Group 1: Market Overview - A-share indices showed mixed performance in May, with the Wind All A Index recording the highest increase, while the Sci-Tech Innovation 50 Index experienced the largest decline [3] - Various industries performed differently, with light manufacturing, comprehensive, and textile apparel sectors showing strong performance, while electronics, computers, real estate, and social services lagged [3] Group 2: Company Insights - Longji Technology (600584.SH) is focusing on high-performance packaging technology and high-value applications, accelerating its strategic layout in automotive electronics, high-performance computing, storage, and 5G communication markets. Revenue from communication electronics, consumer electronics, computing electronics, automotive electronics, and industrial & medical electronics for 2024 is projected to be 44.8%, 24.1%, 16.2%, 7.9%, and 7.0% respectively, with all but the industrial sector showing double-digit year-on-year growth [4] - Xiaomi Group (1810.HK) reported Q1 2025 revenue of 111.3 billion yuan, a 47.4% year-on-year increase, marking a record high for a single quarter and surpassing 100 billion yuan for two consecutive quarters. The Non-IFRS net profit reached 10.7 billion yuan, up 64.5%, with a net profit margin of 9.6% [5] - Pinduoduo (PDD.O) reported Q1 2025 revenue of 95.67 billion yuan, a 10.2% year-on-year increase, but faced a significant decline in net profit, with GAAP net profit down 47.3% to 14.74 billion yuan and Non-GAAP net profit down 44.7% to 16.92 billion yuan [6] - Meituan-W (3690.HK) achieved Q1 2025 revenue of 86.56 billion yuan, an 18.1% year-on-year increase, with net profit attributable to shareholders rising 87.3% to 10.06 billion yuan and adjusted net profit increasing 46.2% to 10.95 billion yuan [7]

Group 1 - The core viewpoint of the articles indicates a decline in investment and financing activity within China's short video industry, particularly since 2019, with only three financing events recorded by April 2025 [1] - The financing activities are concentrated in major cities like Beijing and Shanghai, which have the highest number of financing events at 10 each, followed by Guangdong with 7 and Zhejiang with 5 [2] - The user base for short videos in China has grown from approximately 600 million in 2018 to over 1 billion by 2023, but the growth rate has recently slowed, with a decrease of 13 million users compared to the previous year [6] Group 2 - Users are increasingly motivated by practical purposes when watching short videos, with the desire to "broaden knowledge and expand horizons" surpassing the need to "relieve stress and pass time," now accounting for 57.3% of users, a 13 percentage point increase from 2023 [7] - The majority of users (86.8%) seek practical content, with specific purposes including acquiring news (55.6%), learning practical skills (47.7%), and obtaining useful life information (45.0%) [8] - The short video user engagement rate has remained high, with 93.8% of users in 2024, maintaining the leading position in the online audio-visual application sector for six consecutive years [6]

Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD) [3][10][22] Core Views - Pinduoduo's Q1 2025 revenue was Rmb95.7 billion, a 10% year-over-year increase, but below market expectations of Rmb101.6 billion. Operating profit fell 38% year-over-year to Rmb16.1 billion, and non-GAAP net profit dropped 45% year-over-year to Rmb16.9 billion, missing consensus forecasts [4][5] - The company has launched a "Billion Yuan Merchant Support" program, aiming to invest over Rmb100 billion in the platform ecosystem over the next three years to support small and medium-sized businesses amid economic uncertainties. This initiative is expected to pressure short-term profits but is seen as a strategic move for long-term growth [5][6][10] - Pinduoduo is focusing on enhancing its platform ecosystem and technology investments, which are crucial for high-quality development. The gross profit for Q1 2025 was Rmb54.7 billion, with a gross margin of 57.2%, down 5.1 percentage points year-over-year. Operating expenses increased to 40.4% of revenue, driven by higher selling expenses [6][8][10] Financial Data and Profit Forecast - Revenue projections for Pinduoduo are as follows: - 2023: Rmb247.639 billion - 2024: Rmb393.836 billion - 2025E: Rmb408.400 billion - 2026E: Rmb439.304 billion - 2027E: Rmb501.347 billion - Non-GAAP net profit forecasts have been revised down to: - 2025E: Rmb101.143 billion - 2026E: Rmb138.565 billion - 2027E: Rmb168.937 billion [2][10][13] Market Position and Competitive Landscape - Pinduoduo's market share is nearing its upper limit in the short term, leading to a strategic decision to sacrifice short-term profits for long-term ecosystem development. The company is also expanding its overseas business and adapting to tariff risks, indicating potential for market share improvement in the long run [5][10][9]

