Luckin Coffee announced Friday that it has paid the $180 million civil penalty agreed to as part of a settlement plan it reached with the US Securities and Exchange Commission (SEC) in December. On February 3, the SEC acknowledged in a notice to the Southern District of New York that Luckin Coffee had satisfied the penalty provisions by making cash payments to the company’s security holders. The US court had ordered the China-based company to pay the civil penalty after it found that Luckin had defrauded investors by inflating its revenues by around $310 million in 2019. [Luckin press release]
The US Securities and Exchange Commission (SEC) added seventeen US-listed Chinese companies to its provisional delisting list, identified under the Holding Foreign Companies Accountable Act in the US. Some of China’s major tech-related firms are included, such as coffee chain Luckin, electric vehicle maker Li Auto, Q&A platform Zhihu, and online housing firm KE Holdings. The US regulator has given these companies 15 business days to submit evidence to oppose the commission’s charge, with a deadline of May 12.
For many Chinese tech watchers, the year 2021 can be divided into two distinct periods: before and after Didi’s cybersecurity review.
Luckin on Tuesday posted better-than-expected results for the first quarter of this year. The company’s revenue soared 89.5% year-on-year to RMB 2.4 billion ($379.3 million), easily beating the high-end $310.8 million estimate compiled by Yahoo Finance. The Xiamen-based company also announced a total of 6,580 stores as of the end of the reporting period, including 556 new store openings, which represents a 9% growth on a quarter-over-quarter basis. Net income was RMB 19.8 million for the period, compared to a net loss of RMB 232.5 million a year ago. While the company’s shares are still reeling from the negative impacts of the financial fraud scandal revealed in April 2020, the company is gearing up for a comeback in the Chinese market. However, new Covid-19 outbreaks, increasing competition, and its infamous fraud history may factor in this turnaround.
Chinese-style noodle chain restaurants first became tech investor darlings in 2021 when the industry faced tightened regulation.
Manner Coffee, a Chinese Starbucks rival, announced Sunday that it was partnering with lifestyle services giant Meituan for food and drink delivery. The tie-up will provide users with online delivery services for Manner, a popular coffee brand which was previously only available through in-store pick-up. The service has already launched in cities including Shanghai and Suzhou. Manner’s move into delivery services comes amid a recent coronavirus outbreak in China, which forced the company to suspend in-store services in Shanghai and Shenzhen, on the same day last week. More than 90% of Manner’s stores are located in these two cities. In early March, the Shanghai-based coffee chain said it had plans to open more than 200 new stores, bringing its total store count to nearly 600 in the country. Meituan already supports delivery services for a group of coffee chain brands including Starbucks, Luckin, and Tim Hortons. [Manner press release]