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

Equity Bottom-Up

<ul>
<li>PDD reported C4Q22 total revenue and non-GAAP net income (5.1%) and 8.4% higher than cons. Topline miss mainly comes from the deceleration of online marketplace services. </li>
<li>We expect that PDD’s domestic eCommerce will experience slowdown in growth.  Temu is likely to grow GMV rapidly with high losses from branding and subsidies.</li>
<li>PDD still outpaces its peers including JD, BABA and Shein, in both domestic and oversea markets. Maintain BUY rating on PDD with TP of US$95, which implies 24x P/2023E.</li>
</ul>


PDD reported C4Q22 total revenue and non-GAAP net income (5.1%) and 8.4% higher than cons. Topline miss mainly comes from the deceleration of online marketplace services. 
We expect that PDD’s domestic eCommerce will experience slowdown in growth.  Temu is likely to grow GMV rapidly with high losses from branding and subsidies.
PDD still outpaces its peers including JD, BABA and Shein, in both domestic and oversea markets. Maintain BUY rating on PDD with TP of US$95, which implies 24x P/2023E.


[PDD US]: Slowing Growth but Still Best-In-Class, Cut TP Maintain BUY.

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>With the impact of cost-cutting and monetisation wearing out, consensus looks overly aggressive to expect revenue and OP CAGRs of 24% and 35% respectively over the next two years.</li>
<li>Based on <a href="https://www.smartkarma.com/entities/pinduoduo-inc" target="_blank" data-smartkarma-citation="entities:27250:1" rel="noopener">Pinduoduo (PDD US)</a>’s revenue and cost trends discussed below, we think the steady state OP margin could be substantially lower than consensus.</li>
<li>Expecting consensus to downgrade expectations, we don’t think it is worthwhile paying up to 45.0x FY+2 OP (on our steady-state OP margin) for Pinduoduo at its current EV of $80.5bn.</li>
</ul>


With the impact of cost-cutting and monetisation wearing out, consensus looks overly aggressive to expect revenue and OP CAGRs of 24% and 35% respectively over the next two years.
Based on Pinduoduo (PDD US)’s revenue and cost trends discussed below, we think the steady state OP margin could be substantially lower than consensus.
Expecting consensus to downgrade expectations, we don’t think it is worthwhile paying up to 45.0x FY+2 OP (on our steady-state OP margin) for Pinduoduo at its current EV of $80.5bn.


Pinduoduo: Cost Cutting Wearing Out, Margins Heading Towards Our Steady State Target of 6-7%

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>In 4Q22, revenue grew by 46% YoY, lower than consensus, but higher than competitors.</li>
<li>The operating margin improved significantly from 7% in 2021 to 23% in 2022.</li>
<li>We believe the stock has an upside of 31% and a price target of US$120.</li>
</ul>


In 4Q22, revenue grew by 46% YoY, lower than consensus, but higher than competitors.
The operating margin improved significantly from 7% in 2021 to 23% in 2022.
We believe the stock has an upside of 31% and a price target of US$120.


Pinduoduo (PDD): 4Q22, Lower Than Consensus, But Higher Than Competitors

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Thematic (Sector/Industry)

<ul>
<li>Combined January-February express industry parcel volume was up just 4.6% Y/Y, and ASPs were down -1.8% Y/Y</li>
<li>Listed express companies' parcel volume and government-reported online tangible goods sales in the first two months of 2023 also both up a modest ~5% Y/Y</li>
<li>In a year when one express player hopes to list its shares, it's unclear who will be willing to concede market share. We expect price competition to intensify in 2023.</li>
</ul>


Combined January-February express industry parcel volume was up just 4.6% Y/Y, and ASPs were down -1.8% Y/Y
Listed express companies' parcel volume and government-reported online tangible goods sales in the first two months of 2023 also both up a modest ~5% Y/Y
In a year when one express player hopes to list its shares, it's unclear who will be willing to concede market share. We expect price competition to intensify in 2023.


TRACKING TRAFFIC: Chinese Express / No Signs of a Sharp Recovery in Jan-Feb Data

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Equity Capital Markets

<ul>
<li>Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.</li>
<li>IPO activity continues to pick up momentum, although the recent market volatility will likely make a few companies reconsider their near term plans.</li>
<li>On the placements front, <a href="https://www.smartkarma.com/entities/japan-post-bank-co-ltd" target="_blank" data-smartkarma-citation="entities:838:1" rel="noopener">Japan Post Bank (7182 JP)</a> hasn't been playing ball, as has been the case with most of the other past deals which offered a trivial discount.</li>
</ul>


Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.
IPO activity continues to pick up momentum, although the recent market volatility will likely make a few companies reconsider their near term plans.
On the placements front, Japan Post Bank (7182 JP) hasn't been playing ball, as has been the case with most of the other past deals which offered a trivial discount.


ECM Weekly (19th Mar 2023) - Japan Post Bank, SBI Sumishin, Harita, Trial Holding, ZKH, DPC, Kelsian

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)

[PDD US]: Slowing Growth but Still Best-In-Class, Cut TP Maintain BUY.

We expect that PDD’s domestic eCommerce will experience slowdown in growth. Temu is likely to grow GMV rapidly with high losses from branding and...

Blue Lotus Research Institute

Pinduoduo: Cost Cutting Wearing Out, Margins Heading Towards Our Steady State Target of 6-7%

Expecting consensus to downgrade expectations substantially over the next few years, we don’t think it is worthwhile paying up to 45.0x FY+2 OP (on...

Oshadhi Kumarasiri

Pinduoduo (PDD): 4Q22, Lower Than Consensus, But Higher Than Competitors

In 4Q22, revenue grew by 46% YoY, lower than consensus, but higher than competitors. The operating margin improved significantly from 7% in 2021 to...

Ming Lu

TRACKING TRAFFIC: Chinese Express / No Signs of a Sharp Recovery in Jan-Feb Data

So far in 2023, parcel volume has recovered only moderately. We believe the industry may again see price deterioration after a brief respite in 2022.

Tracking Traffic

ECM Weekly (19th Mar 2023) - Japan Post Bank, SBI Sumishin, Harita, Trial Holding, ZKH, DPC, Kelsian

Aequitas Research puts out a weekly update on the deals that were covered by the team recently along with updates for upcoming IPOs.

Sumeet Singh

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)