Core Insights - Oliver Rodzianko has introduced his new fund, Invictus Origin, through a YouTube video aimed at a select group of contacts [1] - The fund focuses on macroeconomic trends and public equity strategy, emphasizing sectors such as technology, semiconductors, AI, and energy [1] - Rodzianko's investment approach is characterized by a long-only, unleveraged portfolio aimed at capital preservation and capturing asymmetric upside during market dislocations [1] Investment Strategy - The investment strategy is grounded in valuation discipline and long-term fundamentals, with positions held through medium-term cycles [1] - Exits from positions are based on intrinsic value assessments [1] - The Nasdaq High-Alpha Black Swan Portfolio is a key component of his strategy, designed for resilience and long-term outperformance [1] Research and Publications - Rodzianko's research is published on platforms such as Seeking Alpha, TipRanks, and GuruFocus [1] - He is in the process of formalizing his investment framework within an asset management firm and developing a family office focused on lower-volatility capital stewardship [1]

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's revenue for Q1 2025 reached 95.672 billion yuan, a year-on-year increase of 10.2%, while GAAP net profit decreased by 47.3% to 14.742 billion yuan [1] - The decline in profit is attributed to increased costs from platform investments and uncertainties in overseas tariffs, leading to a downward revision of profit forecasts for 2025, 2026, and 2027 by 34%, 37%, and 41% respectively [4] Summary by Sections Financial Performance - In Q1 2025, the company's gross margin was 57.2%, down 5.1 percentage points year-on-year, primarily due to ongoing overseas expansion and investments to maintain platform competitiveness [2] - Sales expense ratio increased by 7.9 percentage points to 34.9% due to higher promotional expenditures [2] Revenue Streams - Online marketing service revenue grew by 15% year-on-year to 48.722 billion yuan, while commission revenue increased by 6% to 46.950 billion yuan [3] - The company has implemented measures to support merchants and optimize the platform ecosystem, including the establishment of a "Merchant Rights Protection Committee" and a "Billion Support" strategy [3] Profit Forecasts and Valuation - The report provides a detailed profit forecast, with expected revenues of 437.712 billion yuan in 2025, reflecting an 11% growth rate [5] - GAAP net profit is projected to be 91.006 billion yuan in 2025, indicating a decline of 19% compared to the previous year [5]

Core Insights - PDD Holdings reported weaker-than-expected earnings for the first quarter, primarily due to the ongoing trade conflict between the U.S. and China, which adversely affected its e-Commerce platform [1] Group 1: Company Performance - The earnings report for PDD Holdings indicated a significant impact from the U.S.-China trade spat, highlighting the company's vulnerability in the current geopolitical climate [1] - The ownership of Temu exposes Pinduoduo to the tariff conflict, further complicating its operational landscape [1] Group 2: Market Context - The trade tensions between the U.S. and China are creating a challenging environment for e-Commerce companies, with PDD Holdings being directly affected [1]

