20231129-招银国际-International_expansion_drove_a_strong_beat_for_3Q_results_5页_1mb

PDD Holdings (PDD US) - 3Q23 Results & Update

Key Highlights

• Revenue: +94% YoY to RMB68.8bn (RMB68.8bn), 26% above Bloomberg consensus, driven by international expansion and "Ten billion subsidy" revenue.
• Non-GAAP Net Income: +37% YoY to RMB17.0bn (RMB17.0bn), 30% above consensus, aided by narrower-than-expected Temu losses and better-than-expected Duoduo Grocery margins.
• Target Price: Lifted DCF-based TP to USD142.6 (previously US$131.8), reflecting strong 3Q results and Temu progress, maintaining "BUY" rating.
• International Expansion: Transaction services revenue surged 315% YoY (RMB29.2bn) due to Temu and subsidy contributions.
• OPM Beat: Despite GPM widening to 61.0% (from 79.1%), disciplined S&M spend (30.9% of revenue) supported OPM of 26.3% (vs estimate 24.9%).

Key Metrics

• 3Q23 Financials:
  • Revenue: RMB68.8bn (+94% YoY).
  • Non-GAAP Net Profit: RMB17.0bn (+37% YoY).
  • GPM: 61.0% (down 9.1 pts YoY).
  • OPM: 26.3% (beat estimate by 1.4 pts).

Valuation

• Current Price: US$117.20.
• TP: US$142.60 (+21.6% upside).
• P/E (2023E): 21.2x; P/B (2025E): 3.7x.

Outlook

• International business is ramping up quickly, expected to support long-term revenue growth.
• Temu business now driving scale effect, while Duoduo Grocery benefits from strong consumer presence.
• Revenue projections through 2025E show strong growth (CAGR ~60%), but margins under pressure due to international scaling.