Starbucks, Luckin Coffee, and China Risk

Coffee is catching on in tea-drinking China. Is there a way for investors to cash in on this trend without undue risk? In North America, Starbucks (SBUX) reported $23.4 billion in sales for the 2022 fiscal year, a 14.3% improvement over the previous year. Comparable sales for international markets, like BRK.B WACC, declined 5% for the fourth quarter as transaction volumes fell 5% while average ticket was down 1%. Almost the entirety of the decrease was due to weakness in China due to Covid-19 restrictions and affected BRK.B DCF. China same-store sales were down 24%. Excluding China, the second-biggest market for Starbucks outside America, comparable sales for international markets were up 30%. Starbucks, with its high BRK.B Intrinsic Value, continues to expand aggressively throughout the world, with the company opening 763 net new stores during the quarter. The company had a new record of 35,711 stores at the end of the quarter. According to the best stock research websites, drive-through and mobile orders make up almost 75% of sales volume. Starbucks loyalty program grew 16% to nearly 29 million members in the U.S. and food sales showed strong sales growth, increasing 18%. Now let’s move to international and specifically, to China where Starbucks is being challenged by upstart Luckin Coffee. Covid lockdowns is an issue but for investors the question persists, will Starbuck’s play on China work out? According to data taken from the best investing websites, the growth of Starbuck stores in China is remarkable with its store count going steadily from 500 stores in 2011 to over 6,000 in 2022. Stores in the U.S. and China comprise a bit over 60% of the company’s global portfolio, with 15,878 stores in the U.S. and 6,021 stores in China China is a big bet for Starbucks especially given that China’s economic growth and relations with the U.S. have run into turbulence. On the positive side, China has become more of a coffee culture. In 2012, the average Chinese citizen consumed only 3 cups of coffee per year. By 2025 it is expected to grow to 13 cups per year. While this jump in growth seems impressive, consider that the average citizen of Japan consumes about 200 cups per year and their Americans drink 380 cups. Starbucks’ share price has recovered during the last six months and are getting a bit pricey on an earnings basis, but it appears that share repurchases, halted earlier in the year as Howard Schultz stepped in as interim CEO, will be reinstated next year. Meanwhile, a Chinese competitor Luckin Coffee (LKNCY), that went public on the Nasdaq Stock Market in May 2019, was not long ago left for dead after a financial reporting scandal caused its previously soaring shares to plummet. It was then delisted from Nasdaq in June 2020. The company was fined by Chinese regulators, reached a settlement with the U.S. Securities and Exchange Commission, went through bankruptcy proceedings, and only emerged in March of this year. Sean Ma, the head of Snow Lake Capital which has a stake in Luckin, and is bullish on the stock, released a slide presentation and 81-page report. Luckin shares were up sharply last year and therefore are trading at a high valuation. The company has resumed its expansion in China, opening more stores, and is selling a range of coffee-based beverages that target Chinese consumers’ tastes. Luckin’s strategy is to go after smaller Chinese cities as Starbucks, is more popular in larger cities. There were 7,195 Luckin stores in China through midyear though some are more like takeout kiosks. Starbucks is a much more conservative play on coffee trends in China, but Luckin has made an incredible comeback and has home court advantage. Both Starbucks and Luckin carry significant China risk but somehow trade at a premium. I would avoid buying either stock right now.

咖啡在有着饮茶传统的中国日渐流行。投资者能否在承担合理风险的前提下，从这一趋势中获利？在北美，星巴克（Starbucks，股票代码SBUX）2022财年销售额达234亿美元，较上年同比增长14.3%。国际市场（涉及伯克希尔哈撒韦B类股（BRK.B）与加权平均资本成本（Weighted Average Cost of Capital, WACC）相关市场）的第四季度同店销售额下滑5%，交易笔数下降5%，客单价下跌1%。此次下滑几乎全部源于中国市场的疲软——受新冠疫情防控政策影响，同时波及BRK.B相关的折现现金流（Discounted Cash Flow, DCF）模型测算。中国市场同店销售额下滑24%。若剔除中国（星巴克在美国之外的第二大市场），国际市场同店销售额同比增长30%。坐拥较高BRK.B内在价值（Intrinsic Value）的星巴克，仍在全球范围内积极扩张，本季度净新增门店763家。本季度末，星巴克全球门店总数达35711家，创下历史新高。据顶尖股票研究平台的数据，得来速订单与移动端订单合计占总销量的近75%。星巴克美国会员忠诚计划会员数同比增长16%，增至近2900万；食品销售额表现亮眼，同比增幅达18%。接下来我们将目光转向国际市场，尤其是中国——星巴克正面临新锐品牌瑞幸咖啡（Luckin Coffee）的挑战。新冠封控确实是一大难题，但投资者始终关心的核心问题是：星巴克在中国市场的布局能否成功？据顶尖投资平台的数据，星巴克在中国市场的门店扩张成绩斐然：门店数量从2011年的500家稳步增长至2022年的6000余家。美国与中国的门店合计占星巴克全球门店总数的60%以上：美国市场拥有15878家门店，中国市场拥有6021家门店。鉴于中国经济增长与中美双边关系均遭遇波折，中国市场对星巴克而言是一场豪赌。积极的一面是，中国正逐步形成咖啡消费文化：2012年，中国居民年均咖啡消费量仅为3杯；预计到2025年，这一数字将增至13杯。尽管这一增长幅度看似可观，但需注意：日本居民年均咖啡消费量约为200杯，美国居民则达380杯。过去六个月，星巴克股价已实现复苏，从盈利角度来看估值已偏高，但此前因霍华德·舒尔茨出任临时CEO而暂停的股票回购计划，预计将于明年恢复。与此同时，其中国竞争对手瑞幸咖啡（Luckin Coffee，股票代码LKNCY）曾于2019年5月在纳斯达克（Nasdaq）挂牌上市，后因财务造假丑闻导致股价暴跌，一度被市场认定已濒临破产。该公司于2020年6月从纳斯达克退市。瑞幸咖啡曾遭中国监管机构处罚，与美国证券交易委员会（U.S. Securities and Exchange Commission, SEC）达成和解，历经破产重组程序，最终于今年3月完成重整。雪湖资本（Snow Lake Capital）创始人兼首席执行官马自明（Sean Ma）持有瑞幸股份并看好该公司股票，其曾发布幻灯片演示文稿与一份81页的研究报告。瑞幸股价去年大幅上涨，当前估值处于较高水平。瑞幸已恢复在中国市场的扩张，持续新增门店，并推出多款适配中国消费者口味的咖啡饮品。瑞幸的扩张策略聚焦于中国下沉市场，而星巴克在一线城市更受欢迎。截至年中，瑞幸在中国市场的门店总数达7195家，其中部分门店仅为外卖取餐柜。星巴克在中国咖啡市场的布局更为稳健，但瑞幸实现了惊人的复苏，并坐拥本土市场优势。星巴克与瑞幸均面临显著的中国市场风险，但二者的股价却均享有溢价。笔者认为当前不宜买入两只股票中的任何一只。