LUCKIN COFFEE INC.

Section 1: Company Fundamentals

1.1 Company Overview and Performance summary

Company Overview:

LUCKIN COFFEE INC. (OTC: LKNCY) is a China-based holding company mainly engaged in coffee retail business. The Company applies new retail models for coffee sales and services. The Company operates primarily through mobile apps and pick-up stores. The Company's products mainly include freshly brewed drinks, juices and light meals. The Company's main brand is Luckin Coffee.

This US Inflation Report covers the Company Overview & Price performance, Summary table, Key positives & negatives, Key metrics, Company details, technical guidance & Stock recommendation, and Price chart.

1.2 Summary Table

1.3 The Key Positives & Negatives

1.4 Key Metrics

Luckin Coffee Inc. (OTC: LKNCY) exhibited substantial financial progress in Q1 2025 compared to Q1 2024, underpinned by significant improvements across key performance metrics, as reported on April 29, 2025. The gross profit margin expanded markedly from 19.77% to 29.62%, driven by a 41.2% year-over-year revenue increase to RMB 8,865.4 million (USD 1,220.7 million) and optimized product mix, contributing to a gross profit of RMB 3,538.06 million in 2024. The EBITDA margin surged from 2.26% to 12.21%, and the operating margin shifted from a negative 1.87% to a positive 8.40%, reflecting enhanced operational efficiency and a store-level operating profit margin of 17.1% for self-operated stores, bolstered by a 244.8% increase in store-level operating profit to RMB 1,106.3 million. The income before tax margin improved to 8.74% from negative 0.81%, and the net margin rose to 5.92% from negative 1.32%, supported by a net income of RMB 525.1 million compared to a net loss of RMB 83.2 million in Q1 2024. Additionally, the trailing twelve-month (TTM) return on average common equity increased from 31.74% to 34.75%, and the TTM return on average total assets rose from 14.72% to 16.97%, indicating stronger capital efficiency.

The company’s four-year revenue CAGR of 70.98%, reaching RMB 34,474.81 million in 2024, underscores its robust growth trajectory, though investors should remain cautious of rising operating expenses (up 28.1% to RMB 8,128.2 million) and historical governance concerns from 2020 financial restatements that could pose risks to sustained profitability.

Section 2: LUCKIN Coffee Inc (OTC: LKNCY) (“Buy” at the closing market price USD37.41, as of July 23, 2025)

2.1 Company Details

2.2 Technical Guidance and Stock Recommendation  

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is July 23, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stocks prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.