Core Insights - Pinduoduo's Q1 2025 financial report shows revenue of 957 billion yuan, a 10% year-on-year increase, but operating profit decreased by 38% to 160.856 billion yuan, leading to a nearly 14% drop in stock price [1][2] - The apparent underperformance is attributed to Pinduoduo's strategic choice to prioritize sustainable high-quality development over short-term profits amid a changing e-commerce landscape [2][6] Group 1: Strategic Choices Behind Performance - Pinduoduo's decision to focus on long-term investments rather than short-term gains is evident in its "billion subsidy" and "e-commerce westward" initiatives aimed at supporting small and medium-sized businesses and tapping into potential consumer markets in western regions [4][5] - The company has significantly increased marketing expenses to 334 billion yuan, nearly 100 billion yuan more than the previous year, reflecting its commitment to supporting merchants and upgrading the industry [4][5] Group 2: Long-term Investment and Ecosystem Building - Pinduoduo's "billion subsidy" strategy, launched in April 2025, aims to provide differentiated support to various product categories, fostering a win-win ecosystem for platforms, merchants, and consumers [7][8] - The company emphasizes the importance of integrating resources across the platform to enhance merchant stability and operational efficiency, which is crucial for long-term growth [5][6] Group 3: Industry Trends and Competitive Advantage - Pinduoduo's approach aligns with the broader trend in the e-commerce industry towards high-quality development, contrasting with competitors focused on short-term traffic gains [6][20] - The company's initiatives demonstrate a deep understanding of the industry's fundamental dynamics, emphasizing the need for a robust supply chain and improved product quality to meet evolving consumer demands [5][20] Group 4: Case Studies of Support Initiatives - In agriculture, Pinduoduo's "2025 Duoduo Good Specialty" initiative enhances product standards and supply chain efficiency, benefiting both merchants and consumers [8][10] - In manufacturing, the "new quality supply" initiative helps brands like KOMERY innovate and reduce costs, leading to significant market success [11][12] Group 5: Consumer Engagement and Market Expansion - Pinduoduo's targeted subsidy programs, such as the "100 million merchant feedback plan," effectively stimulate diverse consumer demands and enhance product offerings [14][16] - The establishment of the "Merchant Rights Protection Committee" signifies Pinduoduo's shift from a traffic platform to an ecosystem builder, enhancing merchant support and operational efficiency [17][19]

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's revenue for Q1 2025 increased by 10.2% year-on-year, while GAAP net profit decreased by 47.3% [1] - The decline in profit is attributed to increased costs from platform investments and uncertainties in overseas tariffs [4] - The company is focusing on enhancing platform competitiveness and supporting merchants through various initiatives [3] Revenue and Profitability - Q1 2025 revenue reached 956.72 billion yuan, with a GAAP net profit of 147.42 billion yuan [1] - The company's gross margin for Q1 2025 was 57.2%, down 5.1 percentage points year-on-year, primarily due to overseas expansion and increased promotional spending [2] - Online marketing service revenue grew by 15% year-on-year, while commission revenue increased by 6% [3] Cost Structure - Sales expense ratio increased by 7.9 percentage points to 34.9% in Q1 2025, driven by higher promotional expenditures [2] - Management expense ratio decreased slightly to 1.7%, reflecting improved overall efficiency [2] Future Earnings Forecast - The earnings forecast for GAAP net profit has been revised down by 34%/37%/41% for 2025/2026/2027 to 910.06/1002.16/1082.33 billion yuan [4] - Revenue projections for 2025 are estimated at 437.71 billion yuan, with a growth rate of 11% [5] Valuation Metrics - The report provides a P/E ratio of 11 for 2025 and a P/B ratio of 2.4 [5][13] - The expected EPS for 2025 is 16.03 yuan [5]

