Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD US) with a target price of $144.00, indicating a potential upside of 38.3% from the current price of $104.09 [1][4][10]. Core Insights - The report highlights that the implementation of a 10 billion yuan subsidy policy has led to lower-than-expected commission income and profits, with Q3 performance falling short of expectations primarily due to reduced commission rates [1][2]. - The forecast for 2024 and 2025 profits has been revised down by 5% and 7% respectively, reflecting uncertainties in profit growth and risks associated with overseas tariff policies [1][3]. - The report anticipates continued pressure on commission rates into Q4, which may disrupt profit growth expectations [1][2]. Financial Performance Summary - Q3 revenue increased by 44% year-on-year to 993.5 billion yuan, aligning with expectations but slightly below Bloomberg consensus by 3% [2]. - Adjusted net profit for Q3 was 274.6 billion yuan, a 61% increase year-on-year, but 6% lower than Bloomberg consensus due to higher-than-expected revenue costs [2]. - Advertising and commission revenues grew by 24% and 72% year-on-year respectively, with commission income falling short of Visible Alpha consensus by 5% [2]. - The report projects Q4 adjusted net profit to be 315.8 billion yuan, with a year-on-year profit margin decline of 3 percentage points [2][7]. Earnings Forecast Changes - Revenue forecasts for 2024E and 2025E have been adjusted to 403,922 million yuan and 540,049 million yuan respectively, with minor changes of -0.1% and +0.3% [3]. - Adjusted net profit forecasts for 2024E and 2025E are now 124,076 million yuan and 156,038 million yuan, reflecting downward adjustments of -5.2% and -7.5% [3][14]. - The adjusted operating profit margin is expected to decline, with projections of 30.1% for 2024E and 29.6% for 2025E [3][14]. Market Position and Competitive Landscape - The report notes that recent domestic appliance subsidy policies favor e-commerce platforms primarily operating through official flagship stores, which may require the company to increase subsidies to maintain competitive pricing [2][5]. - The company is expected to continue strategic support for quality merchants, which will involve sustained investment impacting Q4 profits [2][5].

Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD.US) with a target price adjusted to $129, reflecting a potential upside of 24% from the current price of $104.09 [4][6][24]. Core Insights - Despite rising risks, the opportunities for Pinduoduo are considered to outweigh the risks. The company reported Q3 2024 revenue of 99.4 billion RMB, which was 3.4% below market expectations, but showed a year-on-year growth of 44%. Adjusted net profit was 27.5 billion RMB, a 61% increase year-on-year, yet also fell short of market expectations by 6% [4][5][6]. - Revenue growth has slowed down significantly, with overall revenue growth dropping from 86% in Q2 2024 to 44% in Q3 2024. Advertising revenue grew by 24% year-on-year, while transaction service revenue saw a 72% increase year-on-year, primarily due to supportive policies for quality merchants [5][6]. - The report indicates that the company's net profit margin decreased to 27.6% in Q3 2024 from 35.3% in Q2 2024, attributed to various support measures that have yet to show their full impact [5][6]. Financial Summary - For FY24E, the projected revenue is 404.04 billion RMB, with an adjusted net profit forecast of 120.81 billion RMB. The adjusted net profit margin is expected to be 27.4% [7][12]. - The company’s financial metrics indicate a projected PE ratio of 11.0x for FY24E, decreasing to 10.0x for FY25E and 8.9x for FY26E, suggesting a relatively attractive valuation compared to peers [7][12]. - The report highlights that Pinduoduo's stock price currently reflects the potential risks, including ongoing competitive pressures and macroeconomic uncertainties, but still presents an attractive investment opportunity based on valuation metrics [6][12].

