20250321-招银国际-Earnings_beat__better_consumption_sentiment_could_propel_valuation_rerating_7页_991kb

PDD Holdings (PDD US) Summary

Core Content

PDD Holdings (PDD US) released its 4Q24 financial results, which showed revenue growth of 24% YoY, slightly below Bloomberg consensus estimates, primarily due to a 10% miss in transaction services fees attributed to enhanced merchant support. Non-GAAP net profit increased by 17% YoY to RMB29.9bn, exceeding consensus estimates by 4%. The firm has revised its 2025-2026 revenue and non-GAAP net profit forecasts downward by 3-5% and 3-9%, respectively, due to the impact of increased investment in the consumer side and platform ecosystem. The updated SOTP-based target price is US$170.4, up from US$156.8, reflecting a 13x 2025E non-GAAP PE, with the current trading PE at 9x, seen as undemanding.

Main Points

• 4Q24 Revenue: RMB110.6bn (+24% YoY), slightly below consensus.
• 4Q24 Non-GAAP Net Profit: RMB29.9bn (+17% YoY), above consensus.
• Revenue Growth Trends:
  • Online marketing services and others revenue rose 17.1% YoY, in line with GMV growth.
  • Transaction services fees grew 33.3% YoY, but missed consensus by 10%.
• Gross Margin (GPM): Shrank to 56.8% in 4Q24, 3.0ppt below consensus, due to lower commission revenue.
• Operating Margin (OPM): Remained inline with consensus at 23.1%.
• Non-GAAP Net Profit Margin: Slightly higher than consensus at 27.0%.
• Target Price: US$170.4 (up from US$156.8), with a 30.2% upside from the current price of US$130.92.
• Valuation Components:
  • Main app: US$125.1 (12x 2025E PE).
  • Duoduo Grocery: US$1.9 (unchanged).
  • Temu: US$20.5 (1.0x 2025E PS).
  • Net cash: US$22.9 (after 30% holding discount).
• Earnings Forecast for 2025E:
  • Revenue: RMB496.3bn.
  • Non-GAAP net profit: RMB136.7bn (+12% YoY).
• Key Catalysts for Growth:
  • Recovery in consumption sentiment.
  • Mitigation of geopolitical risks.
• Risks:
  • Slower-than-expected global expansion.
  • Geopolitical issues.
  • Slower margin expansion.

Key Information

• Current Price: US$130.92.
• Market Cap: US$196,202.2 million.
• Shareholding Structure:
  • Entities affiliated with Zheng Huang: 27.9%.
  • Entities affiliated with Tencent: 15.5%.
• Share Performance:
  • 1-month: -0.3% (relative: +10.0%).
  • 3-months: +31.6% (relative: +45.6%).
  • 6-months: +31.1% (relative: +33.0%).
• 12-Month Price Performance: Chart included (source: FactSet).
• Analyst Rating: BUY (maintained).
• Valuation Table:
  • Revenue: 4Q24: RMB110.6bn; FY25E: RMB496.3bn.
  • Non-GAAP net profit: 4Q24: RMB29.85bn; FY25E: RMB136.7bn.
  • P/E: 4Q24: 10.7x; FY25E: 12.0x.
  • P/S: 4Q24: 1.0x; FY25E: 1.0x.
• Earnings Growth:
  • FY23A: 71.8% YoY.
  • FY24A: 80.2% YoY.
  • FY25E: 11.7% YoY.
  • FY26E: 26.8% YoY.
  • FY27E: 11.4% YoY.
• Financial Highlights:
  • Operating profit: RMB25,592 million in 4Q24.
  • Net profit: RMB29,851 million in 4Q24.
  • Adjusted net profit: RMB30,602 million in 4Q24.

Conclusion

The firm remains optimistic about PDD's ability to drive GMV growth through enhanced user engagement and platform ecosystem development. Despite a slight revenue miss and margin compression, the updated target price reflects a more favorable valuation, with a 13x non-GAAP PE for 2025. Analysts maintain a BUY rating, citing potential recovery in consumption sentiment and reduced geopolitical risks as key drivers for a valuation rerating.