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Luckin Coffee (LKNCY)
OTHER OTC:LKNCY
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Luckin Coffee
(OTC:LKNCY)
78Outperform
Positive Factors
Customer Loyalty
The stickiness of customers is improving, as the monthly sales per transacting customer continued to grow, indicating strong customer loyalty.
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.
Product Development
Strong R&D capabilities allow Luckin Coffee to consistently deliver hit products and expand its offerings, including entry into the tea drinks market and overseas store expansion.
Sales Performance
Positive SSSG was resumed and management is confident on gradual improvement, supported by strong sales momentum and exceptional new product launches.
Negative Factors
Cost Management
Luckin's vertically integrated operation and its massive scale allow it to effectively manage the coffee bean price crisis, ensuring GP margin improvement.
Investor Sentiment
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
$9.66B
Dividend YieldN/A
Average Volume (3M)3.24M
Price to Earnings (P/E)26.9
Beta (1Y)0.38
Revenue Growth45.55%
EPS Growth-10.59%
CountryUS
Employees29,217
SectorConsumer Cyclical
Sector Strength49
IndustryRestaurants
Share Statistics
EPS (TTM)1.28
Shares Outstanding262,725,000
10 Day Avg. Volume2,909,999
30 Day Avg. Volume3,237,692
Financial Highlights & Ratios
PEG Ratio35.23
Price to Book (P/B)N/A
Price to Sales (P/S)5.04
Price to Cash Flow (P/CF)N/A
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
$34.26Price Target Upside-0.41% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering2
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 makes money through the sale of coffee, tea, and other beverages, along with a selection of light meals and snacks. The company's revenue model is primarily driven by its extensive network of self-operated stores and pick-up stores where customers can order and collect their drinks. Additionally, Luckin Coffee leverages its mobile app to facilitate orders and payments, enhancing customer convenience and streamlining operations. The company also generates revenue through partnerships with third-party delivery services to reach a wider audience beyond their physical stores. Strategic partnerships, promotional deals, and technology integration are significant factors contributing to its earnings by increasing customer engagement and optimizing operational efficiency.
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 | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 31.93B | 24.90B | 13.29B | 7.97B | 4.03B | 3.02B | Gross Profit |
| 9.44B | 14.01B | 5.28B | 2.73B | 311.42M | -195.51M | EBIT |
| 2.76B | 3.03B | 1.60B | -92.39M | -2.04B | -3.21B | EBITDA |
| 3.95B | 5.11B | 2.40B | 1.69B | -5.55B | -2.72B | Net Income Common Stockholders |
| 2.39B | 2.85B | 488.25M | 578.54M | -5.60B | -3.16B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.49B | 3.49B | 3.53B | 6.48B | 5.06B | 5.37B | Total Assets |
| 18.29B | 18.29B | 10.48B | 12.31B | 9.32B | 9.76B | Total Debt |
| 4.97B | 4.97B | 1.91B | 4.10B | 3.00B | 678.70M | Net Debt |
| 2.04B | 2.04B | -1.63B | -2.37B | -1.80B | -4.19B | Total Liabilities |
| 10.16B | 10.16B | 5.43B | 8.68B | 6.60B | 4.62B | Stockholders Equity |
| 8.14B | 8.14B | 5.05B | 3.63B | 2.66B | 5.06B |
| Cash Flow | Free Cash Flow | ||||
| -1.08B | 143.73M | -781.20M | -49.77M | -3.20B | -3.78B | Operating Cash Flow |
| 1.67B | 2.90B | 19.82M | 123.45M | -2.38B | -2.17B | Investing Cash Flow |
| -2.27B | -3.45B | -798.05M | 337.00K | -1.71B | -1.82B | Financing Cash Flow |
| 300.00M | 0.00 | -2.28B | 1.51B | 4.03B | 7.24B |
Luckin Coffee Technical Analysis
Positive
34.40
Price Trends
30.09
Positive
27.04
Positive
24.40
Positive
Market Momentum
1.34
Negative
59.17
Neutral
44.11
