Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Pinduoduo Holdings, Inc. closed its fiscal year of 2023 in a positive trajectory.</li><li>The company reported sustained growth in consumer engagement on its platform in its fourth quarter results.</li><li>High-quality development remains a key strategy for the company.</li></ul>

Pinduoduo Holdings, Inc. closed its fiscal year of 2023 in a positive trajectory.The company reported sustained growth in consumer engagement on its platform in its fourth quarter results.High-quality development remains a key strategy for the company.

PDD Holdings: 6 Growth Factors & 3 Major Challenges In Front Of This Chinese Giant! - Financial Forecasts

Greater China Equity Long/Short Analyst

Eric Chen

<ul>
<li>Concerns around slowdown in growth are behind the disconnect between PDD’s stellar 4Q23 results and lackluster share performance, in our view.</li>
<li>We have seen this before. If history is a guide, its valuation will improve after growth hits bottom in 1Q24.</li>
<li>We expect PDD to deliver 50% plus growth for 2024 and generate US$14 billion adjusted net profit. Reiterate US$240 billion target market cap or 50% upside.</li>
</ul>


Concerns around slowdown in growth are behind the disconnect between PDD’s stellar 4Q23 results and lackluster share performance, in our view.
We have seen this before. If history is a guide, its valuation will improve after growth hits bottom in 1Q24.
We expect PDD to deliver 50% plus growth for 2024 and generate US$14 billion adjusted net profit. Reiterate US$240 billion target market cap or 50% upside.


Pinduoduo (PDD US): Growth Worries Overdone

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

<ul>
<li>PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;</li>
<li>We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;</li>
<li>We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;</li>
</ul>


PDD reported C4Q23 top-line, non-GAAP EBIT, and non-GAAP net income (2.4%), 12.4%, and 24% vs. our est., and 11.6%, 37.0%, and 50.3% vs. cons., respectively;
We estimate the beat was driven by (1) improved take rate on the China platform following ad tool adjustments, and (2) Temu margin expansion;
We remove Temu US from our model from 2025+, as restrictions seem more than likely following the TikTok ban and cut TP to US$ 159 to reflect this;


[PDD Holdings (PDD US, BUY, TP US$159) TP Change]: Bargain Valuation, Even if Temu Disappears

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>Both advertising revenue and commission revenue grew dramatically in 4Q23.</li>
<li>Chinese consumers are seeking low price goods, after the economy went weak.</li>
<li>PDD’s overseas brand, TEMU, is expanding rapidly in the U.S.</li>
</ul>


Both advertising revenue and commission revenue grew dramatically in 4Q23.
Chinese consumers are seeking low price goods, after the economy went weak.
PDD’s overseas brand, TEMU, is expanding rapidly in the U.S.


PDD (PDD): 4Q23, Time for Low Price Goods, Revenue up by 123% YoY

<ul>
<li>We see further upside to our previous above-consensus 4Q23 results estimates on low base, enhanced monetization, and faster TEMU expansion.</li>
<li>That said, we believe market focus already shifted to outlook for 2024, in particular an imminent slowdown in 1Q24 and renewed concern around US curb on TEMU.</li>
<li>30% share price correction is pricing in the above scenario and valuation should gradually improve as PDD delivers back-loaded bottom line growth in 2024.</li>
</ul>


We see further upside to our previous above-consensus 4Q23 results estimates on low base, enhanced monetization, and faster TEMU expansion.
That said, we believe market focus already shifted to outlook for 2024, in particular an imminent slowdown in 1Q24 and renewed concern around US curb on TEMU.
30% share price correction is pricing in the above scenario and valuation should gradually improve as PDD delivers back-loaded bottom line growth in 2024.


Pinduoduo (PDD US): Pricing in an Imminent Slowdown

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)

PDD Holdings: 6 Growth Factors & 3 Major Challenges In Front Of This Chinese Giant! - Financial Forecasts

Pinduoduo Holdings, Inc. closed its fiscal year of 2023 in a positive trajectory. The company reported sustained growth in consumer engagement on...

Baptista Research

Pinduoduo (PDD US): Growth Worries Overdone

Disconnect between strong 4Q results and weak share performance pointed to growth concerns. Valuation expected to improve after growth bottoms out...

Eric Chen