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Luckin Coffee (LKNCY)
OTHER OTC:LKNCY
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Luckin Coffee
(OTC:LKNCY)
81Outperform
Positive Factors
Market Position
Luckin Coffee is the largest and fastest-growing coffee brand in China, with a remarkable market share of 21.7% in the chained cafe segment.
Sales Performance
The company's sales increased by 41% year-over-year, exceeding estimates due to better-than-expected same-store sales growth and faster store expansion.
Valuation
Luckin Coffee remains one of the analyst's sector top picks, trading at attractive discounts compared to peers.
Negative Factors
Costs
Challenges from increased share-based compensation and higher tax rates impact operating profit despite significant improvements.
Investor Perception
Luckin’s ability to cope with costs inflation has not been fully appreciated by all investors, which may serve as a share price catalyst in the future.
Luckin Coffee (LKNCY) vs. S&P 500 (SPY)
Market Cap
$9.50B
Dividend YieldN/A
Average Volume (3M)3.18M
Price to Earnings (P/E)21.7
Beta (1Y)0.20
Revenue Growth37.78%
EPS Growth58.38%
CountryUS
Employees33,795
SectorConsumer Cyclical
Sector Strength63
IndustryRestaurants
Share Statistics
EPS (TTM)1.54
Shares Outstanding266,231,500
10 Day Avg. Volume2,169,148
30 Day Avg. Volume3,182,746
Financial Highlights & Ratios
PEG Ratio0.37
Price to Book (P/B)N/A
Price to Sales (P/S)0.00
Price to Cash Flow (P/CF)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$40.61Price Target Upside21.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Luckin Coffee Business Overview & Revenue Model
Company DescriptionLuckin Coffee Inc. engages in the retail services of freshly brewed coffee and non-coffee drinks in the People's Republic of China. It also offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers cups, tote bags, and other merchandises. It operates 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. Further, the company provides technical and consultation services; and manufactures materials for products. As of December 31, 2021, it operated 4,397 self-operated stores; 1,627 partnership stores; and 1,102 Luckin Coffee EXPRESS machines. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.
How the Company Makes MoneyLuckin Coffee generates revenue primarily through the sale of coffee and other beverages. The company's revenue model is centered around its mobile app, which streamlines the customer experience by allowing users to order and pay for products in advance, reducing wait times and enhancing convenience. A significant portion of its income comes from its extensive network of self-operated stores and pick-up locations, where customers can quickly collect their orders. Additionally, Luckin Coffee has formed partnerships with third-party delivery services to extend its reach and cater to the growing demand for food delivery in urban areas. The company's focus on cost control, competitive pricing, and aggressive expansion strategy has contributed to its ability to capture a substantial share of the Chinese coffee market. Furthermore, Luckin Coffee occasionally engages in marketing promotions and discounts to attract new customers and increase sales volume, which also contributes to its revenue streams.
Luckin Coffee Financial Statement Overview
Summary
Luckin Coffee demonstrates strong revenue growth and profitability, with a notable 28.19% increase in revenue. However, challenges such as increased operational costs affecting margins and negative free cash flow are present. The balance sheet is robust with moderate leverage, suggesting financial stability. Continued focus on cash flow management will be crucial to sustain growth.Income Statement
Luckin Coffee's income statement shows a strong performance in the TTM (Trailing-Twelve-Months) with a gross profit margin of 29.57% and a net profit margin of 7.47%. Revenue growth is impressive at 28.19% from the previous year, indicating robust sales growth. However, there is a slight decrease in EBIT and EBITDA margins compared to the previous year, which may suggest increasing operational costs.85
Very Positive
Balance Sheet
The balance sheet reflects a healthy equity ratio of 47.5%, indicating a well-capitalized company. The debt-to-equity ratio is 0.55, showing moderate leverage and prudent financial management. Return on equity stands at 22.73%, showcasing strong profitability relative to shareholder investment. However, the increase in total debt is a point of concern.78
Positive
Cash Flow
Cash flow analysis reveals a challenging situation with negative free cash flow in the TTM period, indicating cash outflows exceeding inflows from operations. Free cash flow growth rate is negative due to increased capital expenditures. The operating cash flow to net income ratio is 0.70, which is relatively strong, but the free cash flow to net income ratio is negative, highlighting the need for improved cash management.72
Positive
| Breakdown | ||||
| Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 24.90B | 13.29B | 7.97B | 4.03B | 3.02B | Gross Profit |
| 14.01B | 5.28B | 2.73B | 311.42M | -195.51M | EBIT |
| 3.03B | 1.60B | -92.39M | -2.04B | -3.21B | EBITDA |
| 5.11B | 2.40B | 1.69B | -5.55B | -2.72B | Net Income Common Stockholders |
| 2.85B | 488.25M | 578.54M | -5.60B | -3.16B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 3.49B | 3.53B | 6.48B | 5.06B | 5.37B | Total Assets |
| 18.29B | 10.48B | 12.31B | 9.32B | 9.76B | Total Debt |
| 4.97B | 1.91B | 4.10B | 3.00B | 678.70M | Net Debt |
| 2.04B | -1.63B | -2.37B | -1.80B | -4.19B | Total Liabilities |
| 10.16B | 5.43B | 8.68B | 6.60B | 4.62B | Stockholders Equity |
| 8.14B | 5.05B | 3.63B | 2.66B | 5.06B |
| Cash Flow | Free Cash Flow | |||
| 143.73M | -781.20M | -49.77M | -3.20B | -3.78B | Operating Cash Flow |
| 2.90B | 19.82M | 123.45M | -2.38B | -2.17B | Investing Cash Flow |
| -3.45B | -798.05M | 337.00K | -1.71B | -1.82B | Financing Cash Flow |
| 0.00 | -2.28B | 1.51B | 4.03B | 7.24B |
Luckin Coffee Technical Analysis
Positive
33.50
Price Trends
31.79
Positive
29.06
Positive
25.63
Positive
Market Momentum
0.44
Negative
54.16
Neutral
75.24
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LKNCY, the sentiment is Positive. The current price of 33.5 is above the 20-day moving average (MA) of 31.46, above the 50-day MA of 31.79, and above the 200-day MA of 25.63, indicating a bullish trend. The MACD of 0.44 indicates Negative momentum. The RSI at 54.16 is Neutral, neither overbought nor oversold. The STOCH value of 75.24 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LKNCY.