Investment Rating - The report maintains a "Buy" rating for the company [4][7]. Core Insights - The company reported a revenue growth of 44.33% year-on-year for Q3 2024, with GAAP net profit increasing by 60.78% [1]. - For the first three quarters of 2024, the company achieved a total revenue of 283.23 billion yuan, representing a year-on-year growth of 78.40%, and a GAAP net profit of 84.99 billion yuan, up 131.28% [1]. - The report indicates a decrease in gross margin by 0.99 percentage points in Q3 2024, with a comprehensive gross margin of 60.03% [2]. - Online marketing service revenue grew by 24.35% year-on-year in Q3 2024, while commission income surged by 71.52% [3]. Summary by Sections Financial Performance - Q3 2024 revenue reached 99.35 billion yuan, a 44.33% increase year-on-year, with GAAP net profit at 24.98 billion yuan, up 60.78% [1]. - For the first three quarters of 2024, the company reported a comprehensive gross margin of 62.54%, down 1.78 percentage points year-on-year [2]. Revenue Breakdown - Online marketing service revenue for the first three quarters of 2024 was 140.92 billion yuan, a 34.39% increase year-on-year, while commission income was 142.30 billion yuan, up 164.05% [3]. Profitability Forecast - The report has adjusted the profit forecast downwards, reducing the GAAP net profit estimates for 2024, 2025, and 2026 by 15%, 24%, and 27% respectively, due to increased marketing expenditures and the uncertain costs associated with the TEMU business [4].

Investment Rating - The report maintains a "Buy" rating for PDD Holdings, citing that the stock price reflects short-term pressures and is supported by policy measures to boost consumption [1]. Core Insights - PDD Holdings reported a revenue growth of 44.3% year-on-year for Q3 2024, reaching RMB 99.4 billion, which was approximately 3% below Bloomberg consensus estimates [1]. - The company has adjusted its revenue forecasts for 2024 to 2026 down by 4%-9% and non-GAAP net profit forecasts down by 9%-16% due to the impact of enhanced merchant support measures [1]. - The target price has been revised down from USD 187.90 to USD 156.80, corresponding to a 14x P/E ratio for 2024 [1]. Financial Performance Summary - For FY24E, revenue is projected at RMB 398.2 billion, with a non-GAAP net profit of RMB 123.4 billion, reflecting a year-on-year growth of 81.7% [3]. - The gross profit margin for Q3 2024 decreased to 60.0%, down 2.1 percentage points from the previous year, attributed to a miss in commission revenue forecasts [1][6]. - The company’s operating profit margin for Q3 2024 was reported at 24.5%, which is 2.9 percentage points lower than expected [6]. Revenue Breakdown - Online marketing services and other revenues grew by 24.3% year-on-year in Q3 2024, reaching RMB 49.4 billion, while transaction service fees increased by 71.5% to RMB 50 billion [1][6]. - The total revenue for Q3 2024 was RMB 99.4 billion, reflecting a year-on-year growth of 44.3% [6]. Strategic Initiatives - Management emphasized ongoing investments in the merchant ecosystem to foster a healthier and more sustainable platform, including fee waivers and enhanced after-sales support [1]. - The company has implemented a RMB 10 billion fee reduction plan benefiting over 10 million merchants, aimed at cost savings and efficiency improvements [1].

Investment Rating - The report maintains a "BUY" rating for PDD Holdings, indicating a potential return of over 15% over the next 12 months [1]. Core Insights - PDD Holdings reported a revenue increase of 44.3% YoY in 3Q24, reaching RMB99.4 billion, which was 3% below Bloomberg consensus estimates [1]. - Non-GAAP net profit rose by 61.3% YoY to RMB27.5 billion, also falling short of consensus by 6% due to revenue generation misses [1]. - The target price (TP) has been adjusted down to US$156.8 from US$187.9, reflecting a 34.6% upside from the current price of US$116.49 [1]. - The company is focusing on enhancing merchant support, which has led to cost savings for over 10 million merchants [1]. - Management plans to continue investing in the merchant ecosystem to ensure sustainable long-term growth [1]. Financial Performance Summary - For FY24E, revenue is projected at RMB398.2 billion, with a net profit of RMB113.0 billion, reflecting a YoY growth of 81.7% [3]. - The gross profit margin is expected to be 61.8% in FY24E, with an operating margin of 28.2% [5]. - The adjusted net profit for FY24E is forecasted at RMB123.4 billion, with a P/E ratio of 10.3x [3][5]. Revenue Breakdown - Online marketing services and other revenues increased by 24.3% YoY to RMB49.4 billion in 3Q24, while transaction services revenue grew by 71.5% YoY to RMB50.0 billion [1]. - The total revenue for 3Q24 was RMB99.4 billion, with a gross profit of RMB59.6 billion, resulting in a gross profit margin of 60.0% [1][5]. Segment Valuation - The SOTP valuation indicates that the main app contributes RMB240.1 billion in revenue, with a valuation of US$119.1 per share based on a 12x 2024E P/E [5]. - Duoduo Grocery is valued at US$1.9 per share, while Temu is valued at US$15.7 per share based on a 1.2x 2024E P/S [5].

