Investment Rating - The report initiates coverage on Luckin Coffee (LKNCY US) with a "Buy" rating and a target price of $23 7, implying a potential upside of 22 2% from the current price of $19 4 [2][3] Core Views - Luckin Coffee has become the largest chain coffee brand in China, surpassing Starbucks in both store count and order volume, driven by strong brand marketing, product innovation, and affordable pricing [3] - The company has successfully transformed from a loss-making, credibility-damaged company to a profitable and rapidly expanding brand, focusing on product innovation, youth-oriented marketing, and cost-effective strategies [3] - Luckin Coffee's future growth potential lies in its ability to consolidate the market, expand into lower-tier cities, and explore overseas markets, despite short-term pressure on profitability due to intense competition [3] Industry Overview - The Chinese coffee market has grown significantly, with the overall market size reaching RMB 82 8 billion in 2023, and per capita coffee consumption reaching RMB 58 8 [12] - Ready-to-drink (RTD) coffee shops have become the primary channel for coffee consumption in China, contributing 66 5% of the total retail coffee market revenue in 2023, far exceeding instant coffee and RTD coffee [14] - The rise of RTD coffee shops in China is attributed to urbanization, the influence of Western lifestyles, the role of social media, and the addictive nature of coffee [15] Luckin Coffee's Strategy - Luckin Coffee has disrupted the traditional coffee market by offering a wide variety of products at affordable prices, making RTD coffee more accessible to the general public [3] - The company has focused on product innovation, such as the introduction of coconut latte and sauce-flavored latte, which have become viral hits on social media [3][25] - Luckin Coffee has adopted a franchise model to expand into lower-tier cities, with 5,620 franchise stores accounting for 34 6% of its total store count by the end of 2023 [35] Market Competition - Starbucks and Luckin Coffee have been the key players driving the development of the Chinese RTD coffee market, with Starbucks establishing the premium image of RTD coffee and Luckin Coffee making it more accessible to the masses [16] - The Chinese coffee market is becoming more segmented, with the emergence of both mass-market and premium coffee brands catering to different consumer needs [44] - Starbucks' market share in China has been declining since 2017, as new players like Luckin Coffee and other mass-market brands have gained traction [47] Future Growth Potential - The penetration rate of coffee in lower-tier cities is expected to continue rising, driven by increasing consumer acceptance, economic development, and the return of young people from higher-tier cities [35] - The high-tier cities are experiencing a trend of consumption stratification, with consumers becoming more price-sensitive and demanding higher quality and more diverse coffee products [39] - The Chinese coffee market is expected to continue growing, with the RTD coffee market projected to reach RMB 52 5 billion by 2026, driven by the expansion of mass-market brands and the rise of premium coffee brands [38] Financial Performance - Luckin Coffee's revenue is expected to grow from RMB 24 9 billion in 2023 to RMB 52 5 billion in 2026, with net profit increasing from RMB 2 8 billion to RMB 5 1 billion over the same period [4] - The company's gross margin is expected to remain stable at around 55%, with operating margin improving from 12 1% in 2023 to 11 9% in 2026 [8] - Luckin Coffee's valuation is considered attractive compared to international coffee chains and large-scale Chinese restaurant chains, with potential for further upside if the company relists on a major stock exchange [3]

Financial Data and Key Metrics - Total net revenue reached RMB6.28 billion, representing a year-over-year growth of 41.5% [5] - Operating profit stood at negative RMB65.1 million, with an operating profit margin of negative 1.0% [5] - Self-operated store operating profits was RMB320.8 million with a self-operated store operating profit margin of 7.0% [5] - The total number of net new stores opened was 2,342, and the number of monthly averaging transacting customers was 59.91 million [5] - Revenues from partnership stores totaled RMB1.5 billion, representing a 32.8% increase from the same quarter last year [12] - Net operating cash outflow was RMB264.4 million compared to a net operating cash inflow of RMB1.1 billion in the same quarter of 2023 [32] Business Line Data and Key Metrics - Luckin Coffee added 2,342 new stores, bringing the total number of stores to 18,590, including 12,199 self-operated stores