It’s time to reassess Ruixing.

Ruixing is full of miracles. Back in those days, once founded, he stood in the middle of the Chinese coffee stage, creating one focus after another: discounts like “helicopter money”, blooming everywhere, dense stores, and unexpected accidents in the rapid listing. The tide rises and falls, and rises and falls several times.

Just two years after the counterfeiting incident, Ruixing announced on the evening of April 11 that Ruixing had successfully completed the debt restructuring according to Chapter 15 of TITLE 11 of the United States Code, and the company officially ended the bankruptcy protection proceedings as a debtor with the support of creditors.

On April 14, Ruixing coffee issued a statement on changing the accounting firm, announcing the appointment of Lixin certified public accountants as the company’s independent certified public accountants to replace zhongzhengda certified public accountants, the company’s former independent audit institution.

This means that Ruixing has comprehensively solved the problems left over by history and returned to normal.

It has to be said that this is a historic moment for Ruixing who has experienced purgatory in 2020.

Together with Ruixing’s brilliant financial results.

In the second half of 2021, due to the epidemic and other factors, the whole current beverage industry entered a downward period, and the tide of bankruptcy and layoffs was prevalent. High end head tea like tea layoffs and price cuts. Naixue’s tea (01250. HK) lost a lot of money and its share price collapsed. Online black tea Yan Yuese closed hundreds of stores. The whole industry seems to have lost its aura in the past.

Even so, in 2021, Ruixing still achieved a total revenue of 7.965 billion, a year-on-year increase of 97.5%, nearly doubling the growth rate. In the fourth quarter, the net income was 2.432.7 billion, a year-on-year increase of 80.7%. It even broke the previous curse of “once you burn money, burn money forever” and “Chinese coffee shops can’t make money except Starbucks”.

From the place of despair to reflexive upward, Ruixing realizes Nirvana on the order of magnitude.

01 Nirvana quadratic

After a major setback, Ruixing not only didn’t fall down, but crossed the better.

In the global market, coffee is a mature industry, but the Chinese market is still a “fat meat”. How about Ruixing’s performance background? We might as well make a comparison with Starbucks, its “great rival”.

On March 16, Starbucks announced that its soul legend, 70 year old Howard Schultz, came out again and became the CEO of Starbucks for the third time. Schultz was the core figure who mainly promoted “Starbucks into China” at that time. At present, China has become the second largest market of Starbucks.

Compared with Ruixing’s high growth, Starbucks is slightly bleak.

The latest financial report shows that in 2021, the revenue of Q4 Starbucks in China decreased by 2% year-on-year, the same store sales growth rate of self operated stores decreased by 14% year-on-year, while Ruixing increased by 43.6% year-on-year.

Meanwhile, the average customer unit price of Starbucks in the fourth quarter fell by 9%, and the trading volume also fell by 6%, which fell for six consecutive months. This is in sharp contrast to the rise in both volume and price of Ruixing.

Looking at Ruixing’s financial report in 2021, with a series of pre risks gradually disintegrating, Ruixing’s important achievements are reflected in these three points: accelerating the opening of stores, especially joint stores; The number of live users increased significantly in the trading month, and the average price of products rose.

The first is the number of stores. Store expansion is still the core driving force for the current beverage industry to contribute to the increase of revenue. The fraud storm in 2020 slowed down Ruixing’s expansion and had to turn attack into defense.

The key time point is the litigation settlement with investors in December 2020, so the regulatory risk is “cleared”.

After that, Ruixing accelerated his attack, just like chasing the stars and the moon. In 2020, the total number of stores will remain 4800 for two consecutive quarters; By mid-2021, the number had reached 5259. In 2021, there were 6024 stores in the whole year, surpassing the 5557 stores of Starbucks, including 4397 self operated stores and 1627 joint ventures.

Since the fourth quarter of 2019, the expansion of self operated stores has been relatively restrained, while the number of franchise stores has reached 1627 from 282 in the same period.

It may be intentional to control the total amount of self operated stores. Under the condition of no additional capital expenditure, deep ploughing operation can achieve a significant turnaround in profits by increasing users, raising prices, reducing subsidies, controlling expenses and so on.

This measure has achieved remarkable results. In the same period of 2020, the loss of self operated stores was 434.7 million, and the loss rate at the store level was 12.5%. In 2021, the revenue of self operated stores was 6.192.7 billion, an increase of 78.3% over the same period in 2020. The profit of the store was 1.252.8 billion, with a profit margin of 20.2%.

In the fourth quarter of 2021, the profit at the store level was 383.4 million yuan (about US $60.2 million), and the profit margin at the store level was 20.9%, higher than 8.7% in the same period of 2020.

The annual same store sales growth rate of self operated stores was 69.3%, and the index was - 7.8% in the same period in 2020.

On the other hand, joining is a “sharp weapon” for Ruixing to sink the market layout. This is different from the domestic self operated model of Starbucks. Seizing the second and third tier and more “sinking” market increment, franchising undoubtedly has more advantages than self-operation, such as two Competitiveness: information symmetry and grafting resource highland.

Different from the general chain franchise mode, Ruixing does not charge franchise fee. In the whole fiscal year 2021, the revenue of affiliated stores was 1306.1 million, an increase of 312.5% over 316.6 million in 2020, accounting for 16.4% of the total revenue.

After the heavy asset mode stage of expanding scale and building brand in the early stage, Ruixing’s strategic adjustment has taken the initiative to move towards the second stage of profit improvement.

Since May, 2020, Ruixing has gradually stopped the marketing activities of providing products free of charge, and the low price discount of 1-20% has basically faded out. According to the latest financial report data, the marketing expenses in 2021 decreased by 27.11% year-on-year to 337 million.

The cost is reduced, but it does not hinder the significant growth of the number of users. According to the financial report, the average number of monthly trading customers of Ruixing was 13 million in fiscal year 2021, an increase of 55.2% over 8.4 million in 2020.

It is worth noting that Ruixing has always won the favor of users. In the fourth quarter, the average number of monthly trading customers of Ruixing was 16.2 million in the fourth quarter, an increase of 10.05% compared with 14.72 million in the third quarter.

Starbucks, on the other hand, reported strong earnings