Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD US) with a target price adjusted from $165 to $135, indicating a potential upside of 31.1% from the current price of $102.98 [2][3][12]. Core Insights - The company's Q1 2025 performance fell short of expectations, with revenue and gross profit impacted by tariff uncertainties affecting TEMU and rising short-term logistics costs. The mainland e-commerce advertising revenue growth met expectations, but net profit was below forecasts due to increased subsidies in response to national policies [3][7]. - The report anticipates continued pressure on profits in Q2 2025 due to these factors, leading to a downward revision of revenue and profit forecasts by 9% and 25% respectively for 2025 [3][4]. - The long-term outlook remains positive, with expectations for a return to normalized profit levels by 2026, supported by strategic adjustments and merchant support plans [3][4]. Financial Forecast Summary - Revenue projections for 2025 have been revised to RMB 449.83 billion, down from RMB 496.41 billion, reflecting a 9.4% decrease. For 2026 and 2027, revenue is expected to be RMB 556.01 billion and RMB 630.39 billion, respectively [4][15]. - Adjusted net profit for 2025 is forecasted at RMB 104.83 billion, a 25.4% decrease from previous estimates, with further declines expected in 2026 and 2027 [4][15]. - The adjusted operating profit margin is projected to decline from 28.5% in 2024 to 24.6% in 2025, with a gradual recovery anticipated thereafter [4][15]. Performance Metrics - The report highlights a significant drop in adjusted net profit for Q1 2025, which fell 45% year-on-year to RMB 16.92 billion, significantly below consensus estimates [7][8]. - The gross margin for Q1 2025 was reported at 57%, down from 62% in the previous quarter, indicating pressure on profitability [8][9]. - The company's market capitalization is approximately $143.36 billion, with a year-to-date change of 6.18% [6][10].

Core Viewpoint - Long-termism is becoming a prominent trend in the business and investment sectors, but few companies can consistently adhere to this principle over time [1] Group 1: Company Strategy - Pinduoduo has launched a "100 billion support" initiative, following its previous "100 billion reduction" campaign, demonstrating a commitment to substantial investment in the e-commerce sector [2][5] - The company’s Q1 revenue reached 957 billion yuan, with a growth rate declining to 10%, yet it continues to prioritize the "100 billion support" strategy despite external pressures [2][9] - Pinduoduo established a "Merchant Rights Protection Committee" to address the needs of merchants, particularly small and medium-sized businesses, and has implemented measures to enhance merchant services [3][5] Group 2: Financial Commitment - In Q1, Pinduoduo's marketing expenses surged to 334 billion yuan, reflecting a nearly 100 billion yuan increase year-over-year, aimed at supporting merchants and consumers [9] - The company has introduced various consumer incentives, including a "100 billion merchant feedback plan" and significant subsidies across all product categories [7][9] Group 3: Long-term Vision - Pinduoduo remains focused on high-quality development within the e-commerce industry, resisting the temptation to chase fleeting market trends [8][10] - Despite facing short-term stock price volatility, the company's long-term strategy prioritizes the interests of users and merchants, which is expected to strengthen its competitive position over time [9][10]

