KeyBanc's Numbers To Watch In Luckin Coffee's Q2 Report

Chinese coffee chain Luckin Coffee Inc LK is expected to report "strong" metrics in its first-ever earnings release Aug. 14, according to KeyBanc Capital Markets.

The Analyst

Eric Gonzalez maintained an Overweight rating on Luckin Coffee with an unchanged $22 price target.

The Thesis

Heading into Luckin's earnings report, Gonzalez said in a Friday note that he is modeling for the following metrics. (See his track record here.)

The addition of 5.4 million new customers.
A retention rate close to 30%
A gross average selling price (before taxes, excluding free offers) of close to 11 yuan ($1.56).
Total sales of 85 million items across approximately 2,900 stores, or 358 average units sold per day.
Total revenue of around 850 million yuan (consensus 854 million yuan).
Restaurant-level losses of around 850 million yuan (consensus 110 million yuan).
An operating loss of around 746 million yuan (consensus 703 million yuan).

Mobile App Data

Data from QuestMobile can be used to gauge Luckin's mobile app usage given a correlation of more than 90%, the analyst said.

Extracting the data suggests the app's monthly active users rose around 34% from last year and 49% from the end of 2018.

Active users as a percentage of total transacting customers averaged around 80% from January 2018 to March 2019 and, if it held steady, the data suggests the company ended the second quarter with 6.5-7 million active users.

Finally, July monthly active users were 33% higher versus the second-quarter average, which implies continued "strong" trends in the third quarter, according to KeyBanc Capital Markets.

Price Action

Shares of Luckin Coffee were down 0.17% at $27.06 at the time of publication Monday.

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