Blue Lotus Non US Internet research, Blue Lotus Research Institute

Ying Pan

Blue Lotus Non US Internet research

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 C3Q23 top-line, non-GAAP EBIT, and GAAP net profit 9%, (4%) and in-line vs. our estimate, and 28%, 29%, and 42%, vs. consensus respectively.</li>
<li>We estimate that Temu reached positive gross profit for the first time in 3Q, one quarter ahead of our prior estimate.</li>
<li>We believe increased prices on its US platform was the main driver, while it was able to maintain supply prices.</li>
</ul>


PDD reported C3Q23 top-line, non-GAAP EBIT, and GAAP net profit 9%, (4%) and in-line vs. our estimate, and 28%, 29%, and 42%, vs. consensus respectively.
We estimate that Temu reached positive gross profit for the first time in 3Q, one quarter ahead of our prior estimate.
We believe increased prices on its US platform was the main driver, while it was able to maintain supply prices.


[PDD Holdings (PDD US, BUY, TP US$165) TP Change]: PDD and Temu Growth Tailwinds Will Continue

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Equity Capital Markets

REPT BATTERO Energy / Equity Capital Markets

<ul>
<li>REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. </li>
<li>REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&amp;D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. </li>
<li>In this note, we will talk about the positive aspects of the deal.</li>
</ul>


REPT BATTERO Energy (REPT HK) is looking to raise US$1bn in its upcoming Hong Kong IPO. 
REPT BATTERO Energy (REPT) is a lithium-ion battery manufacturer in China, focusing on R&amp;D, production, and sales of EV/ESS lithium-ion battery products such as battery cells, modules and packs. 
In this note, we will talk about the positive aspects of the deal.


REPT BATTERO Energy Pre-IPO - The Positives - Has Scaled Rapidly

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Stock rally on strong revenue growth suggests TEMU will be at center stage of the investment thesis for PDD down the road. </li>
<li>Besides soaring GMV, TEMU achieved blowout performance likely due to much higher-than-expected take-rate and disciplined marketing, resulting in narrower-than-expected losses.</li>
<li>We expect the company's growth will even accelerate in 4Q23 and generate adjusted net profit of US$12 bn for FY24, with a target market cap of US$240 bn (20xPE).</li>
</ul>


Stock rally on strong revenue growth suggests TEMU will be at center stage of the investment thesis for PDD down the road. 
Besides soaring GMV, TEMU achieved blowout performance likely due to much higher-than-expected take-rate and disciplined marketing, resulting in narrower-than-expected losses.
We expect the company's growth will even accelerate in 4Q23 and generate adjusted net profit of US$12 bn for FY24, with a target market cap of US$240 bn (20xPE).


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 (28 Nov) 3Q23 results: revenue was up 94% YoY to RMB68.8bn, 26% ahead of both our/Bloomberg consensus estimates, which we mainly attribute to stronger-than-expected international expansion, and incremental commission revenue generation from the “Ten billion subsidy” section.</li><li>Non-GAAP net income increased by 37% YoY to RMB17.0bn, 30% ahead of consensus, which we attribute to a likely narrower-than-expected loss generated from Temu business, aided by a stronger-than-expected scale effect, and likely better-than-expected profit generation from Duoduo Grocery, aided by well-established consumer mindshare.</li><li>The results echoed our view that PDD’s overseas business is ramping up quickly, and is on track to support PDD’s long-term revenue and earnings growth. </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 (28 Nov) 3Q23 results: revenue was up 94% YoY to RMB68.8bn, 26% ahead of both our/Bloomberg consensus estimates, which we mainly attribute to stronger-than-expected international expansion, and incremental commission revenue generation from the “Ten billion subsidy” section.Non-GAAP net income increased by 37% YoY to RMB17.0bn, 30% ahead of consensus, which we attribute to a likely narrower-than-expected loss generated from Temu business, aided by a stronger-than-expected scale effect, and likely better-than-expected profit generation from Duoduo Grocery, aided by well-established consumer mindshare.The results echoed our view that PDD’s overseas business is ramping up quickly, and is on track to support PDD’s long-term revenue and earnings growth. 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) – International Expansion Drove a Strong Beat for 3Q Results

Thematic (Sector/Industry)

<ul>
<li>On November 22nd, 2023 local Chinese media reported that Pinduoduo began hiring researchers/engineers for its large language model (LLM) on its recruitment website and other staffing channels.</li>
<li>According to reports, PDD is in the process of hiring researchers to build its new LLM tool to make AI functionality available for customer service on Temu.</li>
<li>Reminder that Temu is responsible for handling post sales services under a “fully managed” business model, which is currently out-sourced to a customer service center.</li>
</ul>


On November 22nd, 2023 local Chinese media reported that Pinduoduo began hiring researchers/engineers for its large language model (LLM) on its recruitment website and other staffing channels.
According to reports, PDD is in the process of hiring researchers to build its new LLM tool to make AI functionality available for customer service on Temu.
Reminder that Temu is responsible for handling post sales services under a “fully managed” business model, which is currently out-sourced to a customer service center.


[Blue Lotus Daily - TMT Update] PDD: PDD Begins Hiring Staff to Train LLM for Temu Customer Service

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.

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PDD Holdings (PDD US)