+Follow
LGCPJ
No personal profile
0
Follow
0
Followers
0
Topic
0
Badge
Posts
Hot
LGCPJ
14:35
Share your opinion about this news…
PDD: Price Crash Despite Strong Growth
Go to Tiger App to see more news
{"i18n":{"language":"en_US"},"userPageInfo":{"id":"4189012500205662","uuid":"4189012500205662","gmtCreate":1725910236103,"gmtModify":1727834699014,"name":"LGCPJ","pinyin":"lgcpj","introduction":"","introductionEn":"","signature":"","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","hat":null,"hatId":null,"hatName":null,"vip":1,"status":2,"fanSize":0,"headSize":0,"tweetSize":1,"questionSize":0,"limitLevel":999,"accountStatus":1,"level":{"id":0,"name":"","nameTw":"","represent":"","factor":"","iconColor":"","bgColor":""},"themeCounts":0,"badgeCounts":0,"badges":[],"moderator":false,"superModerator":false,"manageSymbols":null,"badgeLevel":null,"boolIsFan":false,"boolIsHead":false,"favoriteSize":0,"symbols":null,"coverImage":null,"realNameVerified":"init","userBadges":[{"badgeId":"7a9f168ff73447fe856ed6c938b61789-1","templateUuid":"7a9f168ff73447fe856ed6c938b61789","name":"Knowledgeable Investor","description":"Traded more than 10 stocks","bigImgUrl":"https://static.tigerbbs.com/e74cc24115c4fbae6154ec1b1041bf47","smallImgUrl":"https://static.tigerbbs.com/d48265cbfd97c57f9048db29f22227b0","grayImgUrl":"https://static.tigerbbs.com/76c6d6898b073c77e1c537ebe9ac1c57","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.10.03","exceedPercentage":null,"individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1102},{"badgeId":"972123088c9646f7b6091ae0662215be-1","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Elite Trader","description":"Total number of securities or futures transactions reached 30","bigImgUrl":"https://static.tigerbbs.com/ab0f87127c854ce3191a752d57b46edc","smallImgUrl":"https://static.tigerbbs.com/c9835ce48b8c8743566d344ac7a7ba8c","grayImgUrl":"https://static.tigerbbs.com/76754b53ce7a90019f132c1d2fbc698f","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.10.03","exceedPercentage":"60.81%","individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1100},{"badgeId":"a83d7582f45846ffbccbce770ce65d84-1","templateUuid":"a83d7582f45846ffbccbce770ce65d84","name":"Real Trader","description":"Completed a transaction","bigImgUrl":"https://static.tigerbbs.com/2e08a1cc2087a1de93402c2c290fa65b","smallImgUrl":"https://static.tigerbbs.com/4504a6397ce1137932d56e5f4ce27166","grayImgUrl":"https://static.tigerbbs.com/4b22c79415b4cd6e3d8ebc4a0fa32604","redirectLinkEnabled":0,"redirectLink":null,"hasAllocated":1,"isWearing":0,"stamp":null,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2024.09.12","exceedPercentage":null,"individualDisplayEnabled":0,"backgroundColor":null,"fontColor":null,"individualDisplaySort":0,"categoryType":1100}],"userBadgeCount":3,"currentWearingBadge":null,"individualDisplayBadges":null,"crmLevel":1,"crmLevelSwitch":0,"location":null,"starInvestorFollowerNum":0,"starInvestorFlag":false,"starInvestorOrderShareNum":0,"subscribeStarInvestorNum":0,"ror":null,"winRationPercentage":null,"showRor":false,"investmentPhilosophy":null,"starInvestorSubscribeFlag":false},"baikeInfo":{},"tab":"post","tweets":[{"id":373751428583616,"gmtCreate":1732257359895,"gmtModify":1732257415092,"author":{"id":"4189012500205662","authorId":"4189012500205662","name":"LGCPJ","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4189012500205662","authorIdStr":"4189012500205662"},"themes":[],"htmlText":"Share your opinion about this news…","listText":"Share your opinion about this news…","text":"Share your opinion about this news…","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/373751428583616","repostId":"2485446914","repostType":2,"repost":{"id":"2485446914","pubTimestamp":1732242095,"share":"https://ttm.financial/m/news/2485446914?lang=&edition=fundamental","pubTime":"2024-11-22 10:21","market":"us","language":"en","title":"PDD: Price Crash Despite Strong Growth","url":"https://stock-news.laohu8.com/highlight/detail?id=2485446914","media":"seekingalpha","summary":"PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.The company faces competition and macroeconom","content":"<html><head></head><body><ul style=\"\"><li><p>PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.</p></li><li><p>The company faces competition and macroeconomic challenges in China, but its non-China business, particularly Temu, remains a key growth driver.</p></li><li><p>PDD stock's valuation is attractive at 9x net earnings, but risks include China's economic issues and potential US-China trade tensions.</p></li><li><p>Despite risks, PDD Holdings offers strong growth at a low valuation, making it appealing for those seeking China exposure, though allocation should be cautious.</p></li></ul><h2 id=\"id_3155477107\">Article Thesis</h2><p><a href=\"https://laohu8.com/S/PDD\">PDD Holdings Inc.</a> reported strong business growth for the most recent quarter, but expectations were somewhat higher compared to what the company delivered. Shares slumped by double-digits on Thursday, sending shares to a single-digit earnings multiple. For those not afraid of China exposure, PDD Holdings could be attractive, but risks shouldn't be ignored.</p><h2 id=\"id_1804130077\">Past Coverage On PDD Holdings</h2><p>I have written about PDD Holdings Inc. here on Seeking Alpha in the past, most recently in August, when shares slumped following the company's previous earnings release. I gave the company a "Buy" rating back then, with shares rising from just $96 to as much as $140, although PDD Holdings has now given back a large portion of those gains again. With three months having passed since my last article on the Chinese e-commerce player, and with the company releasing its Q3 results on Thursday, it is time for an update.