Category: personal_noteS

Coffee Chains And Prices In China

While Starbucks is probably the No.1 coffee brand in China, its position has constantly been challenged. Luckin Coffee, (briefly covered in a previous post) is cutting into the mass market with lower pricing.

Many people are eyeing on China’s growing coffee market, which will be huge and many are betting on the growth in average coffee consumption.

On the global capital market, Starbucks’ China push and Blue Bottle’s exciting/interesting movements (Jun 2015 $70 million series C; Sep 2017 acquired by Nestle, $425 million for ~68%) may as well push Chinese counter-parties to think about aggressive expansion or building boutique brands.

Listed here are 3 shops I visited recently. Will add more during the summer.

Costa, from UK

Costa Coffee is eyeing 1,200 stores in China by 2022, a big increase from more than 400 at the end of 2017.

Costa stores | Source: Business Insider

Costa is in direct competition with Starbucks, pricing its coffee at exactly the same level – grande latte @ ¥32.

% arabica, from Japan

% arabica @ the bund, Shanghai | Source: arabica.coffee

Started in 2014 in Kyoto, Japan, % arabica is a young brand. It opened the first store in China in Shanghai in Feb 2018 in a trendy (网红) way. It already has opened 4 store in Shanghai alone, including a roastery at the Bund (7 in mainland China and 4 in Hong Kong as of May 2019).

% arabica is a premium brand with latte price starting @ ¥35 (but in short size), @ ¥45 for a tall size (or a little bigger than tall.. cant’ tell exactly), @ ¥40 for tall ice latte.

S.Engine, from Shanghai

A trendy (网红) brand, 鹰集 is a little pricer than Starbucks, with its flagship store opened in January 2017 at Xintiandi, Shanghai.

While its office website only lists 3 locations right now, its has 6 places listed on Meituan in Shanghai. Growing very fast.

S.Engine on Meituan | Source: meituan.com

Pricing is in line with (or a little lower than) boutique coffee shops. Americano @ ¥28 and latte @ ¥36 (¥38 for ice latte). There is only one size (tall); a fair amount of cups are served in reusable cups.

NIO Feeling Similar Pain As Tesla – Lack of Demand

When Tesla said “Deliveries were approximately 63,000 vehicles, which was 110% more than the same quarter last year, but 31% less than last quarter”, NIO wanted to say something similar.

The 2019 Q1 deliveries number was approximately half of that in 2018 Q4. (Still a good job in ramping up production fast)

To compare in numbers:

    • Tesla deliveries is ~15.8x NIO’s in 2019 Q1, ~11.4x  in 2018 Q4
    • Tesla’s automotive revenue in 2018 Q4 was $6.3 billion vs. NIO $0.5 billion:  ~12.6x
    • Current valuation 8x ($40bn vs. $5bn)

NIO said ES6 (to start deliveries in June) should have more than 10,000 pre-orders before deliveries.

Game of Thrones Whiskys

Game of Thrones Single Malt Scotch Whisky Collection | Source: esquire.com

Back in October 2018, HBO and DIAGEO unveiled 9 GOT co-branded whiskies – the new White Walker by Johnnie Walker Blended Scotch Whisky and The Game of Thrones Single Malt Scotch Whisky Collection (8).

Let’s look into some of those whiskies…

lWhite Walker by Johnnie Walker Blended Scotch Whisky | Source: multivu.com

White Walker by Johnnie Walker SRP: $36 for 750ml; ABV 41.7%

    • Rich seasonal flavors of vanilla, red fruits and orchard fruits
    • Single Malts from Cardhu and Clynelish – one of Scotland’s most Northern distilleries, feature in the product.
Game of Thrones Scotch whiskies: Dalwhinnie Winter’s Frost
House Stark – Dalwhinnie Winter’s Frost | Source: Diageo

Game of Thrones House Stark – Dalwhinnie Winter’s Frost; SRP: $39.99 for 750ml; ABV 43%

Game of Thrones Scotch whiskies: Cardhu Gold Reserve
House Targaryen – Cardhu Gold Reserve | Source: Diageo

Game of Thrones House Targaryen – Cardhu Gold Reserve; SRP: $39.99 for 750ml; ABV 40%

Game of Thrones Scotch whiskies: Lagavulin 9 Year
House Lannister – Lagavulin 9 Year Old | Source: Diageo

Game of Thrones House Lannister – Lagavulin 9 Year Old; SRP: $64.99 for 750ml; ABV 46%

    • The distillery of Lagavulin officially dates from 1816, when John Johnston and Archibald Campbell constructed two distilleries on the site. One of them became Lagavulin, taking over the other—which one is not exactly known. Records show illicit distillation in at least ten illegal distilleries on the site as far back as 1742 [Wikipedia]

No Foreign Property Ownership Allowed In Indonesia

Just went to Indonesia last week and realized that protective rules are more general than I previously had thought.

