China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Luckin's Small Step into Non-Coffee Drinks Is a Big Step of Its Future Directions

[Luckin Coffee (LKNCY US, SELL, TP US$16.5) TP Change]: Milkteaization Diminishes Differentiation

O2O Playing a More Prominent Role in China Street Drinks

[Luckin Coffee(LKNCY US, BUY, TP US$43) TP Change]: Weak Earnings in 4Q23 but Better Outlook in 2024

[Luckin Coffee (LKNCY US, BUY, TP US$41) TP Change]: Weak Earnings Could Be Temporary…Reiterate BUY

[Luckin Coffee (LKNCY US, BUY, TP US$37) TP Change]:Weak Sales in 1Q24 but Likely to Improve in 2Q24

Battle Lines Drawn As BABA Builds Out First/Last-Mile Capacity; But Who Will Fund 75+ Bn CNY CapEx?

Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

Equity Bottom-Up

<ul>
<li>Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.</li>
<li>We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion</li>
<li>We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.</li>
</ul>


Despite Cotti’s difficulties, we are seeing intensified competition with well-funded competitors like Starbucks and KFC, joining the price war, which poses challenges to Luckin’s effort at raising prices.
We see Luckin at losing its coffee differentiation. We revised down average store sales growth to (5%)/(10%)YoY due to weak sales caused by the narrowing scope of the RMB9.9 promotion
We downgrade the stock rating from BUY to SELL and lower TP to US$17/ADS.


[Luckin (LKNCY US, SELL, TP US$17) Rating Change]: Old Tricks Might Have Run Out of Its Use