Core Viewpoint - Pinduoduo's Q1 2025 financial report shows a revenue of approximately 95.7 billion RMB, marking a 10% year-on-year growth, the lowest in recent quarters, with a significant decline in operating profit by 38% [1] Financial Performance - The company's revenue fell short of market expectations by about 6 billion RMB, and profits were nearly 9 billion RMB below forecasts, leading to a pre-market stock drop of over 20% and a final decline of nearly 14% [1] - Marketing expenses reached 33.4 billion RMB, an increase of nearly 10 billion RMB compared to the same period last year, driven by the launch of the "100 billion support" strategy [1][2] Strategic Initiatives - The "100 billion support" plan includes various measures to assist merchants, with a focus on reducing operational costs, which has impacted short-term revenue performance [2] - Pinduoduo's management emphasized that investments in merchant support are viewed as long-term investments rather than immediate expenses, aiming to enhance platform ecology over the next 5 to 10 years [2][4] Merchant Support Measures - The company has established a "Merchant Rights Protection Committee" to oversee resources and support for merchants, including regular communication and violation warning mechanisms [2] - Pinduoduo is expanding its support to small and medium-sized merchants and has introduced a "100 billion merchant feedback plan" to provide consumer coupons and subsidies across various product categories [3] Agricultural Support - The "2025 Duoduo Good Specialty" initiative is actively engaging with agricultural regions to enhance production and income for local farmers, with customized solutions for local specialties [3][4] - The company is also supporting the establishment of a technology center focused on "digital commerce + new farmer training" in Yunnan, marking a significant step in agricultural innovation [3] Long-term Vision - Despite short-term financial challenges due to substantial merchant support investments, this strategy is expected to create a more stable merchant ecosystem for future growth [4] - The company remains committed to high-quality development and supporting merchants through economic cycles, emphasizing a long-term growth path [4]

Investment Rating - The report maintains a "Strong Buy" rating for Pinduoduo (PDD) with a target price range of $113 to $134 per share [3][4]. Core Insights - Pinduoduo reported Q1 2025 revenue of 95.67 billion yuan, a year-over-year increase of 10%, but GAAP net profit decreased by 45% to 16.9 billion yuan due to increased merchant support and changes in overseas tariff policies [1][2]. - The company is implementing a 100 billion yuan support plan aimed at enhancing the merchant ecosystem, which is expected to pressure short-term profitability but is viewed as a long-term investment for sustainable growth [1][4]. - The impact of tariff policies has led to a temporary slowdown in the growth of TEMU, but the long-term outlook for global market expansion and profitability remains positive [1][4]. Financial Data Summary - Revenue projections for Pinduoduo are as follows: 2023 at 247.639 billion yuan, 2024 at 393.836 billion yuan, and 2025E at 455.799 billion yuan, with year-over-year growth rates of 90%, 59%, and 16% respectively [2][7]. - Non-GAAP net profit is expected to be 67.899 billion yuan in 2023, 122.344 billion yuan in 2024, and 112.979 billion yuan in 2025E, reflecting a year-over-year growth of 72%, 80%, and a decline of 8% respectively [2][7]. - The report indicates a projected P/E ratio (Non-GAAP) of 14.9 for 2023, decreasing to 5.7 by 2027, suggesting a favorable valuation trend over the forecast period [2][7]. Stock Performance - The stock has shown a 1-month performance of -1.0%, a 6-month performance of +3.7%, and a 12-month performance of -34.6% [4]. - Relative performance indicates a decline of -4.8% over 1 month, -14.1% over 6 months, and -53.6% over 12 months compared to the market [4]. Shareholder Information - The total share capital is 567.859 million shares, with a market capitalization of $146.2 billion [3]. - The major shareholder, Huang Zheng, holds a 24.8% stake in the company [3]. Profitability Metrics - The gross margin for Q1 2025 was reported at 57%, a decrease of 5 percentage points year-over-year [1]. - The report highlights that the company is focusing on high-quality development strategies to foster a healthy merchant ecosystem, which is expected to support long-term sustainable growth [1][4].

