Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>Concerns around slowdown in growth are behind the disconnect between PDD’s stellar 4Q23 results and lackluster share performance, in our view.</li>
<li>We have seen this before. If history is a guide, its valuation will improve after growth hits bottom in 1Q24.</li>
<li>We expect PDD to deliver 50% plus growth for 2024 and generate US$14 billion adjusted net profit. Reiterate US$240 billion target market cap or 50% upside.</li>
</ul>


Concerns around slowdown in growth are behind the disconnect between PDD’s stellar 4Q23 results and lackluster share performance, in our view.
We have seen this before. If history is a guide, its valuation will improve after growth hits bottom in 1Q24.
We expect PDD to deliver 50% plus growth for 2024 and generate US$14 billion adjusted net profit. Reiterate US$240 billion target market cap or 50% upside.


Pinduoduo (PDD US): Growth Worries Overdone

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

<ul>
<li>Organic growth in J&amp;T's China operations exceeded that of peers...</li>
<li>...but the implosion of New Markets and X-Border is a shock</li>
<li>Lower margins from SE Asian cash cow also a surprise, in our view</li>
</ul>


Organic growth in J&amp;T's China operations exceeded that of peers...
...but the implosion of New Markets and X-Border is a shock
Lower margins from SE Asian cash cow also a surprise, in our view


The Three Biggest Surprises in J&T Global Express' Maiden Earnings Report

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

Thematic (Sector/Industry)

<ul>
<li>SHEIN/PDD: France to restrict sales of fast - fashion (-/-)</li>
<li>NTES: After The Release of The New Expansion Pack For &lt;Beyond the World&gt;, It Climbed to the 3rd Position on iOS Games Grossing Chart in China (+)</li>
<li>6618 HK：JD Health's revenue in 2H23 exceeded expectations, while profits fell short, and revenue and profit guidance for 2024 both worse than consensus（-）</li>
</ul>


SHEIN/PDD: France to restrict sales of fast - fashion (-/-)
NTES: After The Release of The New Expansion Pack For &lt;Beyond the World&gt;, It Climbed to the 3rd Position on iOS Games Grossing Chart in China (+)
6618 HK：JD Health's revenue in 2H23 exceeded expectations, while profits fell short, and revenue and profit guidance for 2024 both worse than consensus（-）


[Blue Lotus Daily - TMT Update]:SHEIN/PDD/NTES/6618 HK

<ul>
<li>PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;</li>
<li>We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;</li>
<li>We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;</li>
</ul>


PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;
We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;
We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;


[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>PDD Holdings (PDD) announced (20 Mar) 4Q23 results: revenue was up 123% YoY (4Q22: 46%; 3Q23: 94%) to RMB88.9bn, 11% ahead of Bloomberg consensus, which we attribute to both stronger-than-expected international expansion, and better-than-expected monetization improvement of domestic business.</li><li>Non-GAAP NP increased by 110% YoY to RMB25.5bn, 52% ahead of consensus, which we attribute to better-than-expected domestic business profit generation, and likely narrower-than-expected loss generated from Temu business, aided by more rapid-than-expected business scale expansion and better-than-expected optimization in consumer subsidy.</li><li>Although industry competition may become tougher in 2024, PDD still has room to drive a further increase in monetization rate, aided by the increase in commission rate of its “Ten Billion Subsidy” program, and the launch of new advertising products.</li></ul><p><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></p>

PDD Holdings (PDD) announced (20 Mar) 4Q23 results: revenue was up 123% YoY (4Q22: 46%; 3Q23: 94%) to RMB88.9bn, 11% ahead of Bloomberg consensus, which we attribute to both stronger-than-expected international expansion, and better-than-expected monetization improvement of domestic business.Non-GAAP NP increased by 110% YoY to RMB25.5bn, 52% ahead of consensus, which we attribute to better-than-expected domestic business profit generation, and likely narrower-than-expected loss generated from Temu business, aided by more rapid-than-expected business scale expansion and better-than-expected optimization in consumer subsidy.Although industry competition may become tougher in 2024, PDD still has room to drive a further increase in monetization rate, aided by the increase in commission rate of its “Ten Billion Subsidy” program, and the launch of new advertising products.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

PDD Holdings (PDD US) - Still Has Potential to Improve Monetization

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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[Blue Lotus Daily - TMT Update]:SHEIN/PDD/NTES/6618 HK

France to restrict sales of fast-fashion; JD Health's revenue exceeds expectations but profits fall short with worse guidance for 2024. NTES...

Blue Lotus Research Institute