Investment Rating - The investment rating for the company has been downgraded to "Hold" [6] Core Views - The company's Q1 2025 total revenue was 95.7 billion RMB, a year-on-year increase of 10.2%, but below the consensus estimate of 103.9 billion RMB. The non-GAAP net profit was 16.9 billion RMB, corresponding to a non-GAAP net profit margin of 17.7%, down 17.6 percentage points year-on-year, and also below the consensus estimate of 26.8% [1] - The underperformance in earnings is attributed to increased investments in domestic e-commerce to address market share disadvantages and improve the merchant ecosystem, as well as aggressive investments in overseas e-commerce to accelerate the transition to a semi-managed model [1][2] - The company has launched a "100 billion support" plan that may continue to impact profitability in the short to medium term, alongside geopolitical risks that add uncertainty [1] Domestic E-commerce - In Q1 2025, the company's online marketplace service revenue grew by 14.8% to 48.7 billion RMB, outperforming the consensus estimate of 13.5% growth. However, transaction service revenue increased by only 5.8% to 47 billion RMB, falling short of the expected 56 billion RMB due to aggressive merchant support and commission reductions [2] - Management shared specific initiatives for merchant support, including the "10 billion reduction" plan and the "100 billion support" plan, which aim to stabilize sales and reduce operating costs for small and medium-sized merchants [2] - The company expects that the adjustment in commercialization levels and the establishment of a healthy merchant ecosystem will take time, leading to continued pressure on revenue growth and profit release in the short term [2] Overseas E-commerce - During Q1 2025 to Q2 2025, the company's overseas e-commerce business, Temu, is transitioning its merchant supply model from fully managed to semi-managed to mitigate tariff risks. However, fluctuating policies are expected to negatively impact its fully managed business in the U.S. [3] - The company anticipates that Temu will require further investment to help quality merchants establish overseas warehouse capabilities and explore growth opportunities in non-U.S. regions, delaying the timeline for profitability [3] Profit Forecast and Valuation - The profit forecast for 2025-2027 has been adjusted downwards, with non-GAAP net profit estimates reduced by 37.2%, 25.3%, and 20.3% to 80.1 billion RMB, 106.5 billion RMB, and 127.7 billion RMB respectively [4][19] - The new target price based on SOTP valuation is set at 102.3 USD, down from 144.5 USD, with valuations for domestic e-commerce, Duoduo Maicai, and Temu at 74.6 USD, 4.9 USD, and 22.8 USD respectively [4][24] - The valuation multiples have been adjusted downwards due to lower visibility on profit growth during the investment period and increased competition in the sector [4][24]

Core Viewpoint - Pinduoduo is facing significant challenges in maintaining its market position and profitability amidst increasing competition and strategic shifts, leading to disappointing financial results in Q1. Financial Performance - In Q1, Pinduoduo reported revenue of 957 billion yuan, a year-on-year growth of only 10%, missing market expectations by nearly 60 billion yuan [5] - The company's operating profit fell to 161 billion yuan, a 38% decrease year-on-year, while net profit dropped to 147 billion yuan, down 47% [7] - Despite the disappointing overall performance, the advertising revenue from the main platform reached 487 billion yuan, growing 15% year-on-year, surpassing market expectations [8] Strategic Choices - Pinduoduo's management emphasized that the current profit decline is a result of strategic choices aimed at long-term growth rather than immediate profitability [9] - The company has significantly increased its sales and marketing expenses to 334 billion yuan, a 43% increase year-on-year, to support user and merchant subsidies [15] Competitive Landscape - Pinduoduo's price advantage is under pressure from competitors like Alibaba, JD, and Douyin, who are intensifying their pricing strategies against Pinduoduo [12] - The introduction of national subsidies for "old-for-new" exchanges poses additional challenges for Pinduoduo, which has inherent disadvantages due to its business model [13] Cross-Border E-commerce Challenges - Pinduoduo's cross-border e-commerce platform, Temu, faced difficulties in Q1 due to increased tariffs and changes in U.S. customs policies, leading to a significant reduction in advertising spending [17][18] - The shift from a fully managed to a semi-managed model for Temu is a response to rising costs and regulatory changes, impacting revenue recognition [20] Long-Term Vision - Pinduoduo's management views the current investments in merchant support and user subsidies as long-term strategies that will yield returns over time, despite short-term profitability pressures [16][21]