and 6,391 partnership stores [6] - The company launched 22 new products in the first quarter, including the Chu's Orange Latte, pear flavored velvet latte, and the new Gesha series [25] - The pear flavored velvet latte sold more than 7.24 million cups in its first week alone [25] - Total sales of the Coconut Milk Latte surpassed 700 million cups, and the Orange Americano reached annual sales exceeding 100 million cups [25] Market Data and Key Metrics - The average monthly transacting customers reached 59.9 million, representing a 103.2% increase from the same quarter last year [39] - The company observed surging consumer purchasing power in lower-tier cities during Chinese New Year, highlighting the growth potential of the coffee market in these cities [6] - The company expanded into more than 350 cities throughout China and one overseas market [39] Company Strategy and Industry Competition - Luckin Coffee plans to increase the number of stores in higher-tier cities while accelerating expansion into lower-tier cities through the partnership model [6] - The company remains committed to a robust and sustainable store expansion strategy, focusing on market share and customer needs [6] - The company is leading the industry with innovative products and strategic promotion initiatives, aiming to drive continuous development of the Chinese coffee market [4][15] - The company is dedicated to incorporating low-carbon and sustainability principles across all aspects of its operations, including raw material procurement and manufacturing processes [9] Management Commentary on Operating Environment and Future Outlook - The company experienced a slight decline in profits due to seasonality and rising competition within the industry [5] - The company remains confident in its brand, products, and employees, despite anticipating continued volatility in market dynamics and competition [15] - The company is optimistic about future growth, leveraging its unique business model, continuous product innovation, and scale advantages [21] - The company expects challenges in the upcoming second quarter similar to those faced in the first quarter [36] Other Important Information - Luckin Coffee became the exclusive official coffee partner of the 2024 Badminton Asia Championships [8] - The company commenced the trial operation of its first grain coffee bean processing plant in Yunnan province, with an annual processing capacity of up to 5,000 tons [9] - The company officially opened its Four Seasons and Eight Solar Terms theme store in Shenzhen in partnership with Kweichow Moutai [24] - The company plans to establish a training center to provide coffee planting and processing-related knowledge for employees and local farmers [27] Q&A Session Summary Question: How does the company view the significant drop in profit in the first quarter of 2024? Will there be any adjustments regarding the store expansion strategy? - The profit drop was attributed to cold weather, temperature variations, and fierce competition in the Chinese coffee industry [36] - The company has prioritized market share and recalibrated the pace of store expansion, focusing on a robust and sustainable strategy [36] - The company expects challenges in the second quarter but remains committed to maintaining high standards for new stores and solidifying its leading position in the industry [36] Question: Are there any updates to the company's capital strategy? - The company is currently focused on executing its business strategy, with no specific timeline for uplifting on any mainboard market [44] - The emphasis is on enhancing operational and developmental pursuits, increasing market penetration, and ensuring consistent long-term returns for investors [44]

luckin coffee LKNCY 2024Q1 April 30, 2024 This presentation contains certain financial measures that are not ecognized under generally accepted accounting principles in the United States ("GAAP"), including non-GA operating income/(loss), non-GAAP net income/(loss), non-GAAP basic and diluted net income/(loss) per ADS. The presentation of these non-GAAP financial measurs is not intended to be considered in isolation or as a substitute for the financial information prepaed and presented in accordance with GA ...

Luckin Coffee stock price was little changed in the pre-market session after the company published its first-quarter results. It was trading at $21.13 in New York, where it ended the day on Monday. It has crashed by over 23% this year amid rising concerns about the rising coffee prices.Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.Luckin Coffee earningsCopy link to sectionLuckin Coffee’s revenue for the quarter came in at $869 million, a 41.5% incre ...

