Image source@VisualChina
Text丨Zinc Scale, author丨Chen Dengxin, editor丨Gao Zhi
Ruixing Coffee seems to be interested in Nasdaq Still obsessed. A few days ago, the Financial Times reported that Luckin Coffee held a meeting with investors and consultants and is considering relisting on Nasdaq, possibly as early as the end of 2022. Boosted by the above news, Luckin Coffee surged 16.16% in the pink list market. Immediately, Ruixing Coffee clarified: "Regarding the news that Ruixing Coffee is considering returning to the Nasdaq listing, the report is untrue." After that, Ruixing Coffee plummeted 6.17%.
However, Luckin Coffee may not have this intention.
"LatePost" reported on December 11, 2021 that the current Ruixing management has exceeded the performance bet with the capital, and the agreed return is a certain proportion of equity to prepare for delisting and relisting next year. Prepare. So, if Luckin Coffee returns to Nasdaq, does it meet the standards for re-listing? What is so difficult about this process? Does Luckin Coffee have this urgent need?
Still losing money, but meeting the basic requirements for board transfer
No one would have thought that Luckin Coffee would be unique among Chinese concept stocks. According to public data, the popular Chinese concept stock index fell by more than 50% in 2021. Chinese concept stocks are also nicknamed "final beggar stocks" by investors, fearing to avoid them.
After being delisted, Luckin Coffee is becoming more alive and nourishing.
After retreating to the pink sheet market on June 29, 2020, Luckin Coffee opened at US$0.98. After that, it did not recover. Instead, it showed a fluctuating upward trend. In 2021, it hit a high price of US$17.79. The calculated increase is as high as 17.15 times. No one would have thought that Luckin Coffee would stand out among the Chinese concept stocks. According to public data, the popular Chinese concept stock index fell by more than 50% in 2021. Chinese concept stocks are also nicknamed "final beggar stocks" by investors, fearing to avoid them. But after delisting, Luckin Coffee is becoming more and more vibrant. After retreating to the pink sheet market on June 29, 2020, Luckin Coffee opened at US$0.98. After that, it did not recover. Instead, it showed a fluctuating upward trend, hitting a high price of US$17.79 in 2021. Based on this calculation, the increase was as high as 17.15 times.
Luckin Coffee stock price chart The so-called Pink Sheets market is the lowest level of the U.S. capital market and mainly serves delisted companies, small and micro enterprises, and stock depositary receipts of overseas companies. For a time, it became a hot item in the pink sheet market. Against this background, the outside world is not surprised that Luckin Coffee has been rumored to return to Nasdaq from time to time. Peng Shaoxin, a staff member of an international investment bank, told Zinc Scale: "PinkSheet, there is no requirement for regular disclosure of financial reports, and Luckin almost never pulls down after the thunderstorm. This action itself is meaningful." In fact, applying for promotion from the Pink Sheets market Starkey needs to meet the following conditions:
·Net assets reach US$5 million, or annual after-tax profits exceed US$750,000, or market value reaches US$50 million;·Trading shares reach 1 million shares;· The lowest stock price within 90 trading days is US$4; · More than 300 shareholders; · There are more than 3 market makers.
As of January 21, 2022, the closing price of Luckin Coffee was US$10.79, with a market capitalization of US$3.118 billion, and a total number of outstanding shares of 289 million; the lowest stock price in the past 90 trading days was US$8.4; transactions on the day There are 4.5389 million shares, with a turnover rate of 1.57%, while the number of shares per lot in the Pink Sheets market is 1. In addition, Luckin Coffee's net revenue in the third quarter of 2021 was 2.3502 billion yuan, a year-on-year increase of 105.6%; the net loss was 23.5 million yuan, a 98.6% narrowing from the same period last year; the net revenue in the first three quarters of 2021 was 5.533 billion yuan , exceeding the 4.033 billion yuan for the whole of 2020. The reason for the loss is closely related to office relocation, dealing with financial scandal litigation and restructuring, which means that it is not far from profitability. In a word, Luckin Coffee meets the basic requirements for transfer.
The stain of counterfeiting cannot be washed away. Is "leaving the single" wishful thinking?
Despite this, the market still has mixed opinions on whether Luckin Coffee can achieve its goals.
One voice believes that fundamentals continue to improve and there are clear solutions to problems left over from history.
As of September 30, 2021, the number of Luckin Coffee stores nationwide was 5,671, including 4,206 self-operated stores and 1,465 franchise stores, a year-on-year increase of 6.4% and 66.7% respectively. Take the path of expansion. This means that Ruixing Coffee has passed its darkest moment: in the first quarter of 2020, Ruixing Coffee’s revenue was only 565 million yuan, which increased by 8.49 times in six quarters. More importantly, China was fined 61 million yuan and the United States was fined 180 million U.S. dollars, and a settlement letter of intent of 187.5 million U.S. dollars was signed with the plaintiff's representative in the U.S. class action lawsuit.