</p><h2 id=\"id_3969469045\">PDD Holdings Q3 Financials</h2><p>Judging by the share price reaction to PDD Holdings' Q3 results, one could have guessed that results were disastrous -- shares are down 10% at the time of writing. But actual business growth was very appealing, although slightly below expectations, as we can see in the following screenshot from Seeking Alpha:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/08d87420877c80ace21e21c571cc80ee\" alt=\"PDD Holdings results (Seeking Alpha)\" title=\"PDD Holdings results (Seeking Alpha)\" tg-width=\"640\" tg-height=\"211\"/><span>PDD Holdings results (Seeking Alpha)</span></p><p>Revenues missed estimates by around 1%, which is, I believe, far from a disaster, especially since PDD Holdings still grew its sales by more than 40% compared to one year earlier. The earnings per share miss was more pronounced, but a $0.31 earnings per share miss still does not necessarily justify a share price drop of $11, I believe. The market reacted this way, however, which may be due to the market already being worried about China-specific risks such as potential tariffs, China's real estate market downturn, and so on.</p><h2 id=\"id_1262621592\">PDD Holdings' Results: Growth Continues</h2><p>PDD Holdings is active in more than one country, but China is one of the country's main markets. There, competition is intense, with players such as Alibaba (BABA) and JD.com (JD) being active as well, and all of these companies are seeking to grow their business over time. At the same time, Chinese consumers are not in an overly strong spot right now, as some still worry about the country's real estate market, while China's economic growth is also lower than it was in the past (although still high compared to many other countries in the world).</p><p>While PDD Holdings didn't break out exact numbers in its earnings report, it is likely, I believe, that Temu's non-China business remained an important growth driver for PDD's overall business growth. In China, PDD likely didn't experience 40%+ revenue growth, as I believe that the relatively new (and controversial) business Temu delivered an outsized portion of PDD's overall revenue increase.</p><p>Revenue growth of 44% was excellent in absolute terms, but the growth rate was lower compared to the recent past. In the previous quarter, PDD Holdings had delivered an even larger revenue increase of 86%. Overall revenues did not decline, however, as Q3's revenue of $14.2 billion was slightly higher compared to the previous quarter, when PDD's sales had totaled $13.4 billion. The comparison had gotten tougher, however, likely due to Temu's better performance (wider adoption) in Q3 2023 versus Q2 2023. This means that achieving an extremely high relative year-over-year growth rate was easier in this year's Q2 compared to this year's Q3. On a sequential basis, revenues grew by around 6%, which pencils out to an annualized growth rate in the mid-20s. Further growth deceleration during the upcoming quarters thus seems quite possible. This isn't overly surprising, of course, as maintaining a high relative growth rate becomes harder and harder over time as a company grows in size, so it was unrealistic to believe that PDD would grow by 80% per year (or 40% per year) forever. A growth rate in the 20s would be far from bad, I believe, especially when we consider PDD Holdings' undemanding valuation.</p><p>Management's comments point in the same direction -- intense competition and macro headwinds are resulting in slowing growth. <a href=\"https://laohu8.com/S/VP..UK\">VP</a> of Finance, Ms. Jun Liu, said:</p><blockquote><p><em>“</em><strong><em>Our topline growth further moderated</em></strong><em> quarter-on-quarter amid intensified competition and ongoing external challenges. In our pursuit of high-quality development, we will continue to invest resolutely in building a healthy and sustainable ecosystem, which will be reflected in our results.”</em></p></blockquote><p>Looking at profitability, which is very important for investors, we see that PDD Holdings was able to grow its margins slightly compared to one year earlier. While more pronounced margin growth would have been even better, of course, I still like the fact that the company did not grow its business by sacrificing profits. Instead, the company expanded its margins slightly while being able to grow the business considerably, which is an attractive combination. Operating profits were up 48% compared to the previous year's quarter on an adjusted basis, while GAAP operating profits rose by 46% over the last year.</p><p>Non-GAAP net earnings per share came in lower than expected but were still up nicely versus the previous year's quarter, coming in at RMB18.59, which was up a hefty 60% from one year earlier, and which pencils out to $2.65, which was mostly in line with the company-wide net income growth rate, as PDD's share count didn't change much over the last year.</p><p>Cash generation was very healthy, at almost $4 billion, although that number was down compared to one year earlier. This could be due to the increased investments management talked about, but investors should nevertheless watch this metric going forward -- further declines in PDD's cash generation would be negative and might indicate low-quality earnings growth. Based on one quarter's results, there is no reason to panic, however.