This is an English adaptation of a FoodBud historical article originally published on September 8, 2021.
As of June 30, 2021, Luckin Coffee had 5,259 stores, including 4,018 self-operated stores and 1,241 partnership stores.
On the evening of September 7, 2021, Luckin Coffee released the third report from its joint provisional liquidators to the Grand Court of the Cayman Islands. The report said the company’s overall restructuring plan was progressing in an orderly way and had completed several interim milestones.
Luckin said that under its current management team, it continued to meet disclosure obligations. The company had released its audited 2019 annual financial report and said it would publish its 2020 annual report as soon as possible.
Luckin reissued its audited 2019 annual report on June 30, 2021, describing it as another milestone in its recovery after the events of 2020. Under U.S. Securities and Exchange Commission disclosure requirements, the company said it would continue working to restore a normal financial-reporting schedule.
According to the reissued 2019 annual report:
The third report said Luckin had previously signed a restructuring support agreement with holders of its convertible bonds, secured a new financing round from shareholders, and completed Chinese regulatory approval procedures to reduce registered capital and meet restructuring-related conditions. The joint provisional liquidators and Luckin were also communicating with overseas litigation counsel representing investors who had held or still held American depositary shares, with the aim of reaching a settlement agreement.
The report said Luckin’s revenue and net profit had grown strongly, supported by more transacting users and a broader mix of higher-value products, while overall operating performance was improving.
As of July 31, 2021, Luckin had USD775.8 million in unrestricted cash and cash equivalents. The company said it would continue advancing its restructuring plan and pursue sustained, steady business growth.
Over the previous year, Luckin’s Pink Sheets share price had risen 547%, giving it a market capitalization of USD4.15 billion.
At the time, financing activity among newer coffee brands was pushing valuations higher. Manner Coffee was valued at USD2.8 billion; M Stand at about RMB4 billion; Saturnbird at nearly RMB4.5 billion; Seesaw Coffee at nearly RMB1 billion; and Tims Coffee China had previously been valued at USD1.688 billion in connection with a planned SPAC listing.
According to GeoHey data cited in the article, Manner had 197 stores, M Stand had 46, Seesaw had 40, and Tims Coffee had 251 stores in China.
By comparison, Luckin’s report showed that as of June 30, 2021, it had 5,259 stores, more than 75 million cumulative purchasing users, and more than 10 million cups sold in June 2021 for its newly launched raw coconut series, setting a new-product sales record.
The article closed by asking whether Luckin was significantly undervalued compared with newer coffee chains, or whether those newer brands were overvalued.
Note: IPO, valuation, financing, restructuring, share-price, cash-position, and forward-looking figures are historical and reflect the article’s 2021 context.