So the origin – Indonesian Agrarian Law, Law No. 5 of 1960, governs the property ownership in Indonesia in regards to lands.

Article 21.

(4) As long as person possesses a foreign nationality in addition to his Indonesian nationality he/she may not possess any land with ownership right…

Land ownership is called Hak Milik (Right of Ownership) (“HM”), the most complete land title available under Indonesian law. Only Indonesian citizens are allowed to hold HM

Also stated in this law, foreigners are permitted to purchase land or homes under the “Hak Pakai” or “Right to Use” title.

Article 41.

(1) The right of use is the right to use and/or to collect the product, from land directly controlled by the State, or land owned by other persons which gives the rights and obligations stipulated in the decision upon grating this right by the authorized official, or in the agreement to work the land, as far as it not conflict with the spirit and the provision of this law.

Article 42.

Those who may obtain the right of use are:
a. Indonesian citizen;
b. Foreigner residing in Indonesia;
c. Corporation which have been established according to Indonesian Law and having they seat in Indonesia;
d. Foreign corporations having a representation in Indonesia.

There is also the “right to lease”

Those who may become holders of the right to lease are:
a. Indonesian citizens;
b. Foreigner residing in Indonesia;
c. Corporation which has been established according to Indonesia law and having their seats in Indonesia;
d. Foreign corporation having a representative in Indonesia;

In practise, there are usually 3 ways:

1. Hak Pakai (right to use),

for a period up to 80 years (an initial period of 30 years and can be extended twice by 20 years and a further 30 years).

The Indonesian banks will NOT lend money to property owners that only have Hak Pakai status for their property.

2. PT PMA (Perseroan Terbatas Penanaman Modal Asing)

In short, PT PMA = foreign limited liability company

PMA is a legal entity through which a foreign person, foreign company, or foreign government body can obtain the property ownership in Indonesia (meaning generating revenue streams and profit). The establishment of a PT PMA is regulated by Law No. 40/2007 regarding Limited Liability Companies.

PMA can acquire “Hak Guna Bangunana” (“HGB” )  titles, which is the “right to build”

HGB can later easily be converted back to Hak Milik, for example, if the property is sold to an Indonesian or if the foreign investor decides to use the Nominee method.

HGB has a maximum initial period of 30 years and can be extended for a maximum period of 20 years.

HBG can be mortgaged for credit applications to financial institutions.

3. Nominee method

Essentially, it is purchasing a property with its title in the name of an Indonesian citizen. Not allowed.

 

Books, Digital Books, Public Libraries

So nowadays we are comfortable with two facts:

    1. Books can be digital. It is good for distribution, near zero marginal cost of production, no burden on environment, reducing the barrier of knowledge.
    2. There are public libraries that provide free borrowing for resources including books (physical).

Then here comes the question – why libraries don’t provide free digital version of books.

The Answer could be very simple.

No one will buy books then…..

—

Then there is another question – since public libraries are funded by governments (tax payers) and donors, why are books not subsidized by governments like healthcare or education.

Why don’t governments make a list of knowledge-based books nearly free?

Authors should receive a stream of cash flows from taxpayers, for the contribution of their books.

 

Coffee Chains in China

In a previous post about Starbucks, we talked about its potential in China.

China’s coffee consumption will explode, even considering major cities alone. Younger generations will consume more coffee and they will represent an increasing proportion of the overall urban population.

China coffee consumption potential | Source: Starbucks 6/19 Presentation

Everyone sees the market and opportunities – one of the most eye-catching player is Luckin Coffee (瑞幸咖啡), who just filed to be listed on Nasdaq.

Image result for Luckin Coffee
Source: TechCrunch

The expansion in terms of coverage & number of stores is very impressive: 9 stores by the end of 2017 and 2,370 stores by the end of 2019Q1, although most (91.3 %) of them are pick-up stores (see above).

By comparison, in May 2018, Starbucks announced that it is planning to build nearly 3,000 new stores in mainland China over the next few years (from 3,300 in 2018Q1 to 6,000 before the end of 2022).