Exhibit 99.1 Luckin Coffee Inc. Announces First Quarter 2024 Financial Results First Quarter Net Revenues Increased 41.5% to RMB6,278.1 Million Average Monthly Transacting Customers Increased 103.2% Compared to the Same Period Last Year More than 2,300 Net New Stores Openings; Expanded to More than 18,500 Stores in China BEIJING, April 30, 2024 (GLOBE NEWSWIRE) — Luckin Coffee Inc. (“Luckin Coffee” or the “Company”) (OTC: LKNCY) today announced its unaudited financial results for the three months ended Marc ...

Financial Contributions and Legal Issues - As of December 31, 2023, cumulative capital contributions made by Luckin Coffee Inc. to its PRC subsidiaries amounted to US$1,803.8 million, which were accounted as loans to its intermediate holding companies[52]. - The financial contribution of the Former VIE was not material, with no external revenues contributed to total revenues in 2021, 2022, and 2023[42]. - The termination of contractual arrangements with the Former VIE in March 2024 was aimed at optimizing corporate governance and will result in the Former VIE's financial results no longer being consolidated[42]. - Luckin Coffee Inc. has not declared or paid any cash dividends and intends to retain most of its available funds for business operations and expansion[49]. - The Former VIE's total assets equaled nil as of December 31, 2022, and 2023, indicating no material financial impact on the consolidated total assets[42]. - Luckin Coffee Inc. has faced legal proceedings and investigations related to fabricated transactions that inflated net revenue by approximately RMB2.12 billion (US$0.31 billion) in 2019[55]. - The company incurred significant costs related to the Internal Investigation, including legal expenses and financial statement restatements for Q2 and Q3 2019[56]. - A fine of RMB500,000 was imposed by the PRC tax authorities in 2022 due to corrections in VAT filings related to the Fabricated Transactions[60]. - The company is subject to ongoing legal proceedings and investigations, which may result in significant costs and liabilities[60]. - The company is exposed to increased risks of litigation due to the Fabricated Transactions, which could adversely affect its reputation and financial condition[70]. - The company may incur additional costs related to claims from investors who opted out of the Federal Class Settlement[66]. - The company has faced difficulties in obtaining desirable insurance coverage following the disclosure of the Fabricated Transactions[58]. Operational Performance and Market Position - As of December 31, 2023, the company operates 10,598 self-operated stores and 5,620 partnership stores across more than 300 cities in China, along with 30 self-operated stores in Singapore[82]. - The company has achieved a cumulative total of 230.1 million transacting customers as of December 31, 2023[82]. - Revenues from partnership stores increased from RMB1,306.1 million in 2021 to RMB6,225.8 million (US$876.9 million) in 2023, representing 25.0% of total revenues[93]. - The company incurred operating losses of RMB539.1 million for the year ended December 31, 2021, but reported operating income of RMB3,025.6 million (US$426.1 million) for the year ended December 31, 2023[96]. - The company plans to invest significantly in brand awareness, customer base expansion, and technological capabilities, which may impact future revenues and expenses[97]. - The company faces intense competition in China's coffee industry, with non-proprietary products making it vulnerable to competitors[95]. - The company’s growth may be affected by external factors such as customer spending patterns, competition, and changes in government policies[82]. - The company has invested heavily in branding, sales, and marketing to attract and retain customers, but the effectiveness of these investments remains uncertain[86]. - The company’s innovative business model may complicate the evaluation of its future prospects based on historical performance[82]. - The company incurred sales and marketing expenses of RMB1,286.5 million (US$181.2 million) for the year ended December 31, 2023, reflecting a significant increase from RMB570.1 million in 2022[119]. Regulatory and Compliance Risks - The company faces significant legal and operational risks due to its operations in China, including potential adverse effects from changes in government policies[44]. - The company has been identified as a "Commission-Identified Issuer" under the HFCA Act, which could lead to trading prohibitions if audit reports are not inspected by the PCAOB for two consecutive years[49]. - The PRC government has significant authority to influence the company's operations, which could adversely affect its business and financial condition[46]. - The