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’s SSSG declined 20.9%YoY in the peak season, indicating diseconomies of scale for Luckin and a deteriorated competitive environment. We do not expect a quick turnaround in the near term.</li>
<li>We think Luckin has limited capability to further raise its prices in 3Q24, and expect its NPM to be 11.9%/7.1% in 3Q24/4Q24 as the new norm.</li>
<li>We keep SELL rating and lower TP to US$16.5/ADS. The stock trading at 20x/16x PE in 2024/2025, and we expect the NI to increase 15%CAGR in the next 2 years.</li>
</ul>


Luckin’s SSSG declined 20.9%YoY in the peak season, indicating diseconomies of scale for Luckin and a deteriorated competitive environment. We do not expect a quick turnaround in the near term.
We think Luckin has limited capability to further raise its prices in 3Q24, and expect its NPM to be 11.9%/7.1% in 3Q24/4Q24 as the new norm.
We keep SELL rating and lower TP to US$16.5/ADS. The stock trading at 20x/16x PE in 2024/2025, and we expect the NI to increase 15%CAGR in the next 2 years.


[Luckin Coffee (LKNCY US, SELL, TP US$16.5) TP Change]: Milkteaization Diminishes Differentiation

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

Thematic (Sector/Industry)

<ul>
<li>BZ US: Enterprises’ Recruitment Confidence Shows Slight Recovery in July(+)</li>
<li>3690HK: Meituan and Restaurant Brands Collaborate to Establish Take-out Satellite Stores, Further Penetrating Offline Catering in China.(+)</li>
<li>PDD US/BABA US /SHEIN/SE US: Hundreds of Temu merchants protest at Guangzhou headquarters (-/+/+)</li>
</ul>


BZ US: Enterprises’ Recruitment Confidence Shows Slight Recovery in July(+)
3690HK: Meituan and Restaurant Brands Collaborate to Establish Take-out Satellite Stores, Further Penetrating Offline Catering in China.(+)
PDD US/BABA US /SHEIN/SE US: Hundreds of Temu merchants protest at Guangzhou headquarters (-/+/+)


[Blue Lotus Daily-TMT Update]:BZ US/3690HK/PDD US/BABA US/SE US/JD US/700HK/NTES US/BIDU/MSFT/TCOM

<ul>
<li>LKNCY US:Luckin Coffee's Moutai Flavored Latte is Gradually Being Phased Out (-)</li>
<li>1519 HK/ZTO US: Weekly parcel volume grew ~33% y-o-y (+)</li>
<li>981 HK/1810 HK/AAPL US/NVDA US: SMIC’s upcoming N+3 process to narrow performance with TSMC’s 5nm (+/-/-/-)</li>
</ul>


LKNCY US:Luckin Coffee's Moutai Flavored Latte is Gradually Being Phased Out (-)
1519 HK/ZTO US: Weekly parcel volume grew ~33% y-o-y (+)
981 HK/1810 HK/AAPL US/NVDA US: SMIC’s upcoming N+3 process to narrow performance with TSMC’s 5nm (+/-/-/-)


[Blue Lotus Daily]:LKNCY US/1519 HK/ZTO US/981 HK/1810 HK/AAPL US/NVDA US/BEKE US

<ul>
<li>1810 HK/AAPL: Xiaomi’s China unit volume grew 17% yoy in 2Q (+/-)</li>
<li>1810 HK: Xiaomi acquires more land to build another EV factory (+)</li>
<li>981 HK/1810 HK: SMIC’s upcoming “5nm” process to feature significant efficiency improvement (+/-)</li>
</ul>


1810 HK/AAPL: Xiaomi’s China unit volume grew 17% yoy in 2Q (+/-)
1810 HK: Xiaomi acquires more land to build another EV factory (+)
981 HK/1810 HK: SMIC’s upcoming “5nm” process to feature significant efficiency improvement (+/-)


[Blue Lotus Daily]:1810 HK/AAPL/981 HK/LKNCY US/BZ US/LI US/1211 HK

<ul>
<li>LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)</li>
<li>1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）</li>
<li>XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)</li>
</ul>


LKNCY US: Luckin Coffee Opens Its 20,000th Store . (+)
1810 HK/NIO US/XPEV US/1211 HK:July holiday saw normal seasonliaty in EV sales, Xiaomi ramp up nicely（///////）
XPEV US: Details of new refreshed Xpeng sedan P7 revealed (+)


[Blue Lotus Daily]:LKNCY US/1810 HK/NIO US/XPEV US/1211 HK/MNSO US/3690 HK/981 HK/AAPL US/700 HK

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)