Luckin Coffee: New Releases, Rapid Store Openings, Buyer Surge (Summary)

The following is the summary of Luckin Coffee's telephone meeting. Please move forward in the interpretation of the financial report "Lucky's" Ten Thousand Stores "Rush, Boss's Momentive Power" * * Management's mature core information: * * 1. The number of trading users broke 50 million in June, with a cumulative number of trading users 0.17 billion; 2. Celebrating the milestone of 10,000 stores, launched a weekly 9.9 yuan coffee promotion. In the first week of the offer, we sold over 39 million cups. The effect is better and will be extended for at least two years. 3. The number of stores in Singapore reached 7. After opening the first two stores in the first quarter, five new stores were added in the second quarter. In China, self-operated stores cover 70 cities and cooperative stores cover 265 cities. 3. 24 drinks were introduced in the second quarter, including ice mint coconut latte, bayberry Exfreezo, ice American series and Chinese tea coffee products. During the May Day holiday, product sales reached a record 23.07 million cups, doubling from the same period last year. Key 2. explanations: * * 1) A major contribution to the increase in sales volume is the increase in the number of cups sold * *: a) Innovation and expansion of product range; B) continuous expansion of stores; C) increase in the number of monthly trading customers * * 2) increase in sales and marketing expense ratio to 4.9 in this quarter from 3.9 in the second quarter of last year: **a) strategic investment in brand building and brand marketing, to increase visibility through various channels, such as cooperation with the China National Women's Basketball Team; B) an increase in commissions we pay to third-party distribution platforms due to an increase in distribution orders; and c) an increase in subcontracting service fees to support e-commerce business and promotional activities. * * 3) G & A expenses increased by 24.6 per cent year-on-year, with the expense rate falling from 10.4 per cent in the second quarter of last year to 6.9 per cent in the second quarter of this year: a) mainly due to increases in wage costs and office supplies, surcharge and stamp duty, and continued R & D investment; B) reduced compensation to shares; c) economies of scale, the proportion of G & A expenses to income * * 4) the progress of opening stores in 2023 and the judgment of future market development space: a) the progress of opening stores: at the end of may, we started a new cooperation mode of joining stores, encouraging more high-quality partners interested in expanding the coffee industry to join us and share the gross dividend of China's growing coffee market. This model has been well received by the market, the store expansion effect is remarkable. Stores are important hubs for connecting customers. But investments outside the store are just as important. While accelerating store expansion, we focus on and continue to increase investment in branding, supply chain management, and digital research and development to ensure efficient, stable and sustainable operations. B) The coffee market in China is still growing rapidly. We believe that there is still great potential and we still have a lot of room for expansion. In the future, we will continue to accelerate the expansion of self-operated stores and cooperative stores to provide more customers with high-quality and convenient services. At the same time, we have further optimized the store layout through business model innovation. Risk Disclosure and Statement of this article: Dolphin Investment Research Disclaimer and General Disclosure