PDD's Upside Hinges on Temu Performance

Dow Jones08-26

0311 GMT - The upside for PDD Holdings will depend on the Temu bargain-shopping app's business performance, according to Morningstar's Chelsey Tam. The analyst notes that Temu is navigating increased governance and compliance costs. Second-quarter results from Temu's Chinese owner also suggest that the overseas business is slowing faster than expected. "The market is concerned about lackluster growth at Pinduoduo and the geopolitical risks Temu faces," Tam says in a note. With domestic platform Pinduoduo likely having reached a mature stage, "we think Temu's eventual turnaround can offer long-term upside," the analyst adds. Shares are also undervalued, she notes. Morningstar maintains its $141 fair-value estimate on PDD's ADRs, which last closed at $87.75.

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