</p><p>On the cost side, PDD Holdings experienced an especially large increase in general and administrative expenses, which exploded upwards by 138%, rising to $260 million. That is still not a lot in absolute terms for a company that generates more than $14 billion in revenue, but the growth rate is a bit concerning. If R&D expenses were to grow much, one could argue that increased R&D expenses would lead to higher business growth down the road, but strong growth in G&A expenses is likely not an "investment" that will lead to better products or higher business growth. It would be good if PDD was able to slow down its G&A expense growth in the coming quarters, thus this is another item investors should keep an eye on going forward, I believe.</p><h2 id=\"id_1819407766\">Is PDD Stock A Good Investment?</h2><p>Buying PDD following August's price crash worked out very well, as PDD recovered quickly in the following weeks. This time, the same might happen -- although there is, of course, no guarantee for that. Based on current profit forecasts for this year, PDD Holdings is trading at just 9x net earnings, which makes for an 11% earnings yield. That is a low valuation in absolute terms, and especially undemanding for a company delivering revenue growth of close to 50% as of the most recent quarter.</p><p>That being said, there are some risks to consider: PDD Holdings is exposed to Chinese consumers, which means possible problems if China's housing market gets into even deeper problems.</p><p>For those who are not afraid of these risks and who want China exposure, PDD Holdings could be attractive, as it combines a low valuation with strong growth. But PDD isn't for everyone, and even for those who want to own it, I believe that exposure should be limited -- this isn't a low-risk stock where I would want an especially large allocation.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>PDD: Price Crash Despite Strong Growth</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPDD: Price Crash Despite Strong Growth\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 10:21 GMT+8 <a href=https://seekingalpha.com/article/4739392-pdd-price-crash-despite-strong-growth><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.The company faces competition and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739392-pdd-price-crash-despite-strong-growth\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0051755006.USD":"摩根大通中国A (dist)","LU0594300419.USD":"富达中国消费基金A","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","BK4505":"高瓴资本持仓","LU1868837722.USD":"CT (LUX) I GLOBAL EMERGING MARKET EQUITIES \"2\" (USD) ACC","LU1961090484.USD":"ALLIANZ ALL CHINA EQUITY \"A\" (USD) INC","BK4504":"桥水持仓","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU0348827113.USD":"ALLIANZ RCM CHINA \"AT\" ACC","LU1770034418.SGD":"ALL CHINA EQUITY \"A\" (SGDHDG) ACC","BK4548":"巴美列捷福持仓","LU0359201612.USD":"贝莱德中国基金A2","LU0359202008.SGD":"Blackrock China Fund A2 SGD-H","LU0039217434.USD":"HSBC GIF CHINESE EQUITY \"AD\" INC","LU0359201885.HKD":"BGF CHINA \"A2\" (HKD) ACC","LU0650527681.SGD":"Fidelity China Consumer A-SGD","LU1981816686.USD":"EASTSPRING INV ASIAN MULTI FACTOR EQUITY \"A\" (USD) ACC","LU2399975544.HKD":"ALLIANZ ALL CHINA EQUITY \"AT\" (HKD) ACC","HK0000320264.USD":"TAIKANG KAITAI CHINA NEW OPPORTUNITIES FUND \"A\" (USD) ACC","LU0048580855.USD":"富达大中华区A","BK4531":"中概回港概念","LU2087589342.USD":"BGF ASIAN MULTI-ASSET INCOME \"A6\" (USD) INC","SG9999002562.SGD":"LionGlobal Asia Pacific SGD","BK4558":"双十一","PDD":"拼多多","SG9999002828.SGD":"Eastspring Investments Unit Trusts - Dragon Peacock A SGD","SG9999002463.SGD":"LionGlobal China Growth SGD","LU0328353924.USD":"UBS (LUX) EQUITY SICAV - GLOBAL EMERGING MARKETS OPPORTUNITY (USD) \"P\" (USD) ACC","LU0605514214.HKD":"FIDELITY CHINA CONSUMER \"A\" (HKD) ACC","LU0823413660.USD":"BNP PARIBAS EMERGING EQUITY \"C\" (USD) INC","BK4535":"淡马锡持仓","LU0823038988.USD":"AMUNDI FUNDS ASIA EQUITY FOCUS \"A2\" (USD) ACC","LU1720050803.USD":"安联全方位中国股票基金","BK4220":"综合零售","HK0000306701.USD":"TAIKANG KAITAI CHINA NEW OPPORTUNITIES FUND \"A\" (USD) INC","LU2257852520.SGD":"JPMorgan Funds - Asia Growth A (acc) SGD","LU0589944569.HKD":"ALLIANZ EMERGING ASIA EQUITY \"AT\" (HKD) ACC","LU0047713382.USD":"BGF EMERGING MARKETS \"A2\" ACC","LU2242644610.SGD":"Fidelity China Innovation A-ACC-SGD","BK4588":"碎股","LU0588546209.SGD":"Eastspring Investments - China Equity Fund AS SGD","BK4526":"热门中概股","LU1242518931.SGD":"Fullerton Lux Funds - Asia Absolute Alpha A Acc SGD","LU0823397285.USD":"BNP PARIBAS SUSTAINABLE ASIA EX-JAPAN EQUITY \"C\" (USD) INC","LU0823413587.USD":"BNP PARIBAS EMERGING EQUITY \"C\" (USD) ACC","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","LU0143863198.USD":"CT (LUX) I GLOBAL EMERGING MARKET EQUITIES\"AU\" (USD) ACC","LU0348788117.USD":"ALLIANZ EMERGING ASIA EQUITY \"A\" (USD) INC","LU1794554557.SGD":"Allianz All China Equity AT Acc H2-SGD","BK4122":"互联网与直销零售"},"source_url":"https://seekingalpha.com/article/4739392-pdd-price-crash-despite-strong-growth","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2485446914","content_text":"PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.The company faces competition and macroeconomic challenges in China, but its non-China business, particularly Temu, remains a key growth driver.PDD stock's valuation is attractive at 9x net earnings, but risks include China's economic issues and potential US-China trade tensions.Despite risks, PDD Holdings offers strong growth at a low valuation, making it appealing for those seeking China exposure, though allocation should be cautious.Article ThesisPDD Holdings Inc. reported strong business growth for the most recent quarter, but expectations were somewhat higher compared to what the company delivered. Shares slumped by double-digits on Thursday, sending shares to a single-digit earnings multiple. For those not afraid of China exposure, PDD