Revenue Growth - Total revenues in Q3 2024 were RMB99,354.4 million (US$14,157.9 million), a 44% increase from RMB68,840.4 million in Q3 2023[4] - Total revenues for the three months ended September 30, 2024, reached RMB 99.35 billion (US$ 14.16 billion), a significant increase from RMB 68.84 billion in the same period of 2023[32] - Revenues from online marketing services and others were RMB49,351.0 million (US$7,032.5 million), a 24% increase from RMB39,687.7 million in Q3 2023[8] - Revenues from transaction services were RMB50,003.4 million (US$7,125.4 million), a 72% increase from RMB29,152.7 million in Q3 2023[9] - Revenues from online marketing services and others for the three months ended September 30, 2024, were RMB 49.35 billion (US$ 7.03 billion), compared to RMB 39.69 billion in the same period of 2023[37] - Revenues from transaction services for the three months ended September 30, 2024, were RMB 50.00 billion (US$ 7.13 billion), up from RMB 29.15 billion in the same period of 2023[37] Profitability - Operating profit in Q3 2024 was RMB24,292.5 million (US$3,461.6 million), a 46% increase from RMB16,656.0 million in Q3 2023[4] - Net income attributable to ordinary shareholders in Q3 2024 was RMB24,980.7 million (US$3,559.7 million), a 61% increase from RMB15,537.1 million in Q3 2023[5] - Non-GAAP net income attributable to ordinary shareholders in Q3 2024 was RMB27,458.7 million (US$3,912.8 million), a 61% increase from RMB17,027.1 million in Q3 2023[14] - Net income for the three months ended September 30, 2024, was RMB 24.98 billion (US$ 3.56 billion), up from RMB 15.54 billion in the same period of 2023[32] - Operating profit for the three months ended September 30, 2024, stood at RMB 24.29 billion (US$ 3.46 billion), compared to RMB 16.66 billion in the same period of 2023[32] - Non-GAAP operating profit for the three months ended September 30, 2024, was RMB 26,770,463 (US$ 3,814,760), compared to RMB 18,125,840 for the same period in 2023[45] - Non-GAAP net income attributable to ordinary shareholders for the three months ended September 30, 2024, was RMB 27,458,701 (US$ 3,912,832), compared to RMB 17,027,084 for the same period in 2023[45] - Non-GAAP operating profit for the nine months ended September 30, 2024, was RMB 90,309,956 (US$ 12,869,065), compared to RMB 41,197,644 for the same period in 2023[45] - Non-GAAP net income attributable to ordinary shareholders for the nine months ended September 30, 2024, was RMB 92,492,640 (US$ 13,180,094), compared to RMB 42,422,832 for the same period in 2023[45] Earnings Per Share - Earnings per diluted ordinary share for the three months ended September 30, 2024, were RMB 4.23 (US$ 0.60), up from RMB 2.65 in the same period of 2023[35] - Non-GAAP diluted earnings per ordinary share for the three months ended September 30, 2024, was RMB 4.65 (US$ 0.66), compared to RMB 2.90 for the same period in 2023[45] - Non-GAAP diluted earnings per ordinary share for the nine months ended September 30, 2024, was RMB 15.64 (US$ 2.23), compared to RMB 7.25 for the same period in 2023[45] Cash Flow and Investments - Net cash generated from operating activities was RMB27,522.3 million (US$3,921.9 million), compared to RMB32,537.9 million in Q3 2023[15] - Net cash generated from operating activities for the three months ended September 30, 2024, was RMB 27,522,313 (US$ 3,921,898), compared to RMB 32,537,857 for the same period in 2023[43] - Net cash used in investing activities for the three months ended September 30, 2024, was RMB 16,898,558 (US$ 2,408,025), compared to RMB 4,820,500 for the same period in 2023[43] - Net cash generated from operating activities for the nine months ended September 30, 2024, was RMB 92,382,132 (US$ 13,164,348), compared to RMB 57,271,860 for the same period in 2023[43] - Net cash used in investing activities for the nine months ended September 30, 2024, was RMB 87,810,779 (US$ 12,512,936), compared to RMB 38,960,607 for the same period in 2023[43] Assets and Liabilities - Cash, cash equivalents, and short-term investments were RMB308.5 billion (US$44.0 billion) as of September 30, 2024, compared to RMB217.2 billion as of December 