Luckin Coffee will be listed in the United States, the valuation is less than half of Starbucks, it is said to cooperate with ele.me

Professional coffee knowledge exchange more coffee bean information please follow the coffee workshop (Wechat official account cafe_style)

Luckin Coffee will be listed on May 17, but the valuation is less than half that of Starbucks.

According to IPO early know, Luckin Coffee will be priced on May 16 and listed on May 17.

According to the prospectus, Luckin Coffee plans to list on the Nasdaq Global Select Market under the symbol "LK".

Luckin Coffee filed an updated prospectus with the Securities and Exchange Commission (SEC) earlier this week, setting its IPO price range at $15 to $17 per American depositary share. The maximum amount raised by the IPO may reach 586.5 million US dollars. If the listing is successful, the money will support Ruixing to continue to subsidize losses for some time.

Luckin Coffee has grown rapidly to become the second largest coffee chain in China through generous promotions, offering drinks much cheaper than Starbucks, foreign media reported. Now, the price of its shares is also at a discount compared with its competitors.

Assuming the so-called green shoe option is exercised, the price range of Lucky's initial public offering values the company at 9 to 10.2 times its expected earnings in 2021. That is less than half the valuation of Starbucks, which trades at 22.5 times estimated earnings for the same year.

The low valuation may be due to Lucky's short history, which only began operating in October 2017. Although it had 2370 stores at the end of March, it continues to spend heavily on expansion and is not yet profitable. Ruixing recorded a net loss of 572.8 million yuan ($85 million) in the three months to March, more than four times that of the same period a year earlier, according to regulatory filings. Over the same period, net income soared 37-fold to 478.5 million yuan.

Cooperate with Meituan with a monthly turnover of less than 500. single pass and cooperate with ele.me

Recently, it has been reported that Luckin Coffee is gradually suspending the test store of distribution cooperation with Meituan, seeking to cooperate with ele.me and other distribution suppliers to supplement the delivery capacity.

From 36 krypton news, Luckin Coffee is recently seeking cooperation with ele.me and other distribution suppliers to supplement the delivery service capacity. But Ruixing and ele.me declined to comment. Ruixing has previously outsourced the distribution business to partner Shunfeng, and in December last year, it also launched a test of takeout distribution cooperation with Meituan Dianping to cope with the previous strategic cooperation between Starbucks and ele.me.

Interface news learned from people close to ele.me that the cooperation between Luckin Coffee and ele.me is still under negotiation and has not been finalized. Meituan responded: "at present, the cooperation between Meituan Distribution and Luckin Coffee is progressing smoothly, and the unit volume is growing steadily, bringing users a good service experience." The two sides will also continue to deepen cooperation and gradually expand the space for cooperation. "

Ruixing's distribution cooperation with Meituan began in December 2018, when Ruixing said it had launched Meituan takeout in 21 cities, and Meituan takeout became its only designated delivery platform. At that time, the move was seen as a "war" not long ago between ele.me and Starbucks in the takeout business.

Due to the timeliness of coffee delivery, Ruixing asked Meituan to provide on-site delivery staff to do full-time distribution service. Meituan tested the distribution cooperation in a small number of Ruixing stores. Resident riders can only get 15 to 30 delivery orders per day, which is too small for Meituan's full-time riders, so it is necessary to increase the cost of each delivery.

A person close to Meituan said that the distribution cooperation test store between Meituan and Ruixing had been suspended because the test data were not ideal. On May 6th, among the first batch of customers announced by Meituan Distribution, Meituan's new open distribution platform, there was no Luckin Coffee.

In fact, distribution puts a lot of pressure on Lucky. In order to deal with this problem, on the one hand, Ruixing tries to solve the problem of insufficient transport capacity with a variety of distribution methods, on the other hand, it is committed to reducing the proportion of takeout orders, and at the same time gradually raising the price threshold for free delivery, in order to guide consumers to pick up food in the store in person.

Data show that during the five seasons from the first quarter of 2018 to the first quarter of 2019, the proportion of Luckin Coffee takeout orders gradually decreased, which was 61.7%, 62.2%, 51.4%, 40.8% and 27.7%, respectively.

According to the financial report, Lucky made a net loss of about 1.6 billion yuan in 2018 and about 552 million yuan in the first quarter of 2019, an increase of 317 percent over the same period last year. Lucky made it clear in the financial report that it will strategically focus on the expansion of self-pick-up stores in the future, which will enable them to expand rapidly with lower rents and decoration costs and keep in touch with their target customers. Therefore, this makes many people in the industry think that while it is difficult for Ruixing to reverse the loss situation for the time being, it is trying its best to reduce the pressure on the operation caused by distribution costs, and the cooperation with Meituan or ele.me is also trying to solve the problem of insufficient transport capacity.

What is interesting is that ele.me has cooperated with Starbucks strategically to provide full platform and full flow support for Starbucks. If Luckin Coffee can cooperate with ele.me this time, it will undoubtedly help Lucky easily get customers and share the distribution costs, and ele.me will provide more comprehensive services in coffee distribution.

However, if ele.me wants to be a wall grass, will Starbucks agree?

END