PDD(US:PDD) Soochow Securities·2025-06-05 08:52Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD) [7] Core Views - The company's Q1 2025 performance fell short of expectations, with revenue of RMB 95.67 billion, a year-on-year increase of 10%, but below the Bloomberg consensus estimate of RMB 101.6 billion. Non-GAAP net profit was RMB 16.92 billion, down 45% year-on-year, also below the expected RMB 27.88 billion [12][16] - Pinduoduo is focusing on high-quality platform ecology and supply chain capability construction, despite a slowdown in short-term revenue growth. The company is implementing measures such as "reduction, support, and governance" across various operational aspects to promote sustainable development [13][16] - The company has initiated a RMB 100 billion support program to enhance investments on both the merchant and consumer sides, aiming to stimulate demand and support small and medium-sized businesses [16] Summary by Sections Revenue Growth and Ecosystem Development - In Q1 2025, Pinduoduo's advertising revenue reached RMB 48.72 billion, up 15% year-on-year, exceeding market expectations. However, commission revenue was RMB 46.95 billion, up 6% year-on-year, falling short of expectations [12][13] - The company emphasizes high-quality development and continues to expand its "new quality supply" to benefit consumers and create a win-win ecosystem for users, merchants, and the platform [13][16] Profitability Challenges - The gross margin for Q1 2025 was 57.2%, a decrease of 5.1 percentage points year-on-year, indicating short-term profitability challenges. The sales expense ratio increased to 34.9%, reflecting higher costs associated with ecosystem investments and promotional activities [18][21] - The report notes that the company faces pressure on the expense side, with sales, management, and R&D expense ratios showing varying trends [21][22] Earnings Forecast and Investment Rating - Due to increased investments in ecosystem development, the report adjusts the Non-GAAP net profit forecasts for 2025-2027 to RMB 98.55 billion, RMB 130.32 billion, and RMB 153.98 billion, respectively. The corresponding PE ratios are projected to be 10.2, 7.7, and 6.5 [24][28] - The report maintains a "Buy" rating, reflecting confidence in the company's long-term growth potential despite short-term profit sacrifices [24]