PDD(US:PDD) Ge Long Hui·2025-11-19 07:15Core Insights - PDD reported total revenue of RMB108 billion in 3Q25, reflecting a 9% year-over-year increase and aligning with market expectations of RMB107.7 billion [1] - Online Marketing Services (OMS) revenue was RMB53 billion, below the consensus estimate of RMB56 billion, indicating potential softness in growth [1] - Transaction Services revenue reached RMB55 billion, a 10% year-over-year increase, surpassing consensus by 6% [1] - Non-GAAP net profit margin was 29%, bolstered by RMB8.6 billion in interest and investment income [1] Revenue and Profitability - Management indicated that revenue and profit may fluctuate in upcoming quarters due to aggressive reinvestment strategies aimed at enhancing long-term competitiveness [2] - Selling & Marketing expenses were RMB30 billion in 3Q25, stable year-over-year and below the consensus estimate of RMB33 billion, attributed to the temporary suspension of the domestic trade-in program [4] - R&D spending exceeded expectations due to increased personnel costs and higher bandwidth and server expenses [4] Market Position and Growth - Temu's GMV growth rebounded in 3Q25, achieving nearly 40% year-over-year quarterly growth, following disruptions in 2Q25 [3] - Temu's semi-entrusted model generated US$5.5 billion in GMV, accounting for about 29% of its total, indicating improved access to local supply [3] - Geographically, Europe now contributes the largest GMV share for Temu at around 40%, followed by the U.S. at just over 30% [3] Valuation and Future Outlook - The stock is trading at US$119.58 per ADS, implying a market cap of US$170 billion, with consensus forecasts for 2025/26 revenue of US$60 billion/US$70 billion, reflecting year-over-year growth of 10%/14% [5] - EBITDA is projected at US$14 billion/US$17 billion for 2025/26, both showing a 24% year-over-year increase [5] - The current valuation translates to 9x/7x EV/EBITDA for 2025/26, significantly below the sector average of 24x/20x [5]