Things to notice:

    • Luckin Coffee outsourced delivery services mainly to S.F. Express (顺丰控股SHE: 002352)
    • Luckin’s investors are mainly related to UCAR INC. (神州优车 NEEQ:838006)
    • Didn’t see GIC or BlackRock or Legend Capital as major shareholders (>5%)
    • Loss is significant: ¥527 million operation loss on ¥361 million revenue in 2019Q1 (-110.1%)
    • No significant revenue growth from 2018Q4 to 2019Q1: 465,433k to 478,510k (+2.8%)
    • There was a decrease in advertising cost: 127,372 in 2018Q4 -> 93,080 in 2018Q4 -> 40,143 in 2019Q1

Notre Dame Fire, VR

On 15 April 2019, shortly before 18:50 CEST, fire broke out beneath the roof of Notre-Dame Cathedral in Paris. [Wikipedia]

When it comes to recover/rebuild the damaged masterpiece, the gaming industry will help.

The 2014 game ‘Assassin’s Creed Unity,’ set in Paris during the French Revolution, features a realistic 3D model of the historic house of worship. Caroline Miousse, an artist for the game, spent about two years perfecting the model of the cathedral that appears on gamers’ screens. [New York Post]

Notre-Dame Cathedral in the game | Source: theverge.com

Game developer Ubisoft also employs several staff historians to help dig up any extra details the development team might need. [The Verge]

The level of details not only makes Assassin’s Creed a great game, but also could help to save the history and the real world.

Another very helpful resource is from Vassar art historian Andrew Tallon’s work of exquisite 3D laser maps of every detail of Notre Dame.

In the past, we have many artworks digitalized but mainly for a paining or a sculpture I guess. The tragedy happened in Paris will remind us of many other things to be digitalized. In the future, VR games would probably need even more details and virtually serve as a permanent digital copy of our history. Expect much more “digitalization work” to be done in the next few years. We may even digitalize an event or a piece of time in the digital world.

It’s going to be similar to the “genome bank” to preserve what have existed in this world.

How [Languages] Disappear?

Just finished The World Until Yesterday by Jared Diamond this weekend and here is an excerpt I would really want to recommend, where you could literally replace “languages” with other words.

How do languages go extinct? … so too are there different ways of eradicating a language.

The most direct way is to kill almost all of its speakers…

The next most direct way to eradicate a language is not to kill its speakers, but instead to forbid them to use their language, and to punish them if they are caught doing so… the French government’s official policy is in effect to exclude the Breton language form primary and secondary schools…

But in most cases language loss proceeds by the more insidious process now under way at Rotokas… Young people in search of economics opportunity abandon their native-speaking villages and move the urban centers, where speakers of their own tribal language are greatly outnumbered by people from other tribal backgrounds, and where people needing to communicate with each other have no option except to speak the majority language…

Eventually, minority languages are spoken only by older people, until the last of them dies. Long before that end is reached, the minority language has degenerated through loss of its grammatical complexities, loss of forgotten native words, and incorporation of foreign vocabulary and grammatical features.

 

First Blackhole Picture And Copyright?

One big confirmation of our knowledge about the universe – the first picture of blackhole due to gravity is available.

target was a nearby galaxy dubbed M87 and its supermassive black hole, which packs the mass of six and half billion suns. Despite its size, the black hole is so far from Earth – 53 million light-years – that capturing the image took a telescope the size of the planet.

Meanwhile, a firm in China claimed the copyright of this picture and tried to charge fees for it.

The firm, called Visual China, is China’s largest stock images provider.

It shut its website and apologized on Friday after it falsely claimed copyright of images such as the first photo of a black hole and China’s national flag. [Reuters]

It is a time that China is doing more to protect intellectual property but company in this is embarrassing. It’s definitely not a representation of the “highest” level of IP protection in China, but it does show us that a lot of work needs to be done.

Finally, UBER S-1 Available

The S-1 of much anticipated Uber IPO is publicly available for the first time.

The valuation is said to be $90-100 billion, lower than previously reported.

That is also the reason that Lyft’s valuation is under pressure these days. It all makes that Lyft and Morgan Stanley have something to argue about… Lyft’s high valuation at IPO makes it difficult for Morgan Stanley and other banks to sell Uber. (and the pressure is much higher in such a big deal – $10 billion)

So relatively speaking, how much “higher” is Lyft valued?

  • Uber adjusted ebitda -1.85 billion vs. Lyft -944 million, ~2x
  • Uber revenue 11.27 billion vs. Lyft 2.16 billion, ~5x
  • Uber total trips 5.2 billion vs. Lyft 619 million, ~8x