Investment Rating - The report assigns a 12-month target price of US$152 for PDD Holdings based on a sum-of-the-parts (SOTP) valuation approach [2][22]. Core Insights - The report highlights the narrowing pricing gap between Temu and major U.S. eCommerce platforms, now at approximately 25% compared to 40% previously, following recent price adjustments by Temu [1][14]. - Temu's business model is shifting towards a semi-entrusted model in the U.S., which presents operational challenges compared to the full-entrusted model, including a reduced selection of SKUs and increased working capital pressure for merchants [1][16]. - Temu has been expanding into non-Western markets, particularly in Europe, Africa, and Southeast Asia, with significant growth observed in Japan, where it has achieved a 40-50% year-over-year growth rate over the past two years [1][18]. Summary by Sections Pricing Dynamics - Post-tariff pricing adjustments have led to a more manageable cost structure for cross-border eCommerce, with potential tariff rates of 40-50% translating to a 15-20% increase in prices, which can be absorbed by the value chain [1][19]. Business Model Transition - Temu's transition to a semi-entrusted model in the U.S. is expected to require additional working capital and may limit SKU availability, impacting merchant operations [1][16]. Market Expansion - Temu's geographical diversification strategies include rapid growth in niche markets in Europe, such as Cyprus and Georgia, and a strong presence in Japan [1][18]. Financial Projections - The report provides financial estimates for Temu, projecting significant growth in GMV from US$307 million in 2022 to US$50.5 billion in 2025, with a compound annual growth rate (CAGR) of 165% for 2023 [20][21].