31, 2023[16] - Other non-current assets were RMB74.0 billion (US$10.5 billion) as of September 30, 2024, compared to RMB48.0 billion as of December 31, 2023[16] - Total current liabilities as of September 30, 2024, were RMB 179.99 billion (US$ 25.65 billion), down from RMB 152.90 billion as of December 31, 2023[30] - Total shareholders' equity as of September 30, 2024, increased to RMB 278.50 billion (US$ 39.69 billion) from RMB 187.24 billion as of December 31, 2023[30] Expenses - Sales and marketing expenses were RMB30,483.8 million (US$4,343.9 million), a 40% increase from RMB21,748.5 million in Q3 2023[10] - Total share-based compensation expenses for the three months ended September 30, 2024, were RMB 2.48 billion (US$ 353.11 million), compared to RMB 1.47 billion in the same period of 2023[40]

Group 1 - The primary goal of the Cash Flow Kingdom Income Portfolio is to achieve an overall yield in the range of 7% - 10% by combining various income streams for a steady portfolio payout [1] - PDD Holdings Inc. (NASDAQ: PDD) reported strong business growth in the most recent quarter, but the results fell short of higher expectations, leading to a significant decline in share price [1] - Following the disappointing earnings report, PDD's shares experienced a double-digit slump, resulting in a single-digit earnings multiple [1] Group 2 - The Cash Flow Club, where the author contributes, focuses on company cash flows and access to capital, offering features like a personal income portfolio targeting a yield of over 6%, community chat, and performance transparency [1]

Financial Data and Key Metrics - Total revenues for Q3 2024 reached RMB99.4 billion, a 44% year-over-year increase, driven by growth in online marketing services (RMB49.4 billion, up 24%) and transaction services (RMB50 billion, up 72%) [33] - Net income attributable to ordinary shareholders was RMB25 billion, compared to RMB15.5 billion in the same quarter last year [37] - Non-GAAP operating profit margin was 27%, up from 26% in the same quarter last year [36] - Net cash generated from operating activities was RMB27.5 billion, down from RMB32.5 billion in the same quarter last year [39] Business Line Data and Key Metrics - The RMB10 billion fee reduction program benefited over 10 million merchants, with fee reductions planned for the coming year [8][14] - Logistics support initiatives, including eliminating transhipment fees for Western China, drove significant order volume growth in remote regions [12][24] - The high-quality merchant support program allocated RMB1 billion in subsidies and RMB2 billion in online traffic resources, boosting agricultural product sales [25] Market Data and Key Metrics - Sales of national brands during the Double 11 Shopping Festival rose more than 10-fold quarter-on-quarter [28] - Delivery fees for agricultural products and daily essentials in Western China were cut by up to 70%, encouraging merchants to enter these markets [24] - Consumer preferences shifted towards quality and personalization, driving demand for premium products in urban and rural areas [29] Company Strategy and Industry Competition - The company is committed to high-quality development, focusing on ecosystem investments, fee reductions, and merchant support initiatives [8][15] - Investments in logistics and supply chain innovation aim to strengthen economic links between regions and promote high-quality growth [12][26] - Intensified competition in the e-commerce sector and external challenges have moderated revenue growth and profitability [9][33] Management Commentary on Operating Environment and Future Outlook - Management expects short-term financial impacts from ecosystem investments but remains focused on long-term benefits [10][38] - The company is adapting to shifting consumer preferences and evolving market demands, with a focus on supply chain innovation [15][29] - Global business growth faces challenges from competition and external expectations, but the company remains committed to delivering high-quality services [53][56] Other Important Information - The company hosted the Smart Agriculture Competition and Global Agri-Inno Challenge 