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

Shein Deep Dive:Imitators Perish; Differentiators Flourish

Pinduoduo(PDD.US) 4Q22 Preview: Expect Moderate Margin Beat

China/Asia TMT

Shawn Yang

Equity Bottom-Up

<ul>
<li>There has been debate: 1) why PDD’s take rate can be higher than BABA, 2) how to justify PDD’s long term margin, 3) will PDD be able to beat cons.</li>
<li>We suggest that the key driver of PDD’s outperformance in recent quarters has been the weak macro environment.</li>
<li>We raise our 2023 forecasts of total revenue and non-GAAP net income by 4% and 19%, more than consensus by 8% and 7% respectively.</li>
</ul>


There has been debate: 1) why PDD’s take rate can be higher than BABA, 2) how to justify PDD’s long term margin, 3) will PDD be able to beat cons.
We suggest that the key driver of PDD’s outperformance in recent quarters has been the weak macro environment.
We raise our 2023 forecasts of total revenue and non-GAAP net income by 4% and 19%, more than consensus by 8% and 7% respectively.


Raise 2023 Forecasts Due to High Take Rate

PDD Holdings

Raise 2023 Forecasts Due to High Take Rate