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 34.4 is above the 20-day moving average (MA) of 32.11, above the 50-day MA of 30.09, and above the 200-day MA of 24.40, indicating a bullish trend. The MACD of 1.34 indicates Negative momentum. The RSI at 59.17 is Neutral, neither overbought nor oversold. The STOCH value of 44.11 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $9.66B | 26.89 | 25.80% | ― | 45.55% | -10.59% | |
76 Outperform | $219.40B | 26.96 | -216.57% | 2.17% | 1.67% | -1.61% | |
75 Outperform | $19.87M | 6.58 | 11.70% | ― | 15.24% | ― | |
67 Neutral | $112.28B | 31.66 | -47.07% | 2.39% | -1.48% | -17.32% | |
59 Neutral | $12.27B | 11.11 | -0.54% | 3.71% | 1.45% | -20.42% | |
52 Neutral | $851.50M | 279.33 | 0.27% | 2.55% | -1.23% | ― |
* Consumer Cyclical Sector Average
Performance Comparison
LKNCY
Luckin Coffee
34.40
10.30
42.74%
JVA
Coffee Holding Co
3.24
1.65
103.77%
MCD
McDonald's
307.09
33.52
12.25%
SBUX
Starbucks
97.73
8.47
9.49%
QSR
Restaurant Brands International
64.52
-11.25
-14.85%
DNUT
Krispy Kreme
5.00
-9.98
-66.62%
Luckin Coffee Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: 15.90% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call presented a strong performance with significant revenue and store expansion, improved operating profits, and successful customer growth. However, challenges remain with same-store sales growth and rising coffee bean prices, which the company plans to address through strategic measures.Highlights
Significant Revenue Growth
For the full year 2024, total net revenues increased by 38% year-over-year to RMB34.5 billion, with a notable 36% increase in the fourth quarter to RMB9.6 billion.
Store Expansion
Luckin Coffee opened over 6,000 net new stores in 2024, reaching a total of 22,340 stores by year-end, including 14,540 self-operated stores and 7,749 partnership stores.
Increase in Average Monthly Transaction Customers
The number of average monthly transaction customers increased by 48% year-over-year to 71.8 million, with over 330 million cumulative transaction customers by the end of the fourth quarter.
Improved Operating Profit and Margin
Operating profit increased by 17% to RMB3.5 billion for the year, with operating margin expanding by 7.4 percentage points year-over-year to 10.4% in the fourth quarter.
International Expansion
Luckin Coffee entered the Malaysian market and added new stores in Singapore, demonstrating progress in international expansion.
Lowlights
Same-Store Sales Growth Challenges
Same-store sales growth for self-operated stores showed a negative trend for much of the year, although it improved to negative 3% in the fourth quarter and turned positive in December.
Rising Coffee Bean Prices
The company acknowledged the significant rise in coffee bean prices, which could create cost pressures despite plans to mitigate these through supply chain advantages.
Company Guidance
During the Luckin Coffee Fourth Quarter and Full Year 2024 earnings call, the company reported significant growth and provided guidance for continued expansion and strategic focus in 2025. Total net revenues for the year increased by 38% year-over-year to RMB34.5 billion, with operating profit rising 17% to RMB3.5 billion. The company maintained a rapid pace of store expansion, adding over 6,000 net new stores in 2024, bringing the total to 22,340 stores. Luckin Coffee also reported an increase in average monthly transaction customers by 48% to 71.8 million and achieved a 55% rise in cups sold of freshly brewed beverages, reaching nearly 3 billion. For the first quarter of 2025, the company aims to sustain its industry-leading store growth and enhance operational efficiency, with a focus on maintaining stable per-cup pricing and increasing per-store daily cup sales. Despite pressures from rising coffee bean prices, Luckin plans to leverage its robust supply chain and scale advantages to mitigate impacts and does not currently plan to increase prices, continuing its mission to provide high-quality, affordable coffee.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.