Chinese coffee shop company Luckin is expected to file for a relisting on the stock exchange as soon as Q4 for this year, in what could be the most incredible turnaround story for any coffee business,
The company has yet to complete its bankruptcy process in the US after it was forced to pay $180m to settle a lawsuit after admitting massive $300m fraud.
Sources have come forward that say once the bankruptcy is complete, the company is planning to relist on the US exchange, suggesting that the companies improved profits and impressive growth of 106% over the last year will make it an attractive proposition for retail investors hungry for a turnaround story.
The company’s earlier misfortune was meant to have been a green light to Starbucks in the country, who planned to pick up the market share lost by Luckin during the scandal. Yet the new management at Luckin has outmanoeuvred Starbucks in the local market.
Luckin has 500 more stores than Starbucks and is making products that the Chinese market prefers, retaining their patronage despite a country-management re-shuffle at the Seattle giant.
There is a plan to remove some of the obstacles to the company’s relisting, including the sale of the remaining shares, about 17%, owned by Charles Lu, the previous CEO of Luckin, who was highlighted in the fraud.
The company has continued to pay down their fine to the US market regulator and still trades its shares in the ‘Over the Counter’ (OTC) market. They make financial reports on time and have changed auditors.
While comments from US investors have been overwhelmingly negative upon hearing the news, a good financial story will likely be too attractive for all investors to ignore.
But as one observer wrote – ‘Fool me once, Luckin, shame on you, fool me twice…’
