Broker Name: China Galaxy International Securities (CGSI)
Date of Report: March 2, 2026
Excerpt from China Galaxy International Securities (CGSI) report.
Report Summary
- Luckin Coffee’s 4Q25 sales grew 33% year-on-year but missed expectations due to lower same-store sales, attributed to seasonality and reduced subsidies.
- Despite the sales miss, domestic and overseas store expansion remains on track, with 31,048 stores at FY25 and a target of 42,148 stores by 2028.
- Management expects continued volatility in same-store sales growth (SSSG) and profitability in 2026, forecasting a mid-single-digit decline in SSSG due to sales volume pressure.
- Luckin is responding with non-coffee offerings, premium single-origin beans, and co-branding initiatives to offset operational pressure.
- Financial forecasts for 2026-2028 were slightly lowered (sales by 2%, gross profit margin by 0.6 percentage points, and net profit by 4-5%) to reflect higher taxes and sales volatility.
- The company maintains a positive long-term outlook, retaining an “Add” rating and a target price of US\$52, seeing Luckin as a key beneficiary of rising coffee penetration and market concentration in China.
- Downside risks include intensified competition and potential consumption downgrades, while upside catalysts include accelerated market concentration, M&A, and successful overseas expansion.
- Financial highlights: FY25 revenue reached Rmb49bn (+43% YoY), net profit Rmb3.6bn (+32% YoY), and operating EBITDA margin is expected to improve gradually from 13.5% in FY25 to 16.1% by FY28.
Above is an excerpt from a report by China Galaxy International Securities (CGSI). Clients of China Galaxy International Securities can be the first to access the full report from the China Galaxy International Securities website : https://www.chinastock.com.hk