Luckin Coffee Risk Analysis
Luckin Coffee disclosed 108 risk factors in its most recent earnings report. Luckin Coffee reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Luckin Coffee Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $9.50B | 21.75 | 30.39% | ― | 37.78% | 58.38% | |
76 Outperform | $10.93B | 85.91 | 20.58% | ― | 32.25% | 873.48% | |
71 Outperform | $9.78B | 174.66 | 7.82% | ― | 32.64% | 943.64% | |
64 Neutral | $97.04B | 27.61 | -47.07% | 2.95% | -0.50% | -24.28% | |
61 Neutral | $6.55B | 11.72 | 3.07% | 4.01% | 2.66% | -21.27% | |
60 Neutral | $2.51B | 13.53 | 68.30% | 8.00% | 2.98% | -2.58% | |
46 Neutral | $2.32B | ― | -19.46% | ― | 15.89% | 22.07% |
* Consumer Cyclical Sector Average
Performance Comparison
LKNCY
Luckin Coffee
33.50
11.50
52.27%
SBUX
Starbucks
82.01
10.72
15.04%
WEN
Wendy's
12.49
-6.30
-33.53%
BROS
Dutch Bros Inc
59.96
32.67
119.71%
SG
Sweetgreen
19.68
-2.42
-10.95%
CAVA
CAVA Group, Inc.
94.53
22.36
30.98%
Luckin Coffee Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: -4.67%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance in terms of revenue growth, store expansion, and profitability, driven by strategic initiatives and market demand. However, rising costs and potential competitive pressures pose challenges that need to be managed. Overall, the positive aspects significantly outweigh the lowlights.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
Total net revenue rose by 41% year-over-year to around RMB8.9 billion, driven by a 42% year-over-year increase in GMV which reached RMB10.4 billion.
Expansion of Store Network
Luckin Coffee expanded to over 24,000 stores, adding 1,743 net new stores in China and 14 net new stores internationally, reaching a total of 24,097 stores.
Improvement in Operating Profit
Operating profit rebounded to nearly RMB740 million with operating margins rising to 8.3%, and store-level operating profit increased by 245% year-over-year to RMB1.1 billion.
Positive Same-Store Sales Growth
Same-store sales growth for self-operated stores returned to positive territory at 8.1% following a year of fluctuation.
Product Innovation and Customer Growth
Launch of 15 new beverages and light meals contributed to customer base growth, adding over 20 million new transacting customers, with cumulative transacting customers exceeding 350 million.
Sustainability Achievements
The flagship store in Zhongguancun, Beijing, received the highest LEED IDC Platinum certification for green building, demonstrating leadership in global sustainability standards.
Negative Updates
Rising Coffee Bean Costs
Higher coffee bean costs are anticipated to impact gross margins in the second half of 2025.
Increased Expenses
Delivery expenses increased by 54% year-over-year to RMB689 million, and sales and marketing expenses increased by 52% year-over-year to RMB496 million.
Potential Competitive Pressure
Newly public tea beverage companies could shift competitive dynamics, necessitating continued investment in brand and marketing to maintain market leadership.
Company Guidance
During Luckin Coffee's first quarter 2025 earnings call, the company provided impressive financial guidance, highlighting a 41% year-over-year increase in total net revenue, reaching approximately RMB8.9 billion. The company's operating profit rebounded significantly to nearly RMB740 million, with operating margins rising to 8.3%. Notably, same-store sales growth for self-operated stores returned to positive territory at 8.1%, driven by strong customer demand in China's coffee market. Luckin Coffee expanded its network to over 24,000 stores, including 15,541 self-operated stores and 8,499 partnership stores in China, alongside 65 international stores. The company also added over 20 million new transacting customers, bringing its cumulative transacting customer base to over 350 million, with monthly average transacting customers increasing by 24% year-over-year to over 74 million. Despite potential pressures from rising coffee bean prices and increased competition, Luckin Coffee aims to leverage its scale and operational efficiencies to maintain sustainable profitability throughout 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.