company is subject to evolving governmental regulations regarding data privacy and cybersecurity, which could result in significant penalties and operational disruptions if not complied with[151]. - Compliance with new regulations may increase operational costs and affect the company's reputation and trading prices[169]. - The Data Security Law imposes fines of up to RMB 10 million for violations of data protection obligations[157]. - The Personal Information Protection Law requires compliance for processing personal information of over one million individuals[158]. - The Cybersecurity Review Measures expand requirements for internet platform operators with over one million users intending to list securities abroad[159]. - The Security Assessment Measures mandate data processors to apply for security assessments when transferring important data abroad[163]. - The Draft Measures on Compliance Audits require annual audits for personal information processors handling data of more than one million individuals[164]. - The Provisions on Cross-border Data Transfer clarify compliance requirements for data transfers, including security assessments and contracts[165]. - The Administrative Measures on Reporting of Cybersecurity Incidents require network operators to report incidents that threaten cybersecurity[166]. - The company faces risks related to payment processing regulations and potential penalties for noncompliance[174]. Supply Chain and Operational Challenges - The company relies on a limited number of suppliers for key raw materials, with coffee beans sourced mainly from two suppliers and dairy products from five suppliers[104]. - The company faces risks related to fluctuations in the cost, availability, and quality of raw materials, particularly Arabica coffee beans, which could adversely affect its operations[138]. - The company has experienced negative publicity related to food safety issues, which could harm its reputation and financial performance[125]. - The company has faced challenges in maintaining consistent product quality, which is essential for its reputation and financial condition[107]. - The company may face significant disruptions in operations due to natural disasters, health epidemics, and other calamities, which could adversely affect financial performance[111]. - The company may not be able to effectively manage its store network, impacting its expansion plans and operational efficiency[121]. - Effective inventory management is critical, as the company relies on demand forecasts for perishable goods[202]. - Plans to expand product offerings may complicate inventory and logistics management, increasing the risk of obsolescence[203]. Financial Position and Cash Flow - The company reported net cash provided by operating activities of RMB2,900.4 million (US$408.5 million) for the year ended December 31, 2023, showing significant improvement compared to RMB19.8 million in 2022 and RMB123.4 million in 2021[131]. - As of December 31, 2023, the company had net current assets of RMB2,136.9 million (US$301.0 million), a decrease from RMB3,208.2 million in 2022, indicating potential liquidity risk in the future[132]. - The company has experienced significant cash outflows from operating activities historically, raising concerns about maintaining a positive operating cash position in the future[131]. - Limited insurance coverage may expose the company to significant costs and business disruptions[210]. Shareholder and Governance Issues - Centurium Capital holds 18.2% of Class A Ordinary Shares and 100% of Class B and Senior Preferred Shares, representing 55.3% of voting power[221]. - Centurium Capital's voting control may prevent beneficial transactions for other shareholders, including potential change of control transactions[222]. - The company has fulfilled its commitments under the 2024 Agreement with the Siming District Government, but there is uncertainty about future compliance and the risk of contract disputes[180]. - The company has faced a legal claim from UCAR Inc. for approximately RMB38.4 million, resulting in a final judgment requiring payment of RMB31.7 million for leasehold improvements and legal fees[187]. Economic and Environmental Factors - Climate change may adversely impact the cost and supply of raw materials, affecting financial performance[207]. - A downturn in China's economy could lead to reduced customer demand and spending, adversely affecting operations[208]. - Changes in accounting standards may significantly affect reported financial performance and operating costs[209]. - The evolving regulatory landscape in China's food and beverage market may impose additional requirements that could adversely affect the company's operations and reputation[197].

