Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Luckin reported C2Q25 revenue 9%/11% higher than our est./cons., and non-GAAP OP 37%/17% higher than our est./cons., driven by the extra demand from food delivery platforms' promotional campaigns. </li>
<li>As we now expect the food delivery war to persist, we raise Luckin's C2H25 revenue/OP estimate by 6%/18% and raise the TP to US$45.</li>
<li>Luckin, however, managed margin and expenses well to deliver the profit beat;</li>
</ul>


Luckin reported C2Q25 revenue 9%/11% higher than our est./cons., and non-GAAP OP 37%/17% higher than our est./cons., driven by the extra demand from food delivery platforms' promotional campaigns. 
As we now expect the food delivery war to persist, we raise Luckin's C2H25 revenue/OP estimate by 6%/18% and raise the TP to US$45.
Luckin, however, managed margin and expenses well to deliver the profit beat;


[Luckin Coffee (LKNCY US, BUY, TP US$45) TP Change]:Solid Execution Showcases Consolidator Potential

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>Luckin Coffee reported strong financial results for the first quarter of 2025, underlining significant year-over-year growth in both revenue and profitability.</li><li>The company revealed a 41% increase in total net revenues, reaching approximately RMB 8.9 billion, mainly driven by a 42% rise in gross merchandise value (GMV) amounting to RMB 10.4 billion.</li><li>The growth in revenue was primarily fueled by expanded product sales through increased customer transactions, supported by an extensive store network.</li></ul>

Luckin Coffee reported strong financial results for the first quarter of 2025, underlining significant year-over-year growth in both revenue and profitability.The company revealed a 41% increase in total net revenues, reaching approximately RMB 8.9 billion, mainly driven by a 42% rise in gross merchandise value (GMV) amounting to RMB 10.4 billion.The growth in revenue was primarily fueled by expanded product sales through increased customer transactions, supported by an extensive store network.

Luckin Coffee’s U.S. Invasion: A Brewing Storm for Starbucks!

HK/China Equity Long-Short

Osbert Tang, CFA

<ul>
<li>
<a href="https://www.smartkarma.com/entities/luckin-coffee-inc" target="_blank" data-smartkarma-citation="entities:28046:1" rel="noopener">Luckin Coffee (LKNCY US)</a> concluded FY23 with a 203.3% surge in non-GAAP net profit to Rmb3.2bn, benefiting from higher store count and monthly transacting customers.</li>
<li>Luckin plans to lift store count by at least 23%, with total to reach over 20,000 in FY24. Product innovation, promotional discount reduction, and better store efficiency are profit drivers. </li>
<li>Net cash reached Rmb3.8bn, or 7% of market cap. With a consensus EPS forecast of 28% CAGR in the next two years, its 15.1x and 11.7x PERs are not stretched.</li>
</ul>



Luckin Coffee (LKNCY US) concluded FY23 with a 203.3% surge in non-GAAP net profit to Rmb3.2bn, benefiting from higher store count and monthly transacting customers.
Luckin plans to lift store count by at least 23%, with total to reach over 20,000 in FY24. Product innovation, promotional discount reduction, and better store efficiency are profit drivers. 
Net cash reached Rmb3.8bn, or 7% of market cap. With a consensus EPS forecast of 28% CAGR in the next two years, its 15.1x and 11.7x PERs are not stretched.


Luckin Coffee (LKNCY US): Feeling Lucky in a Challenging Market

<ul>
<li>In 4Q23, we expect Luckin Coffee revenue to increase 93% YoY to RMB7.1bn, and expect GPM/OPM to decline (5.8)/(1.3) ppt YoY to 19.0%/8.2%, respectively. </li>
<li>We cut 4Q23 operating income by 12%. In 2024, we raised our revenue estimate by 5% due to the speed up of new store opening schedule. </li>
<li>Furthermore, as price competition eased, we expect Luckin to offer less low-priced drinks, thus driving up OPM in 2024.</li>
</ul>


In 4Q23, we expect Luckin Coffee revenue to increase 93% YoY to RMB7.1bn, and expect GPM/OPM to decline (5.8)/(1.3) ppt YoY to 19.0%/8.2%, respectively. 
We cut 4Q23 operating income by 12%. In 2024, we raised our revenue estimate by 5% due to the speed up of new store opening schedule. 
Furthermore, as price competition eased, we expect Luckin to offer less low-priced drinks, thus driving up OPM in 2024.


[Luckin Coffee(LKNCY US, BUY, TP US$43) TP Change]: Weak Earnings in 4Q23 but Better Outlook in 2024

<ul>
<li>Luckin reported C1Q25 revenue in-line/6% vs. our estimate/consensus, and non-GAAP operating profit 9%/75% higher than our estimate/consensus, thanks to warmer weather and constrained marketing spending;</li>
<li>Despite Luckin pre-emptive lock-ins, rising coffee bean price shall still take its toll as Luckin's biggest rival Starbucks should be equally capable of managing the commodity price risk. </li>
<li>We keep Luckin as BUY rating but cut TP to US$39.</li>
</ul>


Luckin reported C1Q25 revenue in-line/6% vs. our estimate/consensus, and non-GAAP operating profit 9%/75% higher than our estimate/consensus, thanks to warmer weather and constrained marketing spending;
Despite Luckin pre-emptive lock-ins, rising coffee bean price shall still take its toll as Luckin's biggest rival Starbucks should be equally capable of managing the commodity price risk. 
We keep Luckin as BUY rating but cut TP to US$39.


[Luckin (LKNCY US, BUY, TP US$39) TP Change]: Coffee Bean Price Hike Hurts Margin but Boosts Sales

China

Luckin Coffee Inc. provides non-alcoholic beverages. The Company offers various types of coffee. Luckin Coffee serves customers in China.

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Luckin Coffee (LKNCY US)