Investors in Luckin Coffee are already heading for the exits
Greater China’s shopping situation was messy in the first quarter but Q2 might be on its way to surpassing the record retail wreckage of the first three months of 2020, as Luckin Coffee suspends its COO after an internal investigation confirmed earlier reports of fraud at the NASDAQ-listed take-away chain and helped drive its stock down 81 percent.
Also in the news, a Singapore asset manager says that it has paused investment activities as a matter of prudence amid the current pandemic, while a co-working giant has reached out to landlords to ask for a 30 percent cut in rent. Elsewhere, a mainland China developer is dishing out coupons to lure shoppers back to its malls, while a Singapore REIT has made a surprise reduction in distributions per unit.
Luckin Coffee Found to Have Faked $310M in Sales
Luckin Coffee fabricated hundreds of millions of dollars worth of coffee orders last year, according to an internal investigation. On Thursday, the company announced that its preliminary investigation uncovered fabricated transactions accounting for a total of RMB 2.2 billion ($310 million) from the second to the fourth quarter of 2019. Certain costs and expenses had also been substantially inflated, according to the investigation.
Based on its falsified financials, Luckin Coffee was expected to generate $732 million in sales in 2019, according to Investor Place. In other words, the fabricated transactions appear to have made up almost half of the chain’s sales in 2019. Read more>>
ARA Takes Prudent Approach To Deals During COVID-19
As dealmaking slows amid the economic uncertainty brought about by the novel coronavirus outbreak, ARA Asset Management, one of Asia’s largest real estate fund managers, has put its investment activities on hold.
In a message addressing stakeholders on Thursday, ARA group CEO John Lim wrote that the group’s investment activities “are currently paused out of prudence” against a backdrop of what he described as “extremely trying times”. Read more>>
WeWork Begs Landlords to Cut Rent by 30%
WeWork is in discussions with its biggest landlords globally as the co-working giant aims to slash as much as 30% from its copious load of rent liabilities, according to people with knowledge of the talks.
WeWork Chief Executive Officer Sandeep Mathrani has been contacting the largest owners of buildings in which the New York-based company is a tenant, and pitching solutions including revenue-sharing agreements, the people said, asking not to be identified as the talks are private. Read more>>
SPH REIT Downgraded After Surprise Distributions Cut
Brokerage Maybank Kim Eng has downgraded SPH REIT to “hold” from “buy”, and lowered its target price to S$0.80 ($0.56) from S$1.15 previously.
The downgrade follows the real estate investment trust announcing on Wednesday that it will distribute just 0.3 Singapore cent per unit for the second quarter, 78.7 percent lower than its distribution per unit (DPU) of 1.41 cents a year ago. Read more>>
China Developers Raise Funds at Home to Repay Offshore Debt
Chinese property firms facing a wave of maturing debt will raise funds on the mainland to refinance their offshore borrowings as funding conditions loosen in the world’s second-largest economy at a time when the dollar bond market is slumping.
Companies traditionally refinance bonds where they are issued to lower foreign exchange and transaction costs, but the coronavirus outbreak and ensuing scramble for dollars triggered a jump in yields for Asian debt. That has made it too prohibitive for companies to sell bonds offshore. Read more>>
Wanda Offers Discount Coupons to Boost Flagging Sales
Chinese commercial property giant Dalian Wanda Commercial Management Group will offer coupons worth nearly RMB 200 million($28 million) to consumers to encourage spending in its vast offline retail complex network.
Starting from Wednesday, the company’s 320 Wanda Plazas will offer a total of 3.84 million coupons to consumers this month, with each coupon worth RMB 50, Wanda said in a statement. Read more>>
Shangri-La to Close Bangkok and Chiang Mai Hotels
Shangri-La Asia on Wednesday said it will temporarily suspend its operations in both its Bangkok and Chiang Mai hotels for a minimum of one month.
The hotel said it will shutter its doors from April 1 to comply with government regulations, as well as in the interest of public health, given the rapid spread of the novel coronavirus in Thailand. Read more>>
Country Garden’s Australia Unit Linked to COVID-19 Profiteering
A former Chinese military officer who sent tonnes of protective equipment from Australia to China during the height of the Wuhan coronavirus outbreak has been accused of profiteering from the disaster, with medical supplies allegedly inflated in price by up to 300 percent.
Warnings circulated by several insiders allege that the company run by former People’s Liberation Army officer Kuang Yuanping sold tens of thousands of medical protective coveralls in late February to Australian property developer Risland for $2.2 million. Risland, which is Country Garden’s Australia arm, then flew the goods to China. Read more>>
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