Another voice believes that theory is not equal to reality.
At the beginning, Luckin Coffee received two delisting notices, one involving financial fraud, and the other reason being that it could not prepare its 2019 financial report. If it did not delist in the name of fraud, it would return to Nasdaq. Dak is not impossible. Unfortunately, this is the reason given by the SEC for delisting.
Lawyer Zhou Yujie, a partner at Chongqing Jingyou Law Firm, told Zinc Scale: “Ruixing Coffee violated Articles 5101 and 5250 of the Nasdaq Listing Rules, involving false trading practices and failure to publicly disclose valid information. Currently, Many countries around the world have regulations prohibiting listed companies that have committed major violations from seeking listing after delisting. China's "Implementation Measures for Mandatory Delisting of Listed Companies with Major Violations" stipulates, 'For fraudulent issuing companies that break the law at the entrance to the market, the illegal behavior is more vicious. The company has received a strong response and will no longer be given the opportunity to re-list. "Vesting, a venture capitalist, also deeply agrees: "
The biggest obstacle to Ruixing Coffee's re-listing is psychological. It will create a negative demonstration effect in the market and reduce the deterrent effect against financial fraud. "Vesting, a venture capitalist, further said that the OTC market in the United States is divided into two major markets: OTC and OTCBB. It is further divided into OTCQX, OTCQB, and OTCPink. Since 2018, there have been successful transfer cases in the three market segments except OTCPink. For example, SWK Holdings transferred from the OTCBB market to Nasdaq, California Bancorp transferred from the OTCQX to the Nasdaq, and Metalla transferred from the OTCQB market to the New York Stock Exchange. "In the past three or four years, there have been nearly 10,000 companies in the Pink Sheets market, and there are no One company successfully transferred its business," Vesting said. It should be noted that there are many well-known companies in the Pink Sheets market. Adidas, Nestlé, Adidas, Volkswagen, etc. have left their footprints in the Pink Sheets market, and the one currently available for trading is undoubtedly Tencent Holdings. From this perspective, it is quite difficult for Luckin Coffee to “get out of the singles”.
Tencent is also trading in the Pink Sheets market
Rivals are around, and Guangjiliang is imminent
In the Pink Sheets market, Tencent Holdings can handle it calmly, but Rui Lucky coffee may not be able to endure it. Chen Tingtao, a manager of a private equity investment department, told Zinc Scale: “The financing function of the Pink Sheet market is weak, and it is difficult for Ruixing Coffee to draw on it, but Tencent Holdings does not matter. The main body is on the Hong Kong Stock Exchange, and the United States is just an extra simple one. Transaction channels.”
In fact, Luckin Coffee is facing severe challenges and urgently needs to prepare for the war.
In the past two years, domestic coffee brands have continued to emerge. Among them, Mixue Bingcheng has been aggressive and created the Lucky Coffee brand to challenge Luckin Coffee. According to information from Aiqicha, Lucky Cafe was established in September 2019 with a registered capital of 100 million yuan and is 100% invested and held by Mixue Bingcheng.
Starbucks invested 1.1 billion yuan for the first time in November 2020 to build Asia's largest factory in China, with obvious intentions to increase investment; Tim Hortons, a Canadian national coffee brand invested by Tencent, also accelerated the pace of opening stores in China; McDonald's announced that its Brand McCafé predicts that there will be more than 4,000 McCafé stores across the country by 2023
Compared with foreign brands, cross-border competitors are more worthy of attention. For example, Heytea entered the coffee track and launched sea salt, Americano and other coffee products. In addition, it also participated in the A+ round of financing of the coffee brand Seesaw. The latter has appeared in live broadcast rooms such as Li Jiaqi's and has also frequently interacted with Xiaohongshuda. People cooperate. For another example, as early as 2020, Cha Yan Yuese opened the first offline joint concept store with Sandun and a Half in Changsha to test the coffee market segment. In short, Luckin Coffee is under siege. In fact, this is indeed the case. Luckin Coffee took the lead in launching raw coconut latte in April 2021. After the fire, Heytea launched raw coconut latte, raw coconut jelly latte, etc., and Nayuki’s tea also It has launched raw coconut latte, thick milk latte, etc., which has a strong sense of benchmarking. According to IT Orange data, there were 15 financing incidents related to coffee fields in the first half of 2021, and startup companies raised more than 6 billion yuan.
Faced with such severe competition, there is a big question mark as to whether Luckin Coffee can maintain its fundamentals.
In short, Luckin Coffee, which survived the catastrophe, now has to compete with Mixue Bingcheng for the right to speak in the sinking market, and on the other hand, it has to deal with foreign brands and cross-border rivals. If it has the capital The help of the market can alleviate the worries of fighting a protracted war. Therefore, Luckin Coffee will inevitably miss Nasdaq.