Forensic Analyst

Jason Yap, CFA

Forensic Accounting

PDD posted its first quarterly profit since listing and committed to re-invest net profits towards a newly launched RMB10 billion Agriculture Initiative.
Revenue and active buyers recorded strong growth but otherwise confirmed signs of decelerating growth compared with prior quarters.  Further, PDD's management confirmed that its profitability going forward is likely to be affected both by investments in the Agriculture Initiative and intensifying competition in an evolving China e-commerce landscape.
Notwithstanding the above, US investors read PDD's significant profit milestone positively, with PDD's share price up 22.3% by US trade closing (24 Aug 2021).  
We previously discussed deteriorating sequential quarter on quarter financial and operating metrics and operating cashflows, PDD's pivot to asset heavy strategy, and decelerating GMV and revenue growth.  To its credit, PDD's strong Q2 2021 results has debunked some of these concerns although PDD's latest disclosures and management representations indicate that the strong performance may not repeat in H2 2021. 
We provide updates on the Q2 2021 results and discuss the relevant issues in this article.

PDD posted its first quarterly profit since listing and committed to re-invest net profits towards a newly launched RMB10 billion Agriculture Initiative.
Revenue and active buyers recorded strong growth but otherwise confirmed signs of decelerating growth compared with prior quarters.  Further, PDD's management confirmed that its profitability going forward is likely to be affected both by investments in the Agriculture Initiative and intensifying competition in an evolving China e-commerce landscape.
Notwithstanding the above, US investors read PDD's significant profit milestone positively, with PDD's share price up 22.3% by US trade closing (24 Aug 2021).  
We previously discussed deteriorating sequential quarter on quarter financial and operating metrics and operating cashflows, PDD's pivot to asset heavy strategy, and decelerating GMV and revenue growth.  To its credit, PDD's strong Q2 2021 results has debunked some of these concerns although PDD's latest disclosures and management representations indicate that the strong performance may not repeat in H2 2021. 
We provide updates on the Q2 2021 results and discuss the relevant issues in this article.

PDD - Strong (And First Ever) Profit in Q2 2021 but Likely Transient

PDD Holdings

PDD - Strong (And First Ever) Profit in Q2 2021 but Likely Transient