How Luckin Coffee Spilt the Beans Independent Research Has a Bitter Brew for ’s Rival Research Reinvented

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Cover image by Stellasun666, shared under CC BY-SA 4.0 2 Table of Contents

1. Luckin Coffee (瑞幸咖啡) App Walk-Through and Channel Checks ...... 4

2. Luckin Coffee IPO: Wake up and Smell the Coffee ...... 17

3. Luckin Coffee (瑞幸咖啡) Vs. Starbucks (星巴克) - Still Has a Long Way to Go ...... 26

4. Spilling the Coffee: Rapid Expansion Without Much Due Diligence Could End in Disaster...... 31

5. Luckin Coffee (瑞幸咖啡) - Base Case Valuation - Cheap Coffee Expensive Company ...... 46

6. Luckin Coffee (瑞幸咖啡) - Blue-Sky/Bear-Case Valuation...... 54

7. Luckin Coffee (瑞幸咖啡) IPO Review - Marketed Valuation Is Closer to Our Blue-Sky Scenario ...... 60

8. Luckin Coffee IPO: Best Latte Scenario Priced In Unless You See Data Coffee ...... 66

9. Luckin Coffee (瑞幸咖啡) - The Art of Burning Cash for Market Share ...... 73

10. Luckin Coffee: Top Line Growth May Not Be Enough to Generate Positive Operating Margins ...... 79

11. Luckin Coffee (瑞幸咖啡) IPO Trading Strategies ...... 91

12. Luckin Coffee's Upsized IPO: Why Investors Trod Where Analysts Feared? ...... 96

13. Luckin Coffee: A Quick Path to Profitability Possible but Unrealistic – Quantamental...... 101

14. Luckin Coffee (瑞幸咖啡) Lock-Up Expiry - Short Closer to Q3 as Pre-IPO Investors May Look to Sell ...... 108

15. Luckin Coffee 3Q19 Quantamental Analysis: Price Hike Unjustified as Marginal Cost Improvements Fade ...... 115

16. Luckin Coffee’s Unit Cost Dynamics ...... 121

17. Luckin Coffee: Recent Spike in Arabica Coffee Prices to Affect Margin Improvement...... 129

3 Luckin Coffee (瑞幸咖啡) App Walk-Through and Channel Checks

Luckin Coffee | Equity Capital Markets Luckin Coffee (瑞幸咖 啡) App Walk-Through and Channel Checks Zhen Zhou, Toh By Zhen Zhou, Toh | 24 Apr 2019

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