Dingdong(US:DDL) HTSC·2025-11-16 05:21Investment Rating - The report maintains an "Overweight" rating for the company [6] Core Views - The company has achieved its highest quarterly revenue in history at 6.66 billion yuan in Q3 2025, with a year-on-year growth of 1.9%, marking seven consecutive quarters of positive growth [1][6] - The non-GAAP net profit for Q3 2025 is 100 million yuan, with a non-GAAP net profit margin of 1.5%, a decrease of 0.9 percentage points year-on-year, primarily due to product replacement strategies and competitive pressures in the industry [1][2] - The company has a free cash balance of 3.03 billion yuan as of the end of Q3 2025, which is higher than its current market value, indicating potential valuation attractiveness [1] Summary by Sections Revenue and Profitability - In Q3 2025, the total GMV reached 7.27 billion yuan, with a year-on-year increase of 0.1%. Product revenue was 6.57 billion yuan, up 1.8%, while service revenue grew by 11.9% to 90 million yuan [2] - The gross margin for Q3 2025 was 28.9%, down 0.9 percentage points year-on-year, attributed to product replacement strategies and competitive pricing pressures in the instant retail and fresh e-commerce sectors [2] Strategic Initiatives - The management introduced a "One Big, One Small, One World" strategy focusing on big product strategies, expanding into small cities, and developing overseas markets. This includes the successful launch of over 100 popular products during a promotional campaign [3] - The company aims to enhance user stickiness and repurchase rates through improved product systems, with the proportion of high-quality SKUs reaching 37.2% in September, contributing 44.7% to GMV [2][3] Profit Forecast and Valuation - The report adjusts the company's 2025 non-GAAP net profit forecast down by 11.6% to 350 million yuan, considering competitive pressures and product strategies [4][19] - The target price is set at $2.46, based on a non-GAAP target PE of 11 times, which is below the average of comparable companies at 15.3 times, reflecting the company's ongoing internal transformation and external competitive pressures [4][19]