On Sept. 4, Chinese coffee chain$Luckin Coffee Inc.(LKNCY)$ and luxury liquor $Kweichow Moutai Co.,Ltd.(600519)$ partnered up for a Moutai-flavored latte. The collaboration proved an instant sensation in China. Luckin Coffee said on Tuesday that more than 5.42 million cups of the Kweichow Moutai-flavored latte were sold on the first day of the launch, setting a new sales record for the Chinese coffee chain. Luckin said sales of the single-origin product exceeded 100 million yuan ($13.72 million) on Monday. The 38-yuan ($5.23) "sauce-flavored latte", which Luckin discounted to 19 yuan on the first day of sales, took Chinese social media by storm and the drink sold out many shops in Beijing and Shanghai within hours. . Image: Luckin Coffee Moutai, known as the national liquor of China, is a potent, colorless spirit that is usually served at banquets in China. Drinkers say the flavor and aroma of $Kweichow Moutai Co.,Ltd.(600519)$ 's version are similar to soy sauce. The companies said the latte's alcohol content was lower than 0.5 percent of its volume. 1. $Luckin Coffee Inc.(LKNCY)$ has increased more than 30 times since traded on the Pink Sheets market. Speaking of $Luckin Coffee Inc.(LKNCY)$ , what the market still remembers well is the“ Luckin Coffee Accounting Fraud" that shocked the market in the spring of 2020. On April 2, 2020, Luckin Coffee issued a notice admitting RMB 2.2 billion of false transactions. As a result, the share price plummeted 80% and trading was suspended several times during the session. As a result, $Lucky Cement Ltd.(LUCKY)$ was delisted from the main US stock exchange and traded on the Pink Sheets market. When it was transferred to the Pink Sheet in June 2020, the opening price was only US$0.98. At press time, $Luckin Coffee Inc.(LKNCY)$ was trading at $31.98, up more than 30 times in more than three years. 2. What "positive action" has Luckin Coffee taken in the pink sheet market over the past 3 years to improve its stock price? Over the past 3 years, $Luckin Coffee Inc.(LKNCY)$ has experienced a series of "bottom washings". Lu Zhengyao's team has completely withdrawn from the management team, and the early financial investor Centurium Capital has become the actual controller of the company. The company reissued its 2020 annual report in mid-2021. Although listed on the Pink Sheets market, the company's subsequent financial disclosures still comply with the Main Board's disclosure requirements, which appears to pave the way for its future return to the Main Board. $Luckin Coffee Inc.(LKNCY)$, which has been quietly growing on the Pink Sheet market, is the best-performing Chinese stock in the past three years. In 2022, when China’s concept stocks are at their lowest, $Luckin Coffee Inc.(LKNCY)$’s growth rate is as high as 133%, and it is also up 45% so far in 2023. 3. Are you optimistic about the future stock price of $Luckin Coffee Inc.(LKNCY)$? At press time, $Luckin Coffee Inc.(LKNCY)$ had nearly 10,000 offline stores.. Now, $Luckin Coffee Inc.(LKNCY)$ has teamed up with a famous Chinese liquor company to launch new marketing. Let’s take a look at the operational and financial data first: Take a look at the data in the latest financial report for Q2 2023: On August 1, $LKNCY announced that the total net profit for Q2 2023 was 6.2014 billion yuan (yoy+88.0%). The second quarter operating profit under US GAAP was 1.1728 billion yuan and the operating profit margin was 18.9% (a record high). Then the full-year data for 2022: 1) revenue of 13.293 billion yuan (yoy+66.9%), self-operated store revenue of 9.415 billion yuan (yoy+52%), and joint store revenue of 3.069 billion yuan (yoy+135%). 2) GAAP operating profit was 1.156 billion yuan, corresponding to a profit margin of 8.7%; non-GAAP operating profit was 1.554 billion yuan, corresponding to a profit margin of 11.7%. Then, let’s look at the valuation comparison: $Starbucks(SBUX)$ 's EV/EBITDA is expected to be 19.8 times at the end of 2023 and 16.7 times in 2024. $Luckin Coffee Inc.(LKNCY)$ 's EV/EBITDA in the past 12 months is exactly 19.8 times. However, considering that its current revenue and profit growth rate far exceeds that of Starbucks, Luckin Coffee's valuation increase should at least be the value of its EBITDA growth rate relative to Starbucks' EBITDA growth rate. If we look at the EV/EBITDA of about 18 times in 2024, according to Luckin Coffee’s current income level, if the growth rate in 2024 is only 20%, based on the EBITDA profit margin of about 18%, its price per share can reach at $47, there is still 42% room for growth. Finally, from the perspective of target price expectations: The 3 analysts on CNN.BUSINESS offering 12-month price forecasts for $Luckin Coffee Inc.(LKNCY)$ have a median target of $42.37, with a high estimate of $44.13 and a low estimate of $32.01. The median estimate represents a +32.49% increase from the last price of $31.98. Perhaps there has been much discussion over the past two years about the competition between $Luckin Coffee Inc.(LKNCY)$ and $Starbucks(SBUX)$ , but now it doesn't seem to be an issue. Compared to Starbucks, Luckin Coffee has cheaper prices, more varieties, and richer taste. Although Luckin Coffee still faces competition, the company seems to have gone through a round of rebirth, completed its transformation from a dilemma turnaround to a consumer growth stock, and should become a consumer value stock in the future. What do you think? Are you optimistic about $Luckin Coffee Inc.(LKNCY)$? Do you have any other interesting pink market stocks on your watch list?