Holdings could be attractive, but risks shouldn't be ignored.Past Coverage On PDD HoldingsI have written about PDD Holdings Inc. here on Seeking Alpha in the past, most recently in August, when shares slumped following the company's previous earnings release. I gave the company a \"Buy\" rating back then, with shares rising from just $96 to as much as $140, although PDD Holdings has now given back a large portion of those gains again. With three months having passed since my last article on the Chinese e-commerce player, and with the company releasing its Q3 results on Thursday, it is time for an update.PDD Holdings Q3 FinancialsJudging by the share price reaction to PDD Holdings' Q3 results, one could have guessed that results were disastrous -- shares are down 10% at the time of writing. But actual business growth was very appealing, although slightly below expectations, as we can see in the following screenshot from Seeking Alpha:PDD Holdings results (Seeking Alpha)Revenues missed estimates by around 1%, which is, I believe, far from a disaster, especially since PDD Holdings still grew its sales by more than 40% compared to one year earlier. The earnings per share miss was more pronounced, but a $0.31 earnings per share miss still does not necessarily justify a share price drop of $11, I believe. The market reacted this way, however, which may be due to the market already being worried about China-specific risks such as potential tariffs, China's real estate market downturn, and so on.PDD Holdings' Results: Growth ContinuesPDD Holdings is active in more than one country, but China is one of the country's main markets. There, competition is intense, with players such as Alibaba (BABA) and JD.com (JD) being active as well, and all of these companies are seeking to grow their business over time. At the same time, Chinese consumers are not in an overly strong spot right now, as some still worry about the country's real estate market, while China's economic growth is also lower than it was in the past (although still high compared to many other countries in the world).While PDD Holdings didn't break out exact numbers in its earnings report, it is likely, I believe, that Temu's non-China business remained an important growth driver for PDD's overall business growth. In China, PDD likely didn't experience 40%+ revenue growth, as I believe that the relatively new (and controversial) business Temu delivered an outsized portion of PDD's overall revenue increase.Revenue growth of 44% was excellent in absolute terms, but the growth rate was lower compared to the recent past. In the previous quarter, PDD Holdings had delivered an even larger revenue increase of 86%. Overall revenues did not decline, however, as Q3's revenue of $14.2 billion was slightly higher compared to the previous quarter, when PDD's sales had totaled $13.4 billion. The comparison had gotten tougher, however, likely due to Temu's better performance (wider adoption) in Q3 2023 versus Q2 2023. This means that achieving an extremely high relative year-over-year growth rate was easier in this year's Q2 compared to this year's Q3. On a sequential basis, revenues grew by around 6%, which pencils out to an annualized growth rate in the mid-20s. Further growth deceleration during the upcoming quarters thus seems quite possible. This isn't overly surprising, of course, as maintaining a high relative growth rate becomes harder and harder over time as a company grows in size, so it was unrealistic to believe that PDD would grow by 80% per year (or 40% per year) forever. A growth rate in the 20s would be far from bad, I believe, especially when we consider PDD Holdings' undemanding valuation.Management's comments point in the same direction -- intense competition and macro headwinds are resulting in slowing growth. VP of Finance, Ms. Jun Liu, said:“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges. In our pursuit of high-quality development, we will continue to invest resolutely in building a healthy and sustainable ecosystem, which will be reflected in our results.”Looking at profitability, which is very important for investors, we see that PDD Holdings was able to grow its margins slightly compared to one year earlier. While more pronounced margin growth would have been even better, of course, I still like the fact that the company did not grow its business by sacrificing profits. Instead, the company expanded its margins slightly while being able to grow the business considerably, which is an attractive combination. Operating profits were up 48% compared to the previous year's quarter on an adjusted basis, while GAAP operating profits rose by 46% over the last year.Non-GAAP net earnings per share came in lower than expected but were still up nicely versus the previous year's quarter, coming in at RMB18.59, which was up a hefty 60% from one year earlier, and which pencils out to $2.65, which was mostly in line with the company-wide net income growth rate, as PDD's share count didn't change much over the last year.Cash generation was very healthy, at almost $4 billion, although that number was down compared to one year earlier. This could be due to the increased investments management talked about, but investors should nevertheless watch this metric going forward -- further declines in PDD's cash generation would be negative and might indicate low-quality earnings growth. Based on one quarter's results, there is no reason to panic, however.On the cost side, PDD Holdings experienced an especially large increase in general and administrative expenses, which exploded upwards by 138%, rising to $260 million. That is still not a lot in absolute terms for a company that generates