Pinduoduo Inc, (PDD)

[winston]

not vested

Pinduoduo Inc (PDD US) - Charting the next chapter

Despite its relatively shorter operating history in comparison to its major peers, Pinduoduo (PDD) has made big strides in China’s e-commerce market, especially in lower-tier cities, and is the largest e-commerce platform by active buyers in China (as at 1Q21).

PDD adopts a team-purchase model, which helps to aggregate consumer orders and increases bargaining power.

This model’s success can also be attributed to its unique social features, which relies on Weixin and QQ, its own social network (Pin Xiao Quan) and gamification features.

Within the Community Group Purchase (CGP) market, we believe that PDD’s Duo Duo Maicai (DDMC) has proven to be a nimble innovator.

Despite these positives, we do highlight a number of factors that keep us on the sidelines.

In CGP, we believe PDD’s relative weakness is in offline execution. Another source of near-term uncertainty also relates to founder Colin Huang’s departure from the board.

In branded GMV, management notes that it has made steady progress with brands, but the challenge remains on educating brands on the incremental value that the PDD platform can bring.

We also highlight that PDD and 3 other CGP companies were also fined RMB1.5m in March 2021 for breaching the country’s price law. HOLD.

Source: OCBC

[winston]

not vested

Pinduoduo Inc (PDD US) - Strong beat, though expecting some normalisation ahead

Pinduoduo’s (PDD) total revenue grew 36% year-on-year (YoY) to CNY31.4b in 2Q22, which was 33% above expectations.

Non-GAAP operating margin (OPM) was strong at 33.5% (+20 percentage points, ppt, YoY).

We understand that the postponement of certain projects, including promotional events and agricultural initiatives as well as lower business-related expenses during first half of the quarter affected overall expenses.

Encouragingly, management observed a recovery in consumer sentiment since second half of May, especially around the 6.18 shopping festival, which it views as resilience of overall consumption.

Management notes that more expenses were incurred in the second half of the quarter, highlighting that profitability in the past quarter was mainly attributable to a few short-term factors that may not be applicable in the future.

In our view, PDD’s top-line growth in 2Q22 has certainly been strong, outpacing that of its peers (e.g. JD at +5%, Alibaba flat), which we attribute to users potentially favouring more value-for-money products given the more challenging macro environment, or increasing marketing demand from merchants post lockdowns.

However, some of these could be more one-off in nature. Also, while the Statement of Protocol signed between the Public Company Accounting Oversight Board (PCAOB) and the Chinese authorities is certainly encouraging, we believe that investors would still need to monitor the execution of the agreement.

Should unexpected hiccups materialise subsequently, we believe PDD’s lack of a HK listing at this juncture could cause investor concern, thereby depressing multiples.

Following adjustments to our forecast and using a 25x P/E FY23 earnings per share (EPS) target, our fair value (FV) rises from USD50 to USD72. HOLD.

Source: OCBC

[behappyalways]

E-commerce leader changes, Pinduoduo’s market value surpasses Alibaba

電商龍頭換人 拼多多市值超越阿里巴巴｜TVBS新聞

https://m.youtube.com/watch?v=SQN4mW8kkhc

[behappyalways]

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https://m.youtube.com/watch?v=5jG-1FfGx5c