Luckin Coffee denies reports about its Hong Kong listing

Chinese coffee brand Luckin Coffee has denied a recent report about its potential listing in Hong Kong, saying that it remains committed to the US capital market.

In a statement, the company said, "Luckin Coffee’s management is focused on delivering outstanding products and services to our customers by executing on our business strategies. We remain committed to the US capital markets and strive to enhance long-term value for our shareholders. The company will continue to monitor capital markets developments and evaluate all avenues to deliver value to its stakeholders, but is not currently pursuing a Hong Kong listing."

According to multiple reports including the South China Morning Post, the Chinese coffee chain is considering a listing in Hong Kong. In 2020, the company was said to have fabricated the number of its sales. CNBC reported that an independent investigation found that Luckin Coffee's 2019 sales were inflated by ¥2.12 billion (US$300 million) and its expenses by ¥1.34 billion (US$190 million) that year.

After reviewing over 550,000 documents and interviewing more than 60 witnesses, investigators have found that Luckin Coffee's former CEO Jenny Qian former COO Liu Jian fabricated transactions and used third parties with ties to its employees to offer funds to support the falsified transactions to Luckin Coffee. 

However, according to its latest earnings release, its total net revenue in Q4 was ¥2.43 billion (US$381.7 million), representing an increase of 80.7% from ¥1.35 billion in the same quarter of 2020. Its net new store openings during Q4 were 353, resulting in a quarter-over-quarter store unit growth of 6.2%, ending the period with 6,024 stores of which 4,397 self-operated stores and 1,627 partnership stores. Moreover, its average monthly transacting customers in Q4 was 16.2 million, representing an increase of 67.1% from 9.7 million in the same quarter of 2020.

At the same time, the company unveiled its full-year highlights. In 2021, its total net revenue was ¥79.65 billion (US$12.5 billion), representing an increase of 97.5% from ¥40.33 million in the fiscal year 2020. Net new store openings during the fiscal year 2021 were 1,221, resulting in a year-over-year store unit growth of 25.4%, ending the period with 6,024 stores of which 4,397 self-operated stores and 1,627 partnership stores. Its average monthly transacting customers in the fiscal year 2021 was 13 million, representing an increase of 55.2% from 8.4 million in the fiscal year 2020. 

“The company’s recent completion of the provisional liquidation plays a major role in advancing our growth strategy as it allows us to operate from a position of greater financial strength and unlock our full potential. “Overall, we are pleased with the efficiency of our store operations and increased benefits of scale and operating leverage. These developments resulted in a material improvement in our self-operated store level margins and overall profitability profile during the fourth quarter and fiscal year 2021," said Guo Jinyi, chairman and CEO of Luckin Coffee. 

"We remain dedicated to providing the innovative products and services that our customers have come to rely upon and driving improved returns on capital and long-term value for our shareholders," Guo added. 

(Photo courtesy:123rf)