The story of Luckin's survival by breaking his arm has not yet come to an end. Can Luckin recreate and stage the "God Reversal"?

The story of Luckin's survival by breaking his arm has not yet come to an end, this time, can it really usher in Liu Yinhuaming?

On the evening of April 15th, Luckin Coffee issued an announcement, announcing that it had reached a stock investment agreement with the company's shareholders Dazheng Capital and Joy Capital for a total of 250 million U.

S.
dollars.

According to the agreement, Dazheng Capital and Yuyue Capital have agreed to purchase Ruixing Coffee's senior convertible preferred shares for approximately US$240 million and US$10 million through private placement; in some cases, Dazheng Capital and Yuyue Capital may also be pro rata.
An additional capital increase of 150 million US dollars.

250 million U.

S.
dollars, although this figure is not too large in the history of Ruixing's financing, it will release a strong signal to the market: My Ruixing has survived again.

A month ago, Luckin made a round of advance notice on the financing on its official website: it announced that it had reached an agreement with major debt holders to restructure debt and strengthen the capital structure.

It also said that it is actively using multiple channels to raise funds and intends to raise at least US$250 million through private placement.

On the same day, Luckin rose over 49% in the US stock pink sheet market, and its market value soared by more than 700 million US dollars (about 4.

5 billion yuan) overnight.

Now, "old friends" once again take the lead in showing determination, can it really repair Ruixing's lost trust in the capital market?

"Post-disaster reconstruction" of capital confidence

"Post-disaster reconstruction" of capital confidence

"If Luckin didn't die, it would definitely become a rival to Starbucks.

"

Back to 2018, Luckin started from Galaxy SOHO and expanded wildly while financing, reaching the scale of 2,000 stores at the end of the year.

With this figure, Starbucks spent 17 years in China.

Holding the banner of "Driving Starbucks", Luckin ringed the bell on Nasdaq 18 months after its establishment, creating the fastest record for a Chinese coffee brand to go public in the US stock market.

At that time, burning money was Luckin's business model.

Former Luckin CEO Qian Zhiya once described Luckin's speed of burning money at a press conference: since its establishment six months ago, it has "burned more than a billion.
"

Burning money has won the favor of users for Ruixing; fraud, Ruixing has lost the trust of the capital market.

On the evening of April 2, 2020, Ruixing suddenly exposed himself to financial fraud.

The company announced a survey that its COO Liu Jian and some employees forged transactions worth about 2.
2 billion yuan.
48 days later, Luckin, which was listed for 12 months, received a notice of delisting from Nasdaq.

After a brief highlight, Ruixing became a "shame" that everyone in the capital market called.

In order to save itself, Ruixing went through a series of internal fights, and the senior management changed.

At that time, Luckin’s investors Dazheng Capital and Joy Capital responded, “They are just investors, who are not aware of Luckin Coffee’s fraud and condemn all forms of corporate fraud and fraud.

”

Subsequently, Li Hui, Liu Erhai and others also proposed to convene a board of directors to remove Lu Zhengyao from the positions of director and chairman.

In July 2020, Ruixing appointed Guo Jinyi as the new CEO and chairman.

The former chairman Lu Zhengyao and his "iron triangle" Liu Erhai, Li Hui, and Shao Shaofeng were eliminated and no longer served as members of the board of directors.

On December 16, 2020, the United States Securities and Exchange Commission (SEC) stated that Luckin agreed to pay 180 million US dollars (about 1.
175 billion yuan) to reach a settlement in response to allegations of fraud.

The $250 million to save Luckin this time also proves to a certain extent Luckin's performance in the coffee market.

What's more, Li Hui and Liu Erhai were Lu Zhengyao's "iron buddies" before, and they played a big role in Ruixing's growth.
Before Luckin's IPO, Lu Zhengyao held 30.
53%, Qian Zhiya held 19.
68%, Dazheng Capital held 11.
9%, and Joy Capital held 6.
75%.

This also proves once again that Dazheng Capital, Joy Capital and Ruixing are still deeply bound by their interests.

The audit problem is still the "old problem"

The audit problem is still the "old problem"

Another point of concern is that Ruixing once again announced the replacement of accounting firms.

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At present, Luckin's stores across the country are still in normal operation, and discount coupons are still being distributed.
In 2020, Luckin launched a total of 77 new ready-made drinks.
During the Spring Festival of 2021, Luckin achieved nearly 7 times its operating income compared with the same period last year.

This phenomenon is also reflected in Luckin's 2020 financial report.

According to Luckin's latest unaudited financial information, in the first three quarters of 2020, Luckin Coffee's single-quarter revenue was 565 million, 980 million, and 1.
145 billion, representing a year-on-year increase of 18.
1%, 49.
9% and 35.
8%.

This operating data shows that Ruixing achieved breakeven at the store level for the first time in August 2020, and 60% of the stores achieved profitability.

At the same time, in order to alleviate funding problems, continue to maintain store expansion and increase market share, at the beginning of this year, Ruixing, which has always insisted on self-operating, launched a franchise model.
According to Ruixing, the total cost of the franchisee's initial investment is between 350,000-370,000.

Through the franchise and investment attraction, Luckin will continue to expand and aim to achieve nearly 7,000 stores in 2023.
At the beginning of the year, Ruixing CEO Guo Jinyi revealed in an internal letter that the current total number of Ruixing stores is nearly 4,800.

After the capital is injected, Ruixing is bound to continue to expand, or it will reignite war in the coffee market.

It is worth noting that the Chinese coffee market in 2021 is no longer the same as 2018.

The traditional Starbucks is becoming more and more localized, actively embracing the Internet and new retail.
KFC's K coffee and McDonald's McCafe are also increasing their forays.

Tim Hortons, from Canada, has entered China in just two years and has received two rounds of financing from Tencent and Sequoia Capital China, claiming to open 1,500 stores.

In addition, new coffee brands such as Manner, Shicui, and Fisheye also joined the melee.

Luckin, can you make another Luckin? This will be a double test of Luckin at the capital level and business model.

Source: Blue Media Exchange

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