拼多多沽空报告（中英全文）-Blue_Orca-2018.11_5__80页_8mb

Pinduoduo Inc. (PDD) Research Report Summary

Core Content

This research report, issued by BOC Texas, LLC, is a short seller's analysis of Pinduoduo Inc. (PDD), a Chinese e-commerce platform. The report is biased, as the firm has a short position in PDD's stock, and it aims to highlight potential financial misrepresentations and inefficiencies in PDD's business model and reported financials.

Main Points

1. Financial Misrepresentation

• Revenue Overstatement: SAIC filings indicate that PDD's 2017 revenues were 36–40% less than those reported to U.S. investors. The two VIE subsidiaries reported only RMB 1.2 billion in total revenue, while PDD's SEC filings stated RMB 1.95 billion.
• Net Loss Understatement: PDD's reported net losses in the PRC were RMB 417 million, but when including the net losses of the two VIEs and their parent company, SAIC filings show a 65% higher net loss of RMB 689 million.
• Staffing Costs Understatement: PDD's SEC filings report only 1,159 employees, while its own website indicated over 5,000 employees in 2017 and 2018. This suggests that staffing costs are substantially underreported, leading to understated losses.

2. GMV Inflation

• GMV Overstatement: Multiple data points indicate that PDD's reported GMV is inflated by 34–47%.
  • Payment Processing Costs: Implied GMV from RMB 541 million in costs is 43% less than reported.
  • Commission Revenues: Implied GMV from RMB 1.1 billion in commission revenues is 34% less than reported.
  • Merchant Cash Cycle: The actual cash cycle is 18.5 days, suggesting the real GMV is 47% less than reported.
• GMV Per Employee: PDD's reported GMV per employee (RMB 167 million) is an outlier compared to peers like Alibaba (RMB 120 million) and JD.com (RMB 39 million). When using the actual headcount from the website, GMV per employee drops to RMB 53 million, aligning with industry averages.

3. Undisclosed Related Party Transactions

• Lequee's Role: Lequee, an undisclosed related party controlled by PDD's chairman, is suspected of shouldering some staffing costs for PDD. This is supported by job postings from both Lequee and PDD for each other’s offices and positions.
• Corporate Transparency Issues: PDD does not disclose Lequee in its prospectus, raising concerns about transparency and governance. This lack of disclosure undermines the credibility of PDD's financial reporting.

4. Valuation Concerns

• Price-to-Sales (P/S) Multiple: PDD trades at 21.7x LTM sales, which is twice Alibaba's multiple (8.8x) and 44 times JD.com's (0.5x).
• Adjusted Valuation: Using Alibaba's P/S ratio (7.5x) and adjusting for overstated sales, the report estimates a Blue Orca Valuation of $7.10 per share, a 59% downside from the current price of $17.15.
• Price-to-GMV (P/GMV) Multiple: After adjusting for overstated GMV (41% less), and applying a 20% corporate governance discount, the report values PDD at $8.05 per share, a 53.1% downside from the current price.

5. Business Model and Market Position

• Social E-commerce Model: PDD's platform encourages users to share products and invite others to join purchases, driving growth but also attracting low-quality goods and lower ticket prices.
• Low Take Rate and Average Ticket Size: PDD's reported take rate is low compared to Alibaba and JD.com, and its average ticket size is RMB 33, 18.2x lower than JD.com and 3.6x lower than Alibaba.
• Best Selling Item: Tissue paper is the most popular item on PDD's platform, indicating the business may be driven more by cheap, low-value products than by high-margin or scalable offerings.

Key Information

• Market Cap (2018): $19 billion
• 65-Day Avg Volume: 6MM shares
• Current Stock Price (11/13/18): $17.15
• Blue Orca Valuation: $7.10 per share
• Downside from Current Price (P/S): 59%
• Downside from Current Price (P/GMV): 53.1%
• GMV Overstatement: 34–47%
• Staffing Cost Understatement: RMB 489 million
• Headcount Discrepancy: 1,159 (SEC) vs. >5,000 (website)

Conclusion

The report concludes that PDD's financial performance and business model are misrepresented, with overstated revenues, understated net losses, and inflated GMV. These issues, compounded by undisclosed related party transactions and poor corporate governance, lead to the belief that PDD is uninvestable. The firm's valuation is significantly lower than its current price, and its growth is driven more by low-margin, low-quality products than by a scalable or profitable business model.