PDD(US:PDD) Soochow Securities·2024-05-25 22:30Investment Rating - The report maintains a "Buy" rating for Pinduoduo (PDD) [1][36] Core Insights - Pinduoduo's revenue and profit significantly exceeded market expectations, with Q1 2024 revenue reaching 86.812 billion RMB, a year-over-year increase of 131%, and Non-GAAP net profit at 30.602 billion RMB, a year-over-year increase of 202% [1][2][18] - The strong revenue growth is attributed to significant synergy effects and the main platform's performance exceeding industry growth [2][20] - The global business is progressing, with Temu expected to continue narrowing its losses, benefiting from Pinduoduo's supply chain advantages [2][24] - Although the gross margin decreased year-over-year, long-term profit margins are expected to improve as the company enhances its supply chain and service capabilities [3][27] Summary by Sections Revenue and Profit Performance - In Q1 2024, Pinduoduo achieved revenue of 86.812 billion RMB, surpassing Bloomberg's consensus estimate of 76.860 billion RMB [1][18] - Non-GAAP net profit was 30.602 billion RMB, significantly above the expected 15.535 billion RMB [1][24] Revenue Growth Drivers - The revenue growth was primarily driven by significant synergy effects and the main platform's continued outperformance in the industry [2][20] - Advertising revenue reached 42.456 billion RMB, a year-over-year increase of 56%, while commission revenue surged to 44.356 billion RMB, a year-over-year increase of 327% [2][20] Global Business Expansion - Temu, Pinduoduo's cross-border e-commerce platform, is expected to continue reducing losses, with a recent shift to a semi-managed model in the U.S. to enhance gross margins [2][24] Profitability Outlook - The gross margin for Q1 2024 was 62.34%, down 8.10 percentage points year-over-year, but the company is expected to improve profitability in the long term [3][27] - The report anticipates that Pinduoduo will maintain high revenue and profit growth throughout the year [3][35] Earnings Forecast and Valuation - The Non-GAAP net profit estimates for 2024-2026 have been revised upwards to 130.51 billion RMB, 170.35 billion RMB, and 205.92 billion RMB, respectively [3][36] - Corresponding P/E ratios are projected to be 45.3, 34.7, and 28.7 times [3][36]