more than $14 billion in revenue, but the growth rate is a bit concerning. If R&D expenses were to grow much, one could argue that increased R&D expenses would lead to higher business growth down the road, but strong growth in G&A expenses is likely not an \"investment\" that will lead to better products or higher business growth. It would be good if PDD was able to slow down its G&A expense growth in the coming quarters, thus this is another item investors should keep an eye on going forward, I believe.Is PDD Stock A Good Investment?Buying PDD following August's price crash worked out very well, as PDD recovered quickly in the following weeks. This time, the same might happen -- although there is, of course, no guarantee for that. Based on current profit forecasts for this year, PDD Holdings is trading at just 9x net earnings, which makes for an 11% earnings yield. That is a low valuation in absolute terms, and especially undemanding for a company delivering revenue growth of close to 50% as of the most recent quarter.That being said, there are some risks to consider: PDD Holdings is exposed to Chinese consumers, which means possible problems if China's housing market gets into even deeper problems.For those who are not afraid of these risks and who want China exposure, PDD Holdings could be attractive, as it combines a low valuation with strong growth. But PDD isn't for everyone, and even for those who want to own it, I believe that exposure should be limited -- this isn't a low-risk stock where I would want an especially large allocation.","news_type":1},"isVote":1,"tweetType":1,"viewCount":0,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":373751428583616,"gmtCreate":1732257359895,"gmtModify":1732257415092,"author":{"id":"4189012500205662","authorId":"4189012500205662","name":"LGCPJ","avatar":"https://community-static.tradeup.com/news/default-avatar.jpg","crmLevel":1,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4189012500205662","authorIdStr":"4189012500205662"},"themes":[],"htmlText":"Share your opinion about this news…","listText":"Share your opinion about this news…","text":"Share your opinion about this news…","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/373751428583616","repostId":"2485446914","repostType":2,"repost":{"id":"2485446914","pubTimestamp":1732242095,"share":"https://ttm.financial/m/news/2485446914?lang=&edition=fundamental","pubTime":"2024-11-22 10:21","market":"us","language":"en","title":"PDD: Price Crash Despite Strong Growth","url":"https://stock-news.laohu8.com/highlight/detail?id=2485446914","media":"seekingalpha","summary":"PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.The company faces competition and macroeconom","content":"<html><head></head><body><ul style=\"\"><li><p>PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.</p></li><li><p>The company faces competition and macroeconomic challenges in China, but its non-China business, particularly Temu, remains a key growth driver.</p></li><li><p>PDD stock's valuation is attractive at 9x net earnings, but risks include China's economic issues and potential US-China trade tensions.</p></li><li><p>Despite risks, PDD Holdings offers strong growth at a low valuation, making it appealing for those seeking China exposure, though allocation should be cautious.</p></li></ul><h2 id=\"id_3155477107\">Article Thesis</h2><p><a href=\"https://laohu8.com/S/PDD\">PDD Holdings Inc.</a> reported strong business growth for the most recent quarter, but expectations were somewhat higher compared to what the company delivered. Shares slumped by double-digits on Thursday, sending shares to a single-digit earnings multiple. For those not afraid of China exposure, PDD Holdings could be attractive, but risks shouldn't be ignored.</p><h2 id=\"id_1804130077\">Past Coverage On PDD Holdings</h2><p>I have written about PDD Holdings Inc. here on Seeking Alpha in the past, most recently in August, when shares slumped following the company's previous earnings release. I gave the company a "Buy" rating back then, with shares rising from just $96 to as much as $140, although PDD Holdings has now given back a large portion of those gains again. With three months having passed since my last article on the Chinese e-commerce player, and with the company releasing its Q3 results on Thursday, it is time for an update.</p><h2 id=\"id_3969469045\">PDD Holdings Q3 Financials</h2><p>Judging by the share price reaction to PDD Holdings' Q3 results, one could have guessed that results were disastrous -- shares are down 10% at the time of writing. But actual business growth was very appealing, although slightly below expectations, as we can see in the following screenshot from Seeking Alpha:</p><p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/08d87420877c80ace21e21c571cc80ee\" alt=\"PDD Holdings results (Seeking Alpha)\" title=\"PDD Holdings results (Seeking Alpha)\" tg-width=\"640\" tg-height=\"211\"/><span>PDD Holdings results (Seeking Alpha)</span></p><p>Revenues missed estimates by around 1%, which is, I believe, far from a disaster, especially since PDD Holdings still grew its sales by more than 40% compared to one year earlier. The earnings per share miss was more pronounced, but a $0.31 earnings per share miss still does not necessarily justify a share price drop of $11, I believe. The market reacted this way, however, which may be due to the market already being worried about China-specific risks such as potential tariffs, China's real estate market downturn, and so on.