fraud incident, the number of Luckin stores once contracted, but it made efforts in the direction of expanding franchise stores. Luckin released data for the first half of 2021 shows that the number of stores has generally recovered to 5259 stores, of which self-operated stores have decreased by about 500 to 4018, and franchised stores have increased by more than 700 to 1241. Starbucks data released as of the third quarter of 2021 shows that it has 5360 stores in China, which is on the same order of magnitude as Luckin. The number of tea stores in Nesher is 668.
However, after Luckin raised the cup price to 14 yuan, it is still quite different from Starbucks' single price of more than 30 yuan, and it is still unknown whether consumers will pay for the more expensive Luckin in the future. The unit price of Nai Xue's tea customers increased from less than 43 yuan in 2018 to 43.3 yuan in 2020, higher than about 35 yuan per order in the industry.
Although rising stars such as Nesher's tea and Luckin Coffee like to tell stories to capital with high growth, it cannot be ignored that Starbucks is not growing slowly around the world and shows a certain resilience. Although Starbucks revenue contracted year-on-year in fiscal 2020 due to the epidemic, it has returned to pre-epidemic levels in fiscal 2021, and the compound growth rate of the next two years is still more than 4%.
From the perspective of stock prices, Starbucks has risen and fallen since the second half of 2020, and the highest has even reached almost double before the epidemic, which also reflects that perhaps Starbucks' growth data will not let capital give Starbucks a higher valuation, but such growth rates have also laid a benchmark for the industry that is close to the bottom line.
In summary, it can be said that Luckin Fawn has stabilized its position. In recent months, the coffee investment trend has risen and fallen again, after experiencing the blossoming of multi-brand comprehensive financing, today's capital withdrawal from the investment of star brand Manner Coffee (Investment Network Report) is seen as representing this round of trend ushered in a phased decline. It can be said that during the period of damage to the vitality of the Luckin brand, there is no domestic competitor that can be compared with it to replace the upper position.
Looking at the Canadian brand Tims Coffee, which was laid out in China after the Luckin incident, the june 2021 report showed that the number of stores in China was in the order of 200. It is no wonder that after experiencing numerous changes, people found that in the coffee track, "the domestic brand that really occupies an absolute advantage is still Luckin".
Can the reborn Luckin 2.0 fight again? Will the third quarter performance with hidden "raw coconut performance" exceed expectations?
In fact, perhaps regaining the market's attention to its business fundamentals, Luckin has successfully regained its life.
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