Starbucks (NASDAQ: SBUX) and Luckin Coffee stock prices have come under intense pressure this year amid rising robusta coffee prices and demand. SBUX shares crashed to a low of $88.50 on Thursday, its lowest level since October 2023. It has crashed by over 21% from its highest point in 2023, meaning it has moved into a deep bear market.Luckin Coffee (LKNCY) stock price is doing much better than Starbucks. It has risen by over 28.6% from its lowest level this year and it remains 35% below the highest level i ...

Many if not most people believe that the Street is nearly omniscient. These individuals contend that the price which the market assigned to a stock correctly reflects its current value and its short and medium-term outlook. But in my experience, that’s often not the case. You can often find large returns by picking contrarian stocks. For example, when the Covid pandemic began in early 2020 stocks plunged, with the Street expecting disaster. By the end of the year however, the market was enjoying one of its ...

Financial Data and Key Metrics Changes - Total net revenue reached RMB7.06 billion, marking a 91.2% year-over-year increase [15] - Operating profit margin stood at 3%, with a self-operated store operating profit margin of 13.5% [15] - For the full year of 2023, total net revenues soared to nearly RMB25 billion, representing an impressive 87.3% increase from fiscal year 2022 [54] - Operating income for fiscal year 2023 reached RMB3 billion, with an operating income margin of 12.1% [56] - Net profit margin increased to 11.4% from 3.7% last year [41] Business Line Data and Key Metrics Changes - Revenue from self-operated stores in the fourth quarter reached RMB5.1 billion, representing an increase of 89.2% from RMB2.7 billion in the same quarter of 2022 [34] - Revenues from partnership stores in the fourth quarter amounted to RMB1.8 billion, a substantial 109.1% increase [53] - Same-store sales growth for self-operated stores in fiscal year 2023 achieved an impressive 21% [55] Market Data and Key Metrics Changes - The number of Luckin Coffee stores doubled from the previous year, reaching a total of 16,218 stores [2][17] - Average monthly transacting customers reached 62.4 million, a substantial 154.2% increase from the fourth quarter of 2022 [37] - Total cumulative transacting customers reached 230 million, firmly placing the company in a leading position in the industry [16] Company Strategy and Development Direction - The company plans to further increase the number of stores in high-tier cities and accelerate expansion into lower-tier city markets through the partnership model [18] - Luckin Coffee aims to drive continuous development of the Chinese coffee market while rewarding customers [5] - The company will continue to focus on social responsibility and sustainable development [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining and solidifying market leadership despite intense competition [72] - The coffee market in China is still in the early stages of development, with significant growth potential [74] - The company will closely monitor market changes and continue to focus on customer value [65] Other Important Information - Luckin Coffee launched 102 new products in 2023, with total items sold exceeding 2 billion [27] - The company has no interest-bearing debt and ended 2023 with about RMB3.8 billion in cash [44] - The company donated RMB5 million for disaster relief efforts in response to Typhoon Doksuri [31] Q&A Session Summary Question: How does the company view the significant drop in profit in Q4? Are there plans for pricing adjustment? - Management indicated that the decline in profits was due to seasonal factors and adjustments in product portfolio structure, aligning with industry trends and strategic expectations [71] Question: Is the company continuing the store expansion strategy from 2023? - Management confirmed that the company will continue with the current store expansion and pricing strategies to enlarge market share [72] Question: What is the outlook for the coffee market in China? - Management noted that the coffee market is in the early stages of development, with a growing consumer base and potential for further growth [74]

