IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

14 years of experience in global investment research and trading. In relation to research, we focus on IPO, Event-driven and large-cap non-consensual ideas. In relation to trading, we focus on generating positive index-adjusted returns and have had several top-decile or top-quartile performances over the past three years. In terms of background, I have worked at several sell-side firms (JP, Redburn, Haitong, Mainfirst), won Starmine as top stock picker in European Food Retail in 2015 and have been voted top one to top-five by institutions and hedge funds.

IPO and L/S equity, 2015 Starmine top stock picker

Last Week in GER Research: Wuxi Biologics Placement, Budweiser APAC IPO, Slack and CIMC Direct

Slack (WORK): The Next-Gen Enterprise Aggregation Platform

Luckin Coffee (瑞幸咖啡) IPO Trading Strategies

Luckin Coffee: Top Line Growth May Not Be Enough to Generate Positive Operating Margins

Luckin Coffee IPO: Wake up and Smell the Coffee

Invitation to Luckin Coffee IPO Webinar 15th May 2019 3pm UK Time

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

With sentiment on Luckin turning sour and what looks to be upsized pricing, we assess the bull-case. <div class="content-highlight">GER view: We have struggled to make a decision on Luckin Coffee. There are clear bear points (slowing QoQ growth, cash burn, likely need for further funding and lack of accounting personnel) however at the same time we believe the strategy that Luckin is deploying is correct in a market that is extremely compelling from a growth perspective. We are not averse to cash burn growth stories and investors have shrugged this off on other names if they feel the strategy is working or will eventually lead to a favourable outcome. Moreover, Luckin could genuinely have a chance to disrupt on price whilst Starbucks (Howard Shultz has also recently retired), Tim Hortons and KFC Coffee are taking more measured decisions that are shareholder friendly. If Luckin causes enough havoc, we think it becomes a buyout candidate akin to Flipkart. Our Bull case implies 100% upside and assumes a 50% chance of failure. We think if the price return to below 15 (we expect plenty of volatility), we would look to own some of the shares.</div>

With sentiment on Luckin turning sour and what looks to be upsized pricing, we assess the bull-case. GER view: We have struggled to make a decision on Luckin Coffee. There are clear bear points (slowing QoQ growth, cash burn, likely need for further funding and lack of accounting personnel) however at the same time we believe the strategy that Luckin is deploying is correct in a market that is extremely compelling from a growth perspective. We are not averse to cash burn growth stories and investors have shrugged this off on other names if they feel the strategy is working or will eventually lead to a favourable outcome. Moreover, Luckin could genuinely have a chance to disrupt on price whilst Starbucks (Howard Shultz has also recently retired), Tim Hortons and KFC Coffee are taking more measured decisions that are shareholder friendly. If Luckin causes enough havoc, we think it becomes a buyout candidate akin to Flipkart. Our Bull case implies 100% upside and assumes a 50% chance of failure. We think if the price return to below 15 (we expect plenty of volatility), we would look to own some of the shares.

Luckin Coffee IPO Valuation: What if It Works? Is There 100% Upside?