Investment Rating - The report assigns a "Buy" rating to PDD Holdings with a 12-month sum-of-the-parts (SOTP) based target price of US$152, indicating an upside potential of 27.5% from the current price of US$119.24 [9][10]. Core Insights - PDD Holdings reported mixed results for 1Q25, with a 10% year-over-year increase in net revenues, but a significant 36% decline in adjusted EBIT. The online marketing revenue grew by 15% year-over-year, aligning with expectations [1][2]. - The negative market reaction, with a 17% drop in pre-market trading, was primarily due to a profit miss attributed to higher-than-expected Selling & Marketing expenses during a typically low season [1][2]. - The company is focusing on investments in its platform ecosystem to support small and medium-sized enterprises (SMEs), allowing them to compete effectively on pricing [1]. Revenue Performance - Online marketing revenue for 1Q25 was reported at RMB 48.722 million, reflecting a 15% year-over-year growth, which was in line with Goldman Sachs estimates and above the Visible Alpha consensus [2][10]. - Transaction commission revenue grew by only 6% year-over-year, falling short of expectations due to a shift in Temu's business model and ongoing investments in the platform ecosystem [2][10]. Future Outlook - Key discussion points for the results call include Pinduoduo's growth drivers, the impact of ongoing investments, and the differentiation of Temu's revenue outlook amidst changing market conditions [3]. - The report highlights potential challenges such as geopolitical headwinds, increased competition, and the need for reinvestments to sustain growth, which may affect core profit margins [9].

Group 1 - Temu has achieved remarkable growth in 2025, surpassing local giants in Poland and Brazil, indicating the global adaptability of its "extreme cost-performance + viral marketing" model [1][3] - In Brazil, Temu's market share reached 9.9% with a significant increase in traffic, totaling 56 million visits in April and 39 million monthly active users, surpassing Shopee [3][4] - In Poland, Temu's user base grew to 18.1 million, exceeding Allegro's 17.8 million users, showcasing its competitive edge in the market [4] Group 2 - The growth strategy of Temu relies on viral marketing and social media advertising, leading to explosive growth in categories like home goods, tools, and electronics [5] - Despite having more active users than Amazon, Temu's average revenue per user (ARPU) is only one-third of Amazon's, indicating a need for refined operations as competition intensifies [8] - Regulatory tightening and increased competition suggest that a simple price war may not be sustainable for Temu in the long run [8] Group 3 - Easy ERP provides a comprehensive solution for Temu sellers, enhancing order fulfillment efficiency through a semi-managed model that synchronizes cross-border and local orders [9][11] - The inventory management feature of Easy ERP allows real-time visibility of stock across various warehouses, facilitating intelligent restocking based on sales forecasts [11] - Easy ERP also supports profit analysis by tracking costs and revenues for each order, which is crucial for maintaining supply chain efficiency under Temu's low-cost model [12]

Group 1 - Xiaomi reported a revenue of 111.29 billion yuan for Q1 2025, a year-on-year increase of 47.4%, with adjusted net profit reaching 10.68 billion yuan, up 64.5% [2] - Xiaomi's smartphone business generated 50.6 billion yuan in revenue, achieving a record high gross margin of 12.4%, with the SU7 series delivering 258,000 units since launch [2] - Pinduoduo's Q1 2025 revenue was 95.67 billion yuan, reflecting a 10% year-on-year growth, but a 45% decline in net profit under non-GAAP standards, totaling 16.92 billion yuan [2] Group 2 - Deep Blue Automotive faced backlash from 480,000 car owners for advertising on their vehicle screens without consent, leading to an apology from the CEO [4] - Apple’s App Store was deemed non-compliant with EU regulations, particularly regarding its "anti-steering" policy that restricts developers from promoting alternative payment options [7] - Geely's chairman Li Shufu emphasized the company's commitment to not engage in price wars, focusing instead on value, technology, quality, service, brand, and corporate ethics [8]

| | | | | | PDD quarterly result wrap | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Rmb '00mn | | 1Q23A | 2Q23A | 3Q23A | 4Q23A | 1Q24A | 2Q24A | 3024A | 4Q24A | 1025A | 1Q25E | var. | | | Total revenue | 376 | 523 | 688 | 889 | 868 | 971 | 994 | 1,106 | 957 | 1,016 | -6% | | | yoy | 58% | 66% | 94% | 123% | 131% | 86% | 44% | 24% | 10% | 17.0% | | | | Gross profit | ટ્ટર | 336 | 420 | 538 | 541 | 634 | 596 | 628 | 547 | 597 | -8% | | | yoy | 59% | 43% | 5 ...

