Investment Rating - The report assigns a "Buy" rating for Pinduoduo (PDD US) with a target price raised from $135 to $150, indicating a potential upside of 17.0% [2][11][13]. Core Insights - The second quarter profits exceeded expectations primarily due to better-than-expected interest income and marketing expenses. Advertising revenue grew by 13% year-on-year, aligning with expectations, while commission income slowed due to the contraction of the full-service business and a decrease in merchant support program growth [2][6]. - The report anticipates marginal improvement in performance for the second half of the year compared to the first half, despite ongoing support for merchants and user investments. The impact of merchant support plans and national subsidies is expected to improve marginally, and disruptions to overseas business are anticipated to be less severe than in the second quarter [2][6]. Financial Projections - Revenue projections for 2025 are set at RMB 436,926 million, a decrease of 2.9% from previous estimates. For 2026, revenue is projected at RMB 522,532 million, down 6.0% from earlier forecasts, and for 2027, it is expected to be RMB 590,022 million, also a 6.4% reduction [5][14]. - Adjusted net profit for 2025 is forecasted at RMB 109,073 million, reflecting a 4.1% increase from previous estimates, while adjusted net profit margins are expected to improve to 25.0% [5][14]. Market Performance - The stock has shown a year-to-date change of +32.19%, with a market capitalization of approximately $178.05 billion. The 52-week high and low for the stock are $154.27 and $88.35, respectively [4][14]. Earnings Overview - For Q2 2025, the company reported revenue of RMB 104 billion, with a year-on-year growth rate slowing to 7%. Adjusted net profit for the quarter was RMB 32.7 billion, which was 20% higher than consensus estimates due to better-than-expected interest income and lower marketing expenses [6][7].

Core Viewpoint - The company reported a revenue growth of 10.2% year-on-year in Q1 2025, but GAAP net profit decreased by 47.3% [3]. Financial Performance - In Q1 2025, the company achieved an operating revenue of 95.672 billion, a year-on-year increase of 10.2%. GAAP net profit was 14.742 billion, down 47.3%, while Non-GAAP net profit was 16.916 billion, down 44.7% [3]. - The comprehensive gross margin for Q1 2025 was 57.2%, a decrease of 5.1 percentage points year-on-year, primarily due to the ongoing expansion of overseas business and investments to maintain platform competitiveness and support merchants [4]. Expense Analysis - In Q1 2025, the sales, management, and R&D expense ratios were 34.9%, 1.7%, and 3.7%, respectively, with year-on-year changes of +7.9, -0.4, and +0.4 percentage points. The significant increase in sales expense ratio was attributed to higher promotional expenditures, while the management expense ratio benefited from overall efficiency improvements [4]. Revenue Breakdown - Online marketing service revenue in Q1 2025 was 48.722 billion, reflecting a year-on-year growth of 15%. Commission revenue was 46.950 billion, with a year-on-year increase of 6% [5]. - The company has implemented measures to support merchants and optimize the platform ecosystem, including the establishment of a "Merchant Rights Protection Committee" and the launch of a "Billion Support" strategy to reduce deposits for various product categories [5].

Investment Rating - The report maintains a "Buy" rating for the company [4] Core Views - The company's revenue for Q1 2025 reached 95.672 billion yuan, a year-on-year increase of 10.2%, while GAAP net profit decreased by 47.3% to 14.742 billion yuan [1] - The decline in profit is attributed to increased costs from platform investments and uncertainties in overseas tariffs, leading to a downward revision of profit forecasts for 2025, 2026, and 2027 by 34%, 37%, and 41% respectively [4] Summary by Sections Financial Performance - In Q1 2025, the company's gross margin was 57.2%, down 5.1 percentage points year-on-year, primarily due to ongoing overseas expansion and investments to maintain platform competitiveness [2] - Sales expense ratio increased by 7.9 percentage points to 34.9% due to higher promotional expenditures [2] Revenue Streams - Online marketing service revenue grew by 15% year-on-year to 48.722 billion yuan, while commission revenue increased by 6% to 46.950 billion yuan [3] - The company has implemented measures to support merchants and optimize the platform ecosystem, including the establishment of a "Merchant Rights Protection Committee" and a "Billion Support" strategy [3] Profit Forecasts and Valuation - The report provides a detailed profit forecast, with expected revenues of 437.712 billion yuan in 2025, reflecting an 11% growth rate [5] - GAAP net profit is projected to be 91.006 billion yuan in 2025, indicating a decline of 19% compared to the previous year [5]