2024, advancing research and technology innovation in agriculture [16] - Compliance and platform ecosystem initiatives have been scaled up, with investments in technology and merchant education to enhance supply chain quality [62][65] Q&A Session Summary Question: Progress on Merchant Support Initiatives and Future Plans - The RMB10 billion fee reduction program has significantly lowered operational costs for merchants, enabling them to invest in product development and technology upgrades [48][49] - Logistics fee reductions have expanded merchant reach in Western China, fostering a healthier ecosystem [50][51] Question: Global Business Strategy and External Environment - The company is actively engaging with external stakeholders to enhance service standards and compliance in global markets [54][55] - Intensifying competition and external challenges are expected to impact business growth, but the company remains committed to delivering value to global consumers [56] Question: Compliance and Platform Ecosystem Initiatives - The company has invested in compliance teams, technology, and merchant education to strengthen its ecosystem and meet regulatory requirements [62][65] - These efforts aim to remove bad actors and empower high-quality merchants, fostering a sustainable supply chain [66] Question: Profitability Trends and Long-Term Outlook - Profitability may trend lower in the long term due to investments in ecosystem development, but these investments are expected to create long-term value for consumers and merchants [67][69] Question: Double 11 Shopping Festival Performance and Domestic Competition - The RMB10 billion voucher campaign during Double 11 drove strong sales growth, particularly in agricultural products and daily necessities [77] - Intense competition in the domestic e-commerce market has moderated growth, but the company remains focused on high-quality investments to enhance consumer trust [81][86]

Core Insights - PDD Holdings' shares are experiencing a significant decline in premarket trading following disappointing quarterly results that fell short of analysts' expectations [1][2] - The company's revenue growth is being impacted by intense competition and costly international expansion efforts [2][4] Financial Performance - For the quarter ending September 30, PDD reported a revenue increase of 44.3%, reaching 99.35 billion yuan ($13.7 billion), which was below the consensus estimate of 101.6 billion yuan [2] - Earnings per share (EPS) for the third quarter were reported at 4.23 yuan, also missing the expected 4.46 yuan [2] Competitive Landscape - Temu, a platform under PDD, is facing increased competition from major players like Amazon, which recently launched a new section targeting low-cost items to compete directly with Temu and other rivals [4] - The competitive environment is expected to continue exerting pressure on PDD's revenue growth, as indicated by the company's Vice President of Finance [3][5]

Revenue Growth - Total revenues in Q3 2024 were RMB99,354.4 million (US$14,157.9 million), a 44% increase from RMB68,840.4 million in Q3 2023[1] - Total revenues for the three months ended September 30, 2024, reached RMB 99,354,401 thousand (US$ 14,157,889 thousand), a significant increase from RMB 68,840,371 thousand in the same period of 2023[20] - Revenues from online marketing services and others were RMB49,351.0 million (US$7,032.5 million), a 24% increase from RMB39,687.7 million in Q3 2023[5] - Online marketing services and others contributed RMB 49,351,022 thousand (US$ 7,032,465 thousand) to revenues for the three months ended September 30, 2024, up from RMB 39,687,678 thousand in the same period of 2023[22] - Revenues from transaction services were RMB50,003.4 million (US$7,125.4 million), a 72% increase from RMB29,152.7 million in Q3 2023[5] - Transaction services revenues for the three months ended September 30, 2024, were RMB 50,003,379 thousand (US$ 7,125,424 thousand), compared to RMB 29,152,693 thousand in the same period of 2023[22] Profitability - Operating profit in Q3 2024 was RMB24,292.5 million (US$3,461.6 million), a 46% increase from RMB16,656.0 million in Q3 