Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>PDD's spectacular 3Q results will prove unsustainable based on our assessments of its core markets and deep-dive benchmark analysis of growth trajectory of PDD and Alibaba, using GMV as scale.</li>
<li>We see earnings risk going into 2023 due to well-penetrated wallet share of core user base, deflating growth drivers and ramp-up of investments.</li>
<li>In the long term, inevitable multiple compression also renders the risk-return payoff of this US$100bn company mediocre, even under blue-sky growth forecasts. Prefer Alibaba over PDD.</li>
</ul>


PDD's spectacular 3Q results will prove unsustainable based on our assessments of its core markets and deep-dive benchmark analysis of growth trajectory of PDD and Alibaba, using GMV as scale.
We see earnings risk going into 2023 due to well-penetrated wallet share of core user base, deflating growth drivers and ramp-up of investments.
In the long term, inevitable multiple compression also renders the risk-return payoff of this US$100bn company mediocre, even under blue-sky growth forecasts. Prefer Alibaba over PDD.


Pinduoduo (PDD US): Spectacular 3Q, Tough Outlook

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>’s 3Q22 mirrored its strong previous quarter with revenue of RMB 35.5bn (consensus: RMB 30.8bn) and OP of RMB 10.4bn (consensus: RMB 6.7bn).</li>
<li>CCP’s anti-monopoly drive and common prosperity measures are helping Pinduoduo to outperform the competition.</li>
<li>Nonetheless, we refrain from being outright positive on any of the Chinese e-commerce names with the economy heading into a slowdown and the lowest sector-multiple at above 12x FY+1 OP.</li>
</ul>



Pinduoduo (PDD US)’s 3Q22 mirrored its strong previous quarter with revenue of RMB 35.5bn (consensus: RMB 30.8bn) and OP of RMB 10.4bn (consensus: RMB 6.7bn).
CCP’s anti-monopoly drive and common prosperity measures are helping Pinduoduo to outperform the competition.
Nonetheless, we refrain from being outright positive on any of the Chinese e-commerce names with the economy heading into a slowdown and the lowest sector-multiple at above 12x FY+1 OP.


Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

<ul><li>PDD Holdings Inc. reported robust financial results for the third quarter of 2024, with revenues reaching RMB 99.4 billion, reflecting a 44% increase year-over-year.</li><li>Net income attributable to ordinary shareholders was RMB 25 billion, up from RMB 15.5 billion in the same quarter last year.</li><li>Despite these strong figures, the company acknowledged a moderation in revenue growth compared to previous quarters and noted that profits have trended lower.</li></ul>

PDD Holdings Inc. reported robust financial results for the third quarter of 2024, with revenues reaching RMB 99.4 billion, reflecting a 44% increase year-over-year.Net income attributable to ordinary shareholders was RMB 25 billion, up from RMB 15.5 billion in the same quarter last year.Despite these strong figures, the company acknowledged a moderation in revenue growth compared to previous quarters and noted that profits have trended lower.

PDD Holdings: Will The Logistics Support to Expand Reach in Underserved Markets Grow Its Top-Line? - Major Drivers

Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

<ul>
<li>PDD reported C3Q24 top line, non-GAAP EBIT and non-GAAP net income (2.6%), (12.4%) and (6.3%) vs. cons., and (3.4%)</li>
<li>PDD is easing its appeasement of China-platform merchants, positive for profitability,but its transition to the semi-consignment model will likely continue as it tries to improve merchandise selection and logistics quality</li>
<li>We reiterate BUY as PDD is undervalued at 8.1x CY2025 P/E, but we cut its TP to US$ 146 to reflect slower growth amid increasing overseas investment.</li>
</ul>


PDD reported C3Q24 top line, non-GAAP EBIT and non-GAAP net income (2.6%), (12.4%) and (6.3%) vs. cons., and (3.4%)
PDD is easing its appeasement of China-platform merchants, positive for profitability,but its transition to the semi-consignment model will likely continue as it tries to improve merchandise selection and logistics quality
We reiterate BUY as PDD is undervalued at 8.1x CY2025 P/E, but we cut its TP to US$ 146 to reflect slower growth amid increasing overseas investment.


[PDD Holdings (PDD US, BUY, TP US$146) TP Change]: C3Q24: Painful Reversal of Its Merchant Squeeze

China

PDD Holdings Inc. is a multinational commerce group that owns and operates a portfolio of businesses. The Company focuses on digital economy so that local communities and small businesses can benefit from the increased productivity and new opportunities. PDD Holdings has built a network of sourcing, logistics, and fulfillment capabilities for its underlying businesses.

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PDD Holdings (PDD US)

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Oshadhi Kumarasiri

Tencent Investee Selldown - The US$120bn Global Overhang

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Sumeet Singh

PDD Holdings: Will The Logistics Support to Expand Reach in Underserved Markets Grow Its Top-Line? - Major Drivers

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Baptista Research