Financial Performance - Total net revenues in Q4 2023 were RMB7,065.0 million (US$995.1 million), an increase of 91.2% from RMB3,695.0 million in Q4 2022[8]. - Total net revenues for fiscal year 2023 were RMB24,903.2 million (US$3,507.5 million), representing an increase of 87.3% from RMB13,293.0 million in fiscal year 2022[7]. - Net income for Q4 2023 was RMB296.4 million (US$41.7 million), with a net income margin of 4.2%, compared to RMB54.5 million (1.5%) in Q4 2022[15]. - Non-GAAP net income for Q4 2023 was RMB356.6 million (US$50.2 million), representing a non-GAAP net income margin of 5.0%, up from RMB166.9 million (4.5%) in Q4 2022[15]. - Net income for the year ended December 31, 2023, was RMB 2,847,933, compared to RMB 488,246 for the year ended December 31, 2022, representing a significant increase[38]. - The total comprehensive income attributable to ordinary shareholders for the year ended December 31, 2023, was RMB 2,847,573 thousand, compared to RMB 488,246 thousand in 2022, indicating a substantial increase[39]. Customer Growth - Average monthly transacting customers in Q4 2023 reached 62.4 million, a 154.2% increase from 24.6 million in Q4 2022[4]. - Average monthly transacting customers reached 62,438 in Q4 2023, compared to 24,559 in Q4 2022, indicating strong customer growth[20]. Store Expansion - Net new store openings in fiscal year 2023 were 8,034, resulting in a year-over-year store unit growth of 97.8%[7]. - Total stores increased to 16,248 as of December 31, 2023, up from 8,214 a year earlier, reflecting significant expansion[20]. Revenue Sources - Revenues from self-operated stores in Q4 2023 were RMB5,103.4 million (US$718.8 million), an increase of 89.2% from RMB2,697.1 million in Q4 2022[4]. - Revenues from partnership stores in Q4 2023 were RMB1,763.8 million (US$248.4 million), an increase of 109.1% from RMB843.4 million in Q4 2022[11]. - Revenues from product sales in Q4 2023 were RMB 5,301,221, up 85.8% from RMB 2,851,660 in Q4 2022[38]. Operating Income and Expenses - GAAP operating income in Q4 2023 was RMB212.7 million (US$30.0 million), with a GAAP operating income margin of 3.0%, down from 8.5% in Q4 2022[13]. - Store level operating profit for self-operated stores in fiscal year 2023 was RMB3,974.9 million (US$559.9 million), with a margin of 22.2%[7]. - Store level operating profit margin for self-operated stores decreased to 13.5% in Q4 2023 from 21.6% in Q4 2022, attributed to lower average selling prices[14]. - Delivery expenses rose to RMB467.4 million (US$65.8 million) in Q4 2023, a 23.3% increase from RMB379.1 million in Q4 2022, driven by higher delivery orders[14]. - Sales and marketing expenses surged to RMB399.1 million (US$56.2 million) in Q4 2023, a 130.2% increase from RMB173.4 million in Q4 2022, reflecting strategic branding investments[14]. - General and administrative expenses were RMB562.0 million (US$79.2 million) in Q4 2023, up 36.6% from RMB411.4 million in Q4 2022, primarily due to increased payroll and R&D costs[14]. Cash Flow and Assets - Cash and cash equivalents as of December 31, 2023, were RMB3,752.7 million (US$528.6 million), an increase from RMB3,577.9 million a year earlier, driven by higher operating profits[18]. - Net cash used in operating activities was RMB926.7 million (US$130.5 million) in Q4 2023, a significant decline from net cash provided of RMB48.3 million in Q4 2022, mainly due to increased raw material purchases[17]. - Cash and cash equivalents as of December 31, 2023, were RMB 3,534,304, an increase from RMB 2,925,709 as of December 31, 2022[36]. - Total assets decreased to RMB 10,480,397 as of December 31, 2023, from RMB 18,291,978 as of December 31, 2022[36]. - Total liabilities decreased to RMB 3,853,110 as of December 31, 2023, from RMB 8,577,533 as of December 31, 2022[36]. Strategic Initiatives - The company launched more than 100 SKUs in 2023 to cater to diverse customer needs[6]. - The company plans to continue expanding its technology-driven retail network to enhance customer experience and brand recognition[33]. - Luckin Coffee aims to maintain its growth strategies in the competitive coffee industry, focusing on quality control and customer retention[33]. - The company is committed to ongoing product innovation and market expansion to solidify its position in the food and beverage sector[33].