2023[2] - Operating profit for the three months ended September 30, 2024, stood at RMB 24,292,458 thousand (US$ 3,461,647 thousand), up from RMB 16,656,021 thousand in the same period of 2023[20] - Operating profit for Q3 2024 increased to RMB 24,292,458 thousand, up 45.8% from RMB 16,656,021 thousand in 2023[26] - Non-GAAP operating profit for Q3 2024 reached RMB 26,770,463 thousand, a 47.7% increase from RMB 18,125,840 thousand in 2023[26] - Net income attributable to ordinary shareholders in Q3 2024 was RMB24,980.7 million (US$3,559.7 million), a 61% increase from RMB15,537.1 million in Q3 2023[3] - Net income for the three months ended September 30, 2024, was RMB 24,980,694 thousand (US$ 3,559,719 thousand), compared to RMB 15,537,122 thousand in the same period of 2023[20] - Net income attributable to ordinary shareholders for Q3 2024 rose to RMB 24,980,694 thousand, up 60.8% from RMB 15,537,122 thousand in 2023[26] - Non-GAAP net income attributable to ordinary shareholders for Q3 2024 was RMB 27,458,701 thousand, a 61.3% increase from RMB 17,027,084 thousand in 2023[26] Earnings Per Share - Diluted earnings per ordinary share for Q3 2024 increased to RMB 4.23, up 59.6% from RMB 2.65 in 2023[26] - Non-GAAP diluted earnings per ordinary share for Q3 2024 was RMB 4.65, a 60.3% increase from RMB 2.90 in 2023[26] - Non-GAAP diluted earnings per ADS for Q3 2024 reached RMB 18.59, up 60.1% from RMB 11.61 in 2023[26] Expenses - Sales and marketing expenses were RMB30,483.8 million (US$4,343.9 million), a 40% increase from RMB21,748.5 million in Q3 2023[7] - Total operating expenses were RMB35,352.7 million (US$5,037.7 million), a 39% increase from RMB25,354.1 million in Q3 2023[6] - General and administrative expenses were RMB1,805.6 million (US$257.3 million), a 138% increase from RMB758.3 million in Q3 2023[7] - Research and development expenses for the three months ended September 30, 2024, were RMB 3,063,353 thousand (US$ 436,524 thousand), up from RMB 2,847,323 thousand in the same period of 2023[20] - Total share-based compensation expenses for the three months ended September 30, 2024, were RMB 2,478,005 thousand (US$ 353,113 thousand), compared to RMB 1,469,819 thousand in the same period of 2023[23] - Share-based compensation expenses for Q3 2024 were RMB 2,478,005 thousand, a 68.6% increase from RMB 1,469,819 thousand in 2023[26] Cash and Investments - Cash, cash equivalents, and short-term investments were RMB308.5 billion (US$44.0 billion) as of September 30, 2024, compared to RMB217.2 billion as of December 31, 2023[9] - Other non-current assets were RMB74.0 billion (US$10.5 billion) as of September 30, 2024, compared to RMB48.0 billion as of December 31, 2023[9] - Cash, cash equivalents, and restricted cash at the end of the period for September 30, 2024, stood at RMB 125,688,495 thousand (US$ 17,910,467 thousand), up from RMB 111,353,259 thousand at the beginning of the period[24] - Net cash generated from operating activities for the three months ended September 30, 2024, was RMB 27,522,313 thousand (US$ 3,921,898 thousand), down from RMB 32,537,857 thousand in the same period of 2023[24] Shareholders' Equity - Total shareholders' equity increased to RMB 278,504,920 thousand (US$ 39,686,634 thousand) as of September 30, 2024, from RMB 187,241,607 thousand in the previous year[18] Non-GAAP Metrics - Non-GAAP operating profit for Q3 2024 reached RMB 26,770,463 thousand, a 47.7% increase from RMB 18,125,840 thousand in 2023[26] - Non-GAAP net income attributable to ordinary shareholders for Q3 2024 was RMB 27,458,701 thousand, a 61.3% increase from RMB 17,027,084 thousand in 2023[26] - Non-GAAP diluted earnings per ordinary share for Q3 2024 was RMB 4.65, a 60.3% increase from RMB 2.90 in 2023[26] - Non-GAAP diluted earnings per ADS for Q3 2024 reached RMB 18.59, up 60.1% from RMB 11.61 in 2023[26] - Non-GAAP diluted weighted-average number of ordinary shares outstanding for Q3 2024 was 5,909,793 thousand, up 0.8% from 5,865,102 thousand in 2023[26] Other Financial Metrics - Loss from fair value change of certain investments for Q3 2024 was RMB 2, a significant decrease from RMB 7,935 in 2023[26]