</p><h2 id=\"id_1262621592\">PDD Holdings' Results: Growth Continues</h2><p>PDD Holdings is active in more than one country, but China is one of the country's main markets. There, competition is intense, with players such as Alibaba (BABA) and JD.com (JD) being active as well, and all of these companies are seeking to grow their business over time. At the same time, Chinese consumers are not in an overly strong spot right now, as some still worry about the country's real estate market, while China's economic growth is also lower than it was in the past (although still high compared to many other countries in the world).</p><p>While PDD Holdings didn't break out exact numbers in its earnings report, it is likely, I believe, that Temu's non-China business remained an important growth driver for PDD's overall business growth. In China, PDD likely didn't experience 40%+ revenue growth, as I believe that the relatively new (and controversial) business Temu delivered an outsized portion of PDD's overall revenue increase.</p><p>Revenue growth of 44% was excellent in absolute terms, but the growth rate was lower compared to the recent past. In the previous quarter, PDD Holdings had delivered an even larger revenue increase of 86%. Overall revenues did not decline, however, as Q3's revenue of $14.2 billion was slightly higher compared to the previous quarter, when PDD's sales had totaled $13.4 billion. The comparison had gotten tougher, however, likely due to Temu's better performance (wider adoption) in Q3 2023 versus Q2 2023. This means that achieving an extremely high relative year-over-year growth rate was easier in this year's Q2 compared to this year's Q3. On a sequential basis, revenues grew by around 6%, which pencils out to an annualized growth rate in the mid-20s. Further growth deceleration during the upcoming quarters thus seems quite possible. This isn't overly surprising, of course, as maintaining a high relative growth rate becomes harder and harder over time as a company grows in size, so it was unrealistic to believe that PDD would grow by 80% per year (or 40% per year) forever. A growth rate in the 20s would be far from bad, I believe, especially when we consider PDD Holdings' undemanding valuation.</p><p>Management's comments point in the same direction -- intense competition and macro headwinds are resulting in slowing growth. <a href=\"https://laohu8.com/S/VP..UK\">VP</a> of Finance, Ms. Jun Liu, said:</p><blockquote><p><em>“</em><strong><em>Our topline growth further moderated</em></strong><em> quarter-on-quarter amid intensified competition and ongoing external challenges. In our pursuit of high-quality development, we will continue to invest resolutely in building a healthy and sustainable ecosystem, which will be reflected in our results.”</em></p></blockquote><p>Looking at profitability, which is very important for investors, we see that PDD Holdings was able to grow its margins slightly compared to one year earlier. While more pronounced margin growth would have been even better, of course, I still like the fact that the company did not grow its business by sacrificing profits. Instead, the company expanded its margins slightly while being able to grow the business considerably, which is an attractive combination. Operating profits were up 48% compared to the previous year's quarter on an adjusted basis, while GAAP operating profits rose by 46% over the last year.</p><p>Non-GAAP net earnings per share came in lower than expected but were still up nicely versus the previous year's quarter, coming in at RMB18.59, which was up a hefty 60% from one year earlier, and which pencils out to $2.65, which was mostly in line with the company-wide net income growth rate, as PDD's share count didn't change much over the last year.</p><p>Cash generation was very healthy, at almost $4 billion, although that number was down compared to one year earlier. This could be due to the increased investments management talked about, but investors should nevertheless watch this metric going forward -- further declines in PDD's cash generation would be negative and might indicate low-quality earnings growth. Based on one quarter's results, there is no reason to panic, however.</p><p>On the cost side, PDD Holdings experienced an especially large increase in general and administrative expenses, which exploded upwards by 138%, rising to $260 million. That is still not a lot in absolute terms for a company that generates more than $14 billion in revenue, but the growth rate is a bit concerning. If R&D expenses were to grow much, one could argue that increased R&D expenses would lead to higher business growth down the road, but strong growth in G&A expenses is likely not an "investment" that will lead to better products or higher business growth. It would be good if PDD was able to slow down its G&A expense growth in the coming quarters, thus this is another item investors should keep an eye on going forward, I believe.</p><h2 id=\"id_1819407766\">Is PDD Stock A Good Investment?</h2><p>Buying PDD following August's price crash worked out very well, as PDD recovered quickly in the following weeks. This time, the same might happen -- although there is, of course, no guarantee for that. Based on current profit forecasts for this year, PDD Holdings is trading at just 9x net earnings, which makes for an 11% earnings yield. That is a low valuation in absolute terms, and especially undemanding for a company delivering revenue growth of close to 50% as of the most recent quarter.</p><p>That being said, there are some risks to consider: PDD Holdings is exposed to Chinese consumers, which means possible problems if China's housing market gets into even deeper problems.