Luckin Coffee Inc - LKNCY stock
Introduction[edit]
Luckin Coffee Inc. (OTC: LKNCY, STU: LC0A) is a Cayman Islands holding company that engages in retail services of freshly brewed coffee and non-coffee drinks. It carries out its operations in the People's Republic of China. The company offers hot and iced freshly brewed coffee including Cappuccino, Latte, Americano, Flat White, Mocha, and Macchiato. It also sells specialty coffee depending on market demand and seasonal trends; tea drinks; pre-made beverages; coconut milk latte products; and pre-made food items, such as pastries, sandwiches, and snacks. The company offers cups, tote bags, and other fancy merchandise to its clients. Its main brand is Luckin Coffee. Luckin Coffee Inc. primarily provides its services via pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. The company further provides technical and consultation services. Its stock is traded publicly on OTCPK under ‘LKNCY’ symbol. The company was founded by Zhiya Qian and Zhengyao Lu on June 16, 2017, and has its headquarters in Xiamen, China.[1]
Company Operations[edit]
Luckin Coffee champions the use of technology-propelled retail solutions to render affordable, high-quality products and services to its customers. Nearly all the aspects of the company’s business heavily rely on technology, ranging from customer interactions and facility operations to supply chain management. Through its mobile app and third-party platform presence, the company offers cashier-less services to clients thus ensuring convenience. This approach has seen the firm enhance customer experience, improve its operating efficiency, interact with clients, and improve the quality of services. The company achieves broad delivery coverage through its numerous pick-up facilities and delivery kitchens.[2] As of December 31, 2021, Luckin operated 4,397 self-operated stores; 1,627 partnership stores; and 1,102 Luckin Coffee EXPRESS machines.[1]
Early History[edit]
After its inception in June 2017, Luckin received a 1 billion yuan investment from Zhengyao Lu on October 1, 2017. Zhengyao Lu and Zhiya Qian had all the company’s shares divided between them. The company announced itself as a high-profile brand to announce its position, a feature that saw Luckin’s App become rapidly popular. The company stepped up its expansion mission and established up to 500 stores, with a customer base exceeding one million by May 2018. Luckin faced stiff completion from the already established Starbucks, which exhibited monopolistic behavior. Luckin’s App was another significant challenge as its customer experience was not smooth enough. It had a long average customer waiting time, approximately 30 minutes, which caused grave unrest.
The company accomplished A round of financing of approximately 200 million US dollars and achieved a 1 billion US dollar valuation. Several companies including Centurium Capital, Joy Capital, GIC, and legend Capital decided to invest in Luckin, boosting its popularity in the country. From the continuous funding and improvement, the company’s takeaway delivery time out was reduced from 26% to 0.4%, roughly 18 minutes leading to a 99.3% customer satisfaction rate. By December 2018, the firm had opened 2,000 stores in China.[3]
Investor News[edit]
On August 26, 2022, Luckin Coffee Inc. announced the redemption in full of its US$109.9 million of 9.00% Series B Senior Secured Notes due 2027. The new notes are a representation of its only offshore debt securities. The move marked a vital step toward the optimization of the firm’s capital structure. The redemption price, estimated at US$110.6 million, comprises the aggregate principal amount and total accrued interest. The company clarified that the settlement was made from its offshore balances and that it maintains a strong liquidity position.[4]
The company released its second quarter 2022 results for the three months that ended June 30, 2022, on August 8, 2022. The general result highlights include:
- Total net revenues were RMB3, 298.7 million (US$493.2 million), representing an increase of 72.4% from RMB1,913.7 million in the same quarter of 2021
- Net new store openings were 615, leading to a quarter-over-quarter store unit growth of 9.3% from the number of stores at the end of the first quarter of 2022, ending the second quarter with 7,195 stores
- Average monthly transacting customers were 20.7 million, a 68.6% increase from 12.3 million in the same quarter of 2021
- Revenues from self-operated stores were RMB2,331.1 million (US$348.6 million), representing an increase of 52.4% from RMB1,529.3 million in the same quarter of 2021
- GAAP operating income in the second quarter was RMB241.6 million (US$36.1 million), giving a GAAP operating income margin of 7.3%, compared to a GAAP operating loss of RMB47.5 million in the same quarter of 2021[5]
The Management Team[6][edit]
Dr. Jinyi Guo, Chairman, and Chief Executive Officer
- One of the co-founders of Luckin Coffee Inc.
