PDD(US:PDD)2025-06-06 07:15Investment Rating - The report assigns a "Buy" rating to Pinduoduo (PDD) with a target price of HKD 131.40, reflecting a 32% upside from the current price of USD 99.65 [2][9]. Core Insights - Pinduoduo is facing challenges in the external environment but remains committed to its long-term development strategy. The company is increasing subsidies to maintain pricing power amid intense competition in the e-commerce sector [6][8]. - The first quarter revenue was RMB 95.672 billion, a year-on-year increase of 10%, but below market expectations. The operating profit was RMB 16.086 billion, down 38% year-on-year, indicating increased subsidy efforts and a higher revenue contribution from Temu [8][9]. - The report anticipates continued pressure on short-term monetization rates and profit margins due to ongoing investments in the platform ecosystem [6][8]. Financial Summary - The report adjusts revenue forecasts for 2025-2027 to RMB 433.4 billion, RMB 499 billion, and RMB 567.6 billion, respectively. Operating profit estimates are revised to RMB 90.9 billion, RMB 120.4 billion, and RMB 153.6 billion for the same years [9][12]. - The earnings per ADS are projected to be RMB 64.5, RMB 83.8, and RMB 105.5 for 2025, 2026, and 2027, respectively, reflecting a significant decrease in 2025 due to increased competition and subsidy costs [9][12].