</p><p>For those who are not afraid of these risks and who want China exposure, PDD Holdings could be attractive, as it combines a low valuation with strong growth. But PDD isn't for everyone, and even for those who want to own it, I believe that exposure should be limited -- this isn't a low-risk stock where I would want an especially large allocation.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>PDD: Price Crash Despite Strong Growth</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nPDD: Price Crash Despite Strong Growth\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 10:21 GMT+8 <a href=https://seekingalpha.com/article/4739392-pdd-price-crash-despite-strong-growth><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.The company faces competition and ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739392-pdd-price-crash-despite-strong-growth\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0051755006.USD":"摩根大通中国A (dist)","LU0594300419.USD":"富达中国消费基金A","IE00B3M56506.USD":"NEUBERGER BERMAN EMERGING MARKETS EQUITY \"A\" (USD) ACC","BK4505":"高瓴资本持仓","LU1868837722.USD":"CT (LUX) I GLOBAL EMERGING MARKET EQUITIES \"2\" (USD) ACC","LU1961090484.USD":"ALLIANZ ALL CHINA EQUITY \"A\" (USD) INC","BK4504":"桥水持仓","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","LU0348827113.USD":"ALLIANZ RCM CHINA \"AT\" ACC","LU1770034418.SGD":"ALL CHINA EQUITY \"A\" (SGDHDG) ACC","BK4548":"巴美列捷福持仓","LU0359201612.USD":"贝莱德中国基金A2","LU0359202008.SGD":"Blackrock China Fund A2 SGD-H","LU0039217434.USD":"HSBC GIF CHINESE EQUITY \"AD\" INC","LU0359201885.HKD":"BGF CHINA \"A2\" (HKD) ACC","LU0650527681.SGD":"Fidelity China Consumer A-SGD","LU1981816686.USD":"EASTSPRING INV ASIAN MULTI FACTOR EQUITY \"A\" (USD) ACC","LU2399975544.HKD":"ALLIANZ ALL CHINA EQUITY \"AT\" (HKD) ACC","HK0000320264.USD":"TAIKANG KAITAI CHINA NEW OPPORTUNITIES FUND \"A\" (USD) ACC","LU0048580855.USD":"富达大中华区A","BK4531":"中概回港概念","LU2087589342.USD":"BGF ASIAN MULTI-ASSET INCOME \"A6\" (USD) INC","SG9999002562.SGD":"LionGlobal Asia Pacific SGD","BK4558":"双十一","PDD":"拼多多","SG9999002828.SGD":"Eastspring Investments Unit Trusts - Dragon Peacock A SGD","SG9999002463.SGD":"LionGlobal China Growth SGD","LU0328353924.USD":"UBS (LUX) EQUITY SICAV - GLOBAL EMERGING MARKETS OPPORTUNITY (USD) \"P\" (USD) ACC","LU0605514214.HKD":"FIDELITY CHINA CONSUMER \"A\" (HKD) ACC","LU0823413660.USD":"BNP PARIBAS EMERGING EQUITY \"C\" (USD) INC","BK4535":"淡马锡持仓","LU0823038988.USD":"AMUNDI FUNDS ASIA EQUITY FOCUS \"A2\" (USD) ACC","LU1720050803.USD":"安联全方位中国股票基金","BK4220":"综合零售","HK0000306701.USD":"TAIKANG KAITAI CHINA NEW OPPORTUNITIES FUND \"A\" (USD) INC","LU2257852520.SGD":"JPMorgan Funds - Asia Growth A (acc) SGD","LU0589944569.HKD":"ALLIANZ EMERGING ASIA EQUITY \"AT\" (HKD) ACC","LU0047713382.USD":"BGF EMERGING MARKETS \"A2\" ACC","LU2242644610.SGD":"Fidelity China Innovation A-ACC-SGD","BK4588":"碎股","LU0588546209.SGD":"Eastspring Investments - China Equity Fund AS SGD","BK4526":"热门中概股","LU1242518931.SGD":"Fullerton Lux Funds - Asia Absolute Alpha A Acc SGD","LU0823397285.USD":"BNP PARIBAS SUSTAINABLE ASIA EX-JAPAN EQUITY \"C\" (USD) INC","LU0823413587.USD":"BNP PARIBAS EMERGING EQUITY \"C\" (USD) ACC","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","LU0143863198.USD":"CT (LUX) I GLOBAL EMERGING MARKET EQUITIES\"AU\" (USD) ACC","LU0348788117.USD":"ALLIANZ EMERGING ASIA EQUITY \"A\" (USD) INC","LU1794554557.SGD":"Allianz All China Equity AT Acc H2-SGD","BK4122":"互联网与直销零售"},"source_url":"https://seekingalpha.com/article/4739392-pdd-price-crash-despite-strong-growth","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2485446914","content_text":"PDD Holdings reported strong Q3 growth, but results slightly missed expectations, leading to a double-digit share price drop despite a 40%+ sales increase.The company faces competition and macroeconomic challenges in China, but its non-China business, particularly Temu, remains a key growth driver.PDD stock's valuation is attractive at 9x net earnings, but risks include China's economic issues and potential US-China trade tensions.Despite risks, PDD Holdings offers strong growth at a low valuation, making it appealing for those seeking China exposure, though allocation should be cautious.Article ThesisPDD Holdings Inc. reported strong business growth for the most recent quarter, but expectations were somewhat higher compared to what the company delivered. Shares slumped by double-digits on Thursday, sending shares to a single-digit earnings multiple. For those not afraid of China exposure, PDD Holdings could be attractive, but risks shouldn't be ignored.Past Coverage On PDD HoldingsI have written about PDD Holdings Inc. here on Seeking Alpha in the past, most recently in August, when shares slumped following the company's previous earnings release. I gave the company a \"Buy\" rating back then, with shares rising from just $96 to as much as $140, although PDD Holdings has now given back a large portion of those gains again. With three months having passed since my last article on the Chinese e-commerce player, and with the company releasing its Q3 results on Thursday, it is time for an update.PDD Holdings Q3 FinancialsJudging by the share price reaction to PDD Holdings' Q3 results, one could have guessed that results were disastrous -- shares are down 10% at the time of writing. But actual business growth was very appealing, although slightly below expectations, as we can see in the following screenshot from Seeking Alpha:PDD Holdings results (Seeking Alpha)Revenues missed estimates by around 1%, which is, I believe, far from a disaster, especially since PDD Holdings still grew its sales by more than 40% compared to one year earlier. The earnings per share miss was more pronounced, but a $0.31 earnings per share miss still does not necessarily justify a share price drop