Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>PDD reported blowout 2Q results with bottom line beating consensus by 40% thanks to stronger domestic marketplaces business, narrower losses incurred by TEMU and higher other income.</li>
<li>2Q results cleared much of our concern around PDD’s bottom line growth and we now see 2Q as the low point of earnings growth in FY23.</li>
<li>We believe the company will report $9 billion net profit for FY23 and expect rounds of earnings revision by the street will further lift share price. US $120 price target.</li>
</ul>


PDD reported blowout 2Q results with bottom line beating consensus by 40% thanks to stronger domestic marketplaces business, narrower losses incurred by TEMU and higher other income.
2Q results cleared much of our concern around PDD’s bottom line growth and we now see 2Q as the low point of earnings growth in FY23.
We believe the company will report $9 billion net profit for FY23 and expect rounds of earnings revision by the street will further lift share price. US $120 price target.


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 (29 Aug) 2Q23 results: revenue was up 66.3% YoY to RMB52.3bn, 22/21% ahead of our/Bloomberg consensus estimates, which we attributable to robust GMV growth and continuous increase in monetization.</li><li>Non-GAAP net income increased by 42% YoY to RMB15.3bn, 41% ahead of consensus, due to operating leverage, sales and marketing spending geared at generating higher GMV from key consumer wallet-share gain categories.</li><li>The strong beat in results echoed our view that in the ecommerce sector PDD has relatively more proactive room to drive GMV growth through targeting bigger consumer wallet share, and further increasing monetization rate given its relatively better ROI compared with peers. </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 (29 Aug) 2Q23 results: revenue was up 66.3% YoY to RMB52.3bn, 22/21% ahead of our/Bloomberg consensus estimates, which we attributable to robust GMV growth and continuous increase in monetization.Non-GAAP net income increased by 42% YoY to RMB15.3bn, 41% ahead of consensus, due to operating leverage, sales and marketing spending geared at generating higher GMV from key consumer wallet-share gain categories.The strong beat in results echoed our view that in the ecommerce sector PDD has relatively more proactive room to drive GMV growth through targeting bigger consumer wallet share, and further increasing monetization rate given its relatively better ROI compared with peers. 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) – Consumer Wallet Share Gain Strategy Boosted Revenue and Earnings Growth

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

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.

<ul>
<li>PDD’s revenue increased by 66% YoY to RMB52 bn, significantly higher than the market consensus RMB43 bn.</li>
<li>The operating margin declined to 24% in 2Q23 from 28% in 2Q22 due to aggressive expansion outside China.</li>
<li>We believe the stock still has an upside of 47% for year end 2023. Buy.</li>
</ul>


PDD’s revenue increased by 66% YoY to RMB52 bn, significantly higher than the market consensus RMB43 bn.
The operating margin declined to 24% in 2Q23 from 28% in 2Q22 due to aggressive expansion outside China.
We believe the stock still has an upside of 47% for year end 2023. Buy.


Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy

China/Asia TMT

Shawn Yang

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>Bilibili has announced the latest incentive policies for the "Spark Program."</li>
<li>XPEV/DiDi: Xpeng to acquire DiDi's Smart EV project and establish strategic partnership with DiDi (+/+)</li>
<li>SE / PDD: Temu enters the Philippines ( - / +)</li>
</ul>


Bilibili has announced the latest incentive policies for the "Spark Program."
XPEV/DiDi: Xpeng to acquire DiDi's Smart EV project and establish strategic partnership with DiDi (+/+)
SE / PDD: Temu enters the Philippines ( - / +)


China TMT Update-Bili/XPEV/DiDi/SE/PDD-Xpeng Acquire DiDi's EV Project/Temu Enters the Philippines

<ul>
<li>Over the last decade, VIPShop proved it is the undisputed leader in China’s online discount retail business with the longest streak of profitability and impressive ROE among China internet names.</li>
<li>Investors are misplaced to look to the stock for growth. Rather, it is cash cow in mature business with deep moat and run by disciplined management who cares about shareholders.</li>
<li>Trading at 4.5x our FY23 earnings excluding net cash, it valuation is attractive even compared to depressed sector comps. Expect 20% CAGR of return by 2025 driven by intrinsic value.</li>
</ul>


Over the last decade, VIPShop proved it is the undisputed leader in China’s online discount retail business with the longest streak of profitability and impressive ROE among China internet names.
Investors are misplaced to look to the stock for growth. Rather, it is cash cow in mature business with deep moat and run by disciplined management who cares about shareholders.
Trading at 4.5x our FY23 earnings excluding net cash, it valuation is attractive even compared to depressed sector comps. Expect 20% CAGR of return by 2025 driven by intrinsic value.


VIPShop (VIPS US): Attractive Value Play Underappreciated by Investors Looking for Growth

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

PDD Holdings (PDD US)

Pinduoduo (PDD US): Don't Fight with PDD

PDD's blowout 2Q results cleared our concern around its growth slowdown. We expect US$9 billion net profit for FY23 and see 25% share price upside.

Eric Chen

Pinduoduo (PDD): 2Q23, Revenue Significantly Higher Than Consensus, Buy

Revenue increased by 66% YoY to RMB52 bn, significantly higher than the market consensus RMB43 bn. The op margin declined to 24% in 2Q23 from 28%...

Ming Lu

China TMT Update-Bili/XPEV/DiDi/SE/PDD-Xpeng Acquire DiDi's EV Project/Temu Enters the Philippines

Bilibili has announced the latest incentive policies for the "Spark Program.";XPEV/DiDi: Xpeng to acquire DiDi's Smart EV project(+/+);SE/PDD: Temu...

Blue Lotus Research Institute

VIPShop (VIPS US): Attractive Value Play Underappreciated by Investors Looking for Growth

As a cash cow with deep moat run by disciplined management who cares shareholders, VIPShop is an attractive value play trading at 4.5x our FY23...

Eric Chen

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)