Luckin Coffee is considering listing in Hong Kong?! The official response said: continue to commit to the US stock market!

On the evening of May 9, according to an exclusive report by the South China Morning Post, Luckin Coffee plans to list in Hong Kong.

Luckin Coffee listed on NASDAQ in the United States on May 17, 2019. On January 31, 2020, Muddy Waters, a short seller of Chinese stocks, released an 89-page report on the actual turnover of Luckin Coffee's storefront, believing that Ruixing gained a large number of customers through subsidies and falsified its financial losses. On February 3, 2020, Ruixing denied the fraud and said the Muddy Waters report was unfounded and misleading.

Luckin Coffee announced before the US stock market on April 2 that the company's internal investigation showed that COO and some of its employees had engaged in some misconduct since the second quarter of 2019, and the sales related to counterfeit transactions were about 2.2 billion yuan, which meant that Lucky finally admitted the allegations in the investigation report, and Luckin Coffee was officially suspended from trading on the NASDAQ on June 29, 2020.

After two years of "reshuffle", "blood change" and "self-rescue", on January 27th, 2022, Dazhi Capital announced that its leading group of buyers had completed the acquisition of the shares of some shareholders of Luckin Coffee, which means that from the perspective of shareholding relationship, Lu Zhengyao's previous lucky former management has been completely out.

On February 4, 2022, Luckin Coffee filed with the Securities and Exchange Commission (SEC) that Luckin Coffee had met the conditions of a previous settlement agreement with SEC at a price of $187.5 million (a fine of 1.2 billion yuan) in exchange for SEC not holding Luckin Coffee accountable, which may put an end to Ruixing's financial fraud.

Some analysts believe that this settlement may be laying the groundwork for Luckin Coffee's re-listing. Prior to this, the media revealed that Luckin Coffee was studying the plan of re-listing in the United States, but it was later denied by Lucky.

When it was revealed that plans to list in Hong Kong were revealed, lucky officials also responded later: Luckin Coffee's management focused on implementing the company's business strategy and providing customers with excellent products and services. The company will remain committed to the US stock market and strive to improve long-term value for its shareholders. The company will continue to monitor the development of the capital market and assess ways to bring value to various stakeholders, but there are no plans to list in Hong Kong at present.

On April 11, 2022, Luckin Coffee announced that he had successfully completed the financial debt restructuring and was no longer subject to bankruptcy or insolvency proceedings in any jurisdiction. Guo Jinyi, chairman of Luckin Coffee and CEO, said: "with the support of creditors, Luckin Coffee ended the bankruptcy proceedings as a debtor, which today marks a new beginning for Luckin Coffee." According to the financial results for the fourth quarter and the whole year of 2021 released on Luckin Coffee's official website earlier, Luckin Coffee's revenue doubled in 2021, and his total net income reached 7.965 billion yuan in 2021, an increase of 97.5% over the same period last year.

Luckin Coffee also opened 1221 new stores in fiscal year 2021, an increase of 25.4% over the same period last year. By the end of the fourth quarter of 2021, Luckin Coffee had 6024 stores, surpassing the 5557 Starbucks China data to become the largest coffee chain brand in China.

From setting a record for the fastest listing of domestic companies, to plummeting through a financial fraud scandal, to the rapid completion of debt restructuring and temporary liquidation, and the re-submission of eye-catching operating transcripts, the once-endangered coffee brand has demonstrated its super viability to the capital markets. According to industry analysis at that time, Ruixing was even expected to return to NASDAQ and become a classic business case of "salted fish turning around" under heavy pressure.

In the view of investors, there is no problem for Rui Lucky to return to NASDAQ in theory, and the possibility of re-listing depends on whether he can win the trust of investors. Lucky to re-list from the pink market to change the board, if the company's documents approved by the United States Securities Regulatory Commission, that the protection of investors has been in place, in accordance with the regulations can be transferred to return.

However, during the period of Lucky's "turnaround" in the past two years, domestic coffee brands have rapidly completed multiple rounds of financing and expanded rapidly, and foreign coffee brands have also accelerated their entry into the Chinese market. Even if Lucky "turnaround", they will have to face fierce competition within the industry. At the same time, it is also more difficult for Luckin Coffee to list in the United States, because the Chinese regulatory authorities have new regulations, and for companies that have not yet been listed, there are so many matters and departments that need to be approved, so it will be more difficult to list in the United States.

Some food industry analysts believe that the Lucky brand as a whole has entered a benign development cycle. although the Lucky brand has been criticized for financial fraud, its operation performance is very good at present, so returning to the capital market is just around the corner. The company's cash flow will also gradually improve to achieve healthy and orderly development.

Photo source: online Ruixing official website

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