- Served as a director since 2018, as the chairman of the board, and CEO since July 2020
- Obtained his master’s degree in July 2005 and a Ph.D. in July 2009 from Beijing Jiaotong University, majoring in transportation planning and management
- Previously worked at the Ministry of Transport from 2011 to 2016. He also served in various positions at UCAR Inc. from 2016 to 2017
Ms. Jing An, Chief Financial Officer
- Has served as the CFO since August 2022
- Received a master of science degree in management from the Stanford Graduate School of Business in 2010 and a bachelor’s degree in economics with a major in accounting from the Renmin University of China in 1998
- Previously served as chief financial officer of 58 Daojia Inc. from 2016 to 2022
Mr. Reinout Hendrik Schakel, Chief Strategy Officer
- Obtained a master of business administration degree from --Erasmus University in December 2005
- Has served as the chief strategy officer since January 2019
- Served as the company’s CFO from January 2019 to August 2022
- Worked at the corporate & institutional banking division of Standard Chartered Bank as an executive director from 2016 to 2018, before joining Luckin
Wenbao Cao, Director, and Senior Vice President
- Has served as our director since May 2020 and Senior Vice President of the Company since June 2018
- currently in charge of the Company’s operations, including store operations, construction and development, and customer service
- Over 23 years of experience at McDonald’s China, serving in different senior positions at the company
Legal Issues[edit]
Lawsuits[edit]
On October 26, 2021, Luckin Coffee Inc. wrapped a $175 million settlement of shareholder class-action claims that the company fraudulently inflated its share price by falsifying revenue. Shareholders sued Luckin in February 2020, merely two weeks after the company was accused of inflating revenue by short-seller Muddy Waters Research. The company’s share price dipped 81% two months later after an international probe found some of its staff guilty of fabricating about $310 million of sales in 2019. Luckin agreed to pay a $180 million fine to settle U.S. Securities and Exchange Commission accounting fraud civil charges.[7]
Code of Conduct and Ethics[edit]
The company strives to foster a culture of honesty and accountability. It is committed to ensuring the highest level of ethical conduct in all its business operations, including its relationship with employees, customers, suppliers, the government, etcetera. Luckin Coffee Inc. is also determined to promote and fulfill social responsibilities, including environmental protection calls when carrying out its business activities.[8]
- ↑ 1.0 1.1 finance.yahoo.com/quote/LKNCY – yahoo Finance News
- ↑ investor.luckincoffee.com/Company Overview – Luckin Coffee Investor Relation
- ↑ The Story of Luckin by Yongyuan Qu, University of California, Irvine and Chutian Li, Pennsylvania State University. Retrieved on 9/1/2022
- ↑ Luckin Coffee Announces Full Redemption of Offshore Debt Securities – Yahoo Finance. Retrieved 9/1/2022
- ↑ Luckin Coffee Inc. Announces Second Quarter 2022 Financial Results – Luckin Coffee Investor Relation Page
- ↑ investor.luckincoffee.com/corporate-governance/management - Luckin Coffee Investor Relation. Accessed on 9/2/2022
- ↑ Luckin Coffee in $175 mln class action settlement over accounting fraud – Reuters. Retrieved on 9/2/2022
- ↑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 -Code of Business Conduct and Ethics. Exhibit 11.1. - Luckin Coffee Investor Relation. Retrieved 9/2/2022
OTC Symbol: LKNCY | OTC Tier: Pink Current
