Ruixing "brings The Dead Back To Life", Q1 Turns Losses Into Profits

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Ruixing coffee, turn losses into profits! On May 24, Ruixing coffee released its unaudited financial report for the first quarter of 2022 According to the financial report, the total net revenue of Ruixing coffee in the first quarter was 2.404.6 billion yuan, an increase of 89.5% compared with 1.268.7 billion yuan in the same period last year. The net profit was 19.8 million yuan, while the net loss in the first quarter of 2021 was 232.5 million yuan.

Author Wang Fei

Under non GAAP, the net profit was 99.1 million yuan, while the net loss in the first quarter of 2021 was 176 million yuan.

Under GAAP, Ruixing coffee's operating profit in the first quarter was 16.1 million yuan and its operating loss in the same period in 2021 was 364 million yuan. Under non US accounting standards, the operating profit of Ruixing coffee in the first quarter was 92.1 million yuan, and the operating loss in the same period in 2021 was 307.6 million yuan.

In other words, the quarterly operating profit of Ruixing coffee, which "came back from the dead", became positive for the first time, realizing the overall profit.

From self operated stores turning losses into profits to overall profits

On March 24 this year, Ruixing coffee released unaudited financial data for the fourth quarter and the whole year of 2021. The report shows that the total net income in 2021 was 7.965 billion yuan, an increase of 97.5% over 4.033 billion yuan in 2020. The total net income in the fourth quarter of 2021 was 2.432 billion yuan, an increase of 80.7% over 1.346 billion yuan in the same period in 2020.

It is worth mentioning that although Ruixing coffee has not yet achieved overall profitability at the operational level, its self operated stores have turned losses into profits for the first time. According to the financial report, the profit of Ruixing coffee's self operated stores reached 1.253 billion yuan in 2021, compared with a loss of 435 million yuan in the same period in 2020.

Both the strong growth momentum in the fourth quarter and the turnaround of self operated stores have laid a foundation for the overall profit of Ruixing coffee in the first quarter of this year.

For the positive profit of a single quarter, Guo Jinyi, chairman and CEO of Ruixing coffee, believes that it mainly comes from the success of store operation ability and new product strategy. "The first quarter was a relatively weak quarter for the sales of Ruixing coffee's self operated stores, but Ruixing coffee launched 34 new products in the first quarter, which supported the performance." Guo Jinyi said.

It is worth mentioning that Ruixing coffee's new coconut latte in April sold 4.95 million cups in the first week, far exceeding expectations.

At the product level, in the first quarter of 2022, the sales revenue of Ruixing coffee products was 1.855.3 billion yuan, compared with 1.106.8 billion yuan in the same period last year, a year-on-year increase of 67.6%. Among them, the revenue of newly brewed beverages was 1.652.6 billion yuan, accounting for 68.8% of the total net revenue in the first quarter of 2022, compared with 966.6 million yuan in the same period last year, accounting for 76.2% of the total revenue. The revenue from other products was 109.1 million yuan, accounting for 4.5% of the total revenue in the first quarter of 2022, and 81.2 million yuan in the same quarter of 2021, accounting for 6.4% of the net revenue.

In the first quarter of this year, Ruixing coffee purchased more than 3000 tons of high-quality raw coffee beans from Ethiopia, which has become a large buyer of Ethiopian "Huakui" in China; In April 2021, Ruixing coffee's first coffee baking plant was officially put into operation in Fujian, with a design capacity of 15000 tons; The second coffee baking plant of Ruixing coffee is also under site selection.

Guo Jinyi said that the layout of the upstream coffee bean industry chain is not only conducive to the stability of the quality of raw materials for a long time, but also improves the ability to control the procurement cost of raw materials and plays a role in reducing costs and increasing efficiency. Continuous cultivation of coffee supply chain will be the deepest moat and the highest competitive barrier of Ruixing coffee.

At the store level, Ruixing coffee added 556 new stores in the first quarter of 2022, with a month on month increase of 9.2% and a year-on-year increase of about 33%. As of the end of the first quarter, the number of Ruixing coffee stores was 6580, including 4675 self operated stores and 1905 affiliated stores. In the first quarter, the average monthly trading customers of Ruixing coffee increased to 16 million from 8.7 million in the same period last year, driving the same store sales of its direct stores to increase by 41.6%.

According to the financial report, in the first quarter of 2022, the revenue of Ruixing coffee's self operated stores was 1.717 billion yuan, a year-on-year increase of 66.2%, with a profit margin of 20.3% and 6.2% in the same period last year; The revenue of affiliated stores was 549.3 million yuan, up from 161.9 million yuan in the same period last year, a year-on-year increase of 239.3%.

Therefore, Guo Jinyi also said at the performance briefing that although the epidemic has been repeated since March, Ruixing coffee stores have strong anti risk ability thanks to the layout of direct + joint stores, and most of them are located in office buildings and universities.

The storm of performance fraud gradually subsided, and Ruixing "came back from the dead"

In April 2020, Ruixing fell into crisis due to financial fraud and faced many problems such as debt and litigation. In June of the same year, the trading was suspended and delisted for the record.

In 2021, Ruixing accelerated the procedures of debt repayment and temporary liquidation.

On December 1, 2021, Ruixing coffee announced that the restructuring plan of US $460 million convertible senior notes with an annual interest rate of 0.75% due in 2025 was voted by the creditors' meeting.

On January 27, 2022, Dazheng capital announced that the buyer group led by Dazheng capital had completed the acquisition of some shareholders' equity of Ruixing coffee. The transaction involved a total of 383 million class a ordinary shares held by some former management members of Ruixing coffee (Lu Zhengyao, Qian Zhiya and affiliated companies). After the debt default of the former management members, the court appointed a joint liquidator to dispose of the shares on behalf of the creditors.

Ruixing coffee announced on February 4 that it had fulfilled the $180 million civil penalty arising from the previous settlement agreement with the U.S. Securities and Exchange Commission. On February 3, 2022, the U.S. Securities and Exchange Commission submitted a notice to the court, acknowledging that Ruixing coffee had satisfied the penalty provisions of the court's final judgment by paying cash to the company's securities holders through the plan.

Ruixing coffee gradually pulled out of the storm of performance fraud.

On the evening of April 11, Ruixing coffee announced on its official website that the company had completed debt restructuring and officially ended the bankruptcy protection procedure as a debtor, and the company would no longer be bound by bankruptcy or bankruptcy proceedings in any jurisdiction.

Ruixing coffee said that it has fully solved the problems left over by history and returned to the normal state of the company.

The relevant information of the first quarter financial report shows that Ruixing coffee officially turned loss into profit after "coming back from the dead".

After the release of the financial report, Guo Jinyi said at the performance communication meeting that Ruixing coffee has completely completed the historical cutting by continuously strengthening the internal control and compliance system. "Except that the name of the company has not changed, Ruixing has been reborn into a new enterprise."

Guo Jinyi said that over the past two years, Ruixing coffee has achieved fundamental improvement in strategy, operation, governance mechanism, management structure and organizational culture, and has been transformed and upgraded into an enterprise under the modern governance structure and led by a team of professional managers. By continuously strengthening the internal control and compliance system, the historical cutting has been completely completed.

For the future development, Guo Jinyi said at the performance communication meeting that Ruixing coffee will continue to adhere to the store strategy of "direct marketing + joint venture". On the one hand, through the continuous encryption of the layout of Direct stores in the first, second and third tier cities, on the other hand, through the "joint venture partner mode", Ruixing coffee will quickly sink into a broader low-line market.

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