Luckin Coffee Inc. (LKNCY)
ValueMarkers Composite Index
98% below intrinsic value ($298)
Luckin Coffee Inc. (LKNCY) — VMCI valuation read
Headline read on LKNCY: VMCI of 66/100 versus a Consumer Cyclical sector median of 50. The 16-point above-median position is what makes Luckin Coffee Inc. a relative-value candidate in the mid-cap cohort, before any pillar-level review.
Form 4 filings on LKNCY: zero in the trailing 30 days. The absence of insider transactions is itself a data point, just a low-information one. The thesis runs on financials and price action until that changes.
**Investor frame.** Three reads on LKNCY: value (LKNCY trades at 27.0x earnings, 50% above the Consumer Cyclical median of 18.0x), quality (ROIC of 11.0% sits 1.0pp above the Consumer Cyclical median (10.0%)), and risk (net debt to EBITDA of 0.6x leaves covenant headroom). The value read also implies an EV/EBITDA gap of +4.0x against the Consumer Cyclical 12.0x baseline.
LKNCY rose 1.8% over the trailing 7 days, with a -16.4% read on a 30-day basis.
Luckin Coffee Inc. engages in the retail services of freshly brewed coffee and non-coffee drinks in the People's Republic of China. It also offers hot and iced freshly brewed coffee, such as Americano, Latte, Cappuccino, Macchiato, Flat White, and Mocha, as well as specialty coffee based on market and seasonal trends; coconut milk latte products; tea drinks; pre-made beverages; and pre-made food items, such as pastries, sandwiches, and snacks. In addition, the company offers cups, tote bags, and other merchandises. It operates pick-up stores, relax stores, and delivery kitchens under the Luckin brand, as well as Luckin mobile app, Weixin mini-program, and other third-party platforms for third-party payment channels. Further, the company provides technical and consultation services; and manufactures materials for products. As of December 31, 2021, it operated 4,397 self-operated stores; 1,627 partnership stores; and 1,102 Luckin Coffee EXPRESS machines. Luckin Coffee Inc. was incorporated in 2017 and is headquartered in Xiamen, the People's Republic of China.
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