China/Asia TMT

Shawn Yang

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

Thematic (Sector/Industry)

<ul>
<li>Our recent interviews with Shein's 3P merchants suggest that Shein's newly launched 3P businesses, which include ODM and marketplace models, are specifically targeting Temu and Amazon, respectively; </li>
<li>Currently, most merchants have expressed a positive attitude towards Shein's 3P business due to the large traffic and reduced competition resulting from its high entry barriers; </li>
<li>While we believe that PDD may face increased competition, we maintain a long-term BUY rating. Additionally, we anticipate that Shein's 3P expansion will gradually affect Amazon and Shopify.</li>
</ul>


Our recent interviews with Shein's 3P merchants suggest that Shein's newly launched 3P businesses, which include ODM and marketplace models, are specifically targeting Temu and Amazon, respectively; 
Currently, most merchants have expressed a positive attitude towards Shein's 3P business due to the large traffic and reduced competition resulting from its high entry barriers; 
While we believe that PDD may face increased competition, we maintain a long-term BUY rating. Additionally, we anticipate that Shein's 3P expansion will gradually affect Amazon and Shopify.


[Blue Lotus E-Commerce Sector Update]: Shein's 3P Market Impacts Temu, Amazon, and Shopify

<ul>
<li>NTES: NetEase testing a new magic academy simulation game in Japan (+)</li>
<li>PDD: PDD officially launches 6.18 event, but there aren't many surprises (-)</li>
<li>NIO/LI: NIO announces pricing details of all-new ES6 (- / +)</li>
</ul>


NTES: NetEase testing a new magic academy simulation game in Japan (+)
PDD: PDD officially launches 6.18 event, but there aren't many surprises (-)
NIO/LI: NIO announces pricing details of all-new ES6 (- / +)


China TMT Update May 31 - NTES/PDD/NIO/LI-PDD Officially Launches 6.18 Event (-)

Greater China Equity Long/Short Analyst

Eric Chen

Equity Bottom-Up

<ul>
<li>1Q massive beat was driven by TEMU, higher-than expected take rates and other income, in order of importance. </li>
<li>We remain confident PDD's China online marketplace business will face increasing growth headwinds, but also acknowledge that TEMU has been growing on track with lower-than-expected losses.</li>
<li>Earnings growth from PDD's domestic business will be largely offset by losses incurred by TEMU for 2023. Strong 1Q has not fundamentally changed deceleration trend of full-year bottom-line growth trajectory. </li>
</ul>


1Q massive beat was driven by TEMU, higher-than expected take rates and other income, in order of importance. 
We remain confident PDD's China online marketplace business will face increasing growth headwinds, but also acknowledge that TEMU has been growing on track with lower-than-expected losses.
Earnings growth from PDD's domestic business will be largely offset by losses incurred by TEMU for 2023. Strong 1Q has not fundamentally changed deceleration trend of full-year bottom-line growth trajectory. 


Pinduoduo (PDD US): Deciphering Massive 1Q Beat

<ul>
<li>PDD once again surprised by reporting revenue/non-GAAP net income 16.5%/68.8% higher vs. cons. We suggest the beat is  due to the moderate competitive landscape in 1Q23 and strong consumer demand</li>
<li>Yet, we don’t expect PDD to be able to surprise again in 2Q23 because of the intensified competitive landscape, and its new ecosystem strategy;</li>
<li>PDD remains a long run BUY as it’s a key beneficiary of the downward trend of Chinese and global consumption. We slightly raise our forecasts for PDD’s 2023 EPS.  </li>
</ul>


PDD once again surprised by reporting revenue/non-GAAP net income 16.5%/68.8% higher vs. cons. We suggest the beat is  due to the moderate competitive landscape in 1Q23 and strong consumer demand
Yet, we don’t expect PDD to be able to surprise again in 2Q23 because of the intensified competitive landscape, and its new ecosystem strategy;
PDD remains a long run BUY as it’s a key beneficiary of the downward trend of Chinese and global consumption. We slightly raise our forecasts for PDD’s 2023 EPS.  


Pinduoduo (PDD US, BUY, TP US$95) Earnings Review: A Long Term Buy Amid Challenges in 2Q23

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 (23 May) 1Q23 results: revenue was up 58.2% YoY to RMB37.6bn, 15/17% ahead of our/Bloomberg consensus estimates, which we attributable to robust GMV growth, and increase in monetization.</li><li>The stronger-than-expected revenue growth propelled better-than-expected operating leverage and drove a beat on earnings.</li><li>Non-GAAP net income increased by 141.1% YoY to RMB10.1bn, 69% ahead of consensus.</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 (23 May) 1Q23 results: revenue was up 58.2% YoY to RMB37.6bn, 15/17% ahead of our/Bloomberg consensus estimates, which we attributable to robust GMV growth, and increase in monetization.The stronger-than-expected revenue growth propelled better-than-expected operating leverage and drove a beat on earnings.Non-GAAP net income increased by 141.1% YoY to RMB10.1bn, 69% ahead of consensus.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) – Core Business Delivered Quality Growth

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)

[Blue Lotus E-Commerce Sector Update]: Shein's 3P Market Impacts Temu, Amazon, and Shopify

Our recent interviews with Shein's 3P merchants suggest that Shein's newly launched 3P businesses, which include ODM and marketplace models, are...

Blue Lotus Research Institute

China TMT Update May 31 - NTES/PDD/NIO/LI-PDD Officially Launches 6.18 Event (-)

NetEase testing a new magic academy simulation game in Japan (+)/NIO/LI: NIO announces pricing details of all-new ES6 (- / +)/ PDD: PDD officially...

Blue Lotus Research Institute

Pinduoduo (PDD US): Deciphering Massive 1Q Beat

PDD’s massive 1Q beat didn’t answer the questions around its sustainability. We expect large fluctuations in earnings growth for the rest of 2023...

Eric Chen

Pinduoduo (PDD US, BUY, TP US$95) Earnings Review: A Long Term Buy Amid Challenges in 2Q23

PDD remains a long run BUY as it’s a key beneficiary of the downward trend of Chinese and global consumption. We slightly raise our forecasts for...

Blue Lotus Research Institute

PDD Holdings (PDD US) – Core Business Delivered Quality Growth

PDD Holdings (PDD) announced (23 May) 1Q23 results: revenue was up 58.2% YoY to RMB37.6bn, 15/17% ahead of our/Bloomberg consensus estimates

CMB International

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