Investment Rating - The report maintains a "Buy" rating for PDD Holdings Inc with a 12-month price target of US$165.00, down from a previous target of US$193.00 [8][13]. Core Insights - The report highlights a 10% year-over-year revenue growth to Rmb96 billion in 1Q25, which missed expectations by 8%, primarily due to transaction services linked to Temu [2][4]. - Adjusted net profit for 1Q25 was Rmb16.9 billion, missing by Rmb11 billion or 39%, attributed to increased sales and marketing spending and lower investment income [2][4]. - The management's cautious tone reflects macroeconomic uncertainties and significant investments impacting profitability, leading to expectations of street downgrades [12]. Revenue and Earnings Analysis - Online market services (OMS) revenue grew by 14.5%, slightly below the consensus of 18%, due to targeted subsidies affecting ad income [3]. - Transaction service revenue missed by Rmb6 billion, primarily due to Temu's challenges in the US market, including tariff impacts and logistical disruptions [4]. - Sales and marketing expenses increased by 44% year-over-year, indicating a shift in customer acquisition strategies [5]. - Investment income decreased significantly, with a net miss of Rmb2 billion, likely due to mark-to-market or impairment losses [6]. Financial Projections - Revenue projections for 2025-2027 have been cut by 28-43%, reflecting increased domestic investments and widening losses for Temu [13]. - The report provides a detailed financial forecast, estimating total revenues of Rmb406.1 billion for 2025, down from a prior estimate of Rmb456.5 billion [15]. - Non-GAAP net income for 2025 is projected at Rmb79.7 billion, a reduction of 43% from previous estimates [15]. Valuation Metrics - The report indicates a significant drop in the price-to-earnings (P/E) ratio, with estimates for 2025 at 13.2x, down from 11.0x previously [15]. - The equity free cash flow yield is projected to be 11.7% for 2025, indicating strong cash generation potential despite current challenges [7]. - The valuation methodology is based on a sum-of-the-parts (SOTP) approach, with core e-commerce operations valued at Rmb137.9 billion [16]. Market Context - PDD Holdings operates in a competitive e-commerce landscape, focusing on value-for-money products and expanding into international markets through Temu [18]. - The report notes that domestic operations are currently profitable, contrasting with Temu's ongoing losses, which are impacting overall profitability [11].

Core Insights - Pinduoduo's Q1 2025 revenue was 95.6722 billion yuan, a 10% year-on-year increase, but below market expectations of 101.6 billion yuan [1] - The net profit attributable to ordinary shareholders was 14.7418 billion yuan, a 47% year-on-year decline, while non-GAAP net profit was 16.916 billion yuan, down 45% [1] - The company's stock price fell 13.64% in the US market following the earnings report, reflecting investor concerns about future growth [1][4] Financial Performance - Total revenue for Q1 2025 was 95.6722 billion yuan, with online marketing services and other services generating 48.7222 billion yuan (15% growth) and transaction services generating 46.95 billion yuan (6% growth) [4] - Sales and marketing expenses increased by 43% year-on-year to 33.4027 billion yuan, primarily due to higher promotional and advertising expenditures [4] - Pinduoduo's market capitalization dropped to 146.2 billion USD, losing over 10 billion USD in value after the stock price decline [4] Competitive Landscape - The e-commerce industry is experiencing intensified competition, with Pinduoduo facing limitations in policy incentives for consumers and insufficient responses to national subsidy policies compared to competitors [4] - To support merchants during short-term fluctuations, Pinduoduo launched a "100 billion support" strategy, increasing assistance and subsidies for small and medium-sized businesses, which may impact short-term profits [4] Management Outlook - Pinduoduo's management emphasized a focus on long-term intrinsic value rather than short-term financial performance [5] - The company aims to control costs, improve gross margins, and accelerate overseas expansion to stabilize stock prices, although challenges remain in achieving a profitable business model and performance recovery [5]