of $11, I believe. The market reacted this way, however, which may be due to the market already being worried about China-specific risks such as potential tariffs, China's real estate market downturn, and so on.PDD Holdings' Results: Growth ContinuesPDD Holdings is active in more than one country, but China is one of the country's main markets. There, competition is intense, with players such as Alibaba (BABA) and JD.com (JD) being active as well, and all of these companies are seeking to grow their business over time. At the same time, Chinese consumers are not in an overly strong spot right now, as some still worry about the country's real estate market, while China's economic growth is also lower than it was in the past (although still high compared to many other countries in the world).While PDD Holdings didn't break out exact numbers in its earnings report, it is likely, I believe, that Temu's non-China business remained an important growth driver for PDD's overall business growth. In China, PDD likely didn't experience 40%+ revenue growth, as I believe that the relatively new (and controversial) business Temu delivered an outsized portion of PDD's overall revenue increase.Revenue growth of 44% was excellent in absolute terms, but the growth rate was lower compared to the recent past. In the previous quarter, PDD Holdings had delivered an even larger revenue increase of 86%. Overall revenues did not decline, however, as Q3's revenue of $14.2 billion was slightly higher compared to the previous quarter, when PDD's sales had totaled $13.4 billion. The comparison had gotten tougher, however, likely due to Temu's better performance (wider adoption) in Q3 2023 versus Q2 2023. This means that achieving an extremely high relative year-over-year growth rate was easier in this year's Q2 compared to this year's Q3. On a sequential basis, revenues grew by around 6%, which pencils out to an annualized growth rate in the mid-20s. Further growth deceleration during the upcoming quarters thus seems quite possible. This isn't overly surprising, of course, as maintaining a high relative growth rate becomes harder and harder over time as a company grows in size, so it was unrealistic to believe that PDD would grow by 80% per year (or 40% per year) forever. A growth rate in the 20s would be far from bad, I believe, especially when we consider PDD Holdings' undemanding valuation.Management's comments point in the same direction -- intense competition and macro headwinds are resulting in slowing growth. VP of Finance, Ms. Jun Liu, said:“Our topline growth further moderated quarter-on-quarter amid intensified competition and ongoing external challenges. In our pursuit of high-quality development, we will continue to invest resolutely in building a healthy and sustainable ecosystem, which will be reflected in our results.”Looking at profitability, which is very important for investors, we see that PDD Holdings was able to grow its margins slightly compared to one year earlier. While more pronounced margin growth would have been even better, of course, I still like the fact that the company did not grow its business by sacrificing profits. Instead, the company expanded its margins slightly while being able to grow the business considerably, which is an attractive combination. Operating profits were up 48% compared to the previous year's quarter on an adjusted basis, while GAAP operating profits rose by 46% over the last year.Non-GAAP net earnings per share came in lower than expected but were still up nicely versus the previous year's quarter, coming in at RMB18.59, which was up a hefty 60% from one year earlier, and which pencils out to $2.65, which was mostly in line with the company-wide net income growth rate, as PDD's share count didn't change much over the last year.Cash generation was very healthy, at almost $4 billion, although that number was down compared to one year earlier. This could be due to the increased investments management talked about, but investors should nevertheless watch this metric going forward -- further declines in PDD's cash generation would be negative and might indicate low-quality earnings growth. Based on one quarter's results, there is no reason to panic, however.On the cost side, PDD Holdings experienced an especially large increase in general and administrative expenses, which exploded upwards by 138%, rising to $260 million. That is still not a lot in absolute terms for a company that generates more than $14 billion in revenue, but the growth rate is a bit concerning. If R&D expenses were to grow much, one could argue that increased R&D expenses would lead to higher business growth down the road, but strong growth in G&A expenses is likely not an \"investment\" that will lead to better products or higher business growth. It would be good if PDD was able to slow down its G&A expense growth in the coming quarters, thus this is another item investors should keep an eye on going forward, I believe.Is PDD Stock A Good Investment?Buying PDD following August's price crash worked out very well, as PDD recovered quickly in the following weeks. This time, the same might happen -- although there is, of course, no guarantee for that. Based on current profit forecasts for this year, PDD Holdings is trading at just 9x net earnings, which makes for an 11% earnings yield. That is a low valuation in absolute terms, and especially undemanding for a company delivering revenue growth of close to 50% as of the most recent quarter.That being said, there are some risks to consider: PDD Holdings is exposed to Chinese consumers, which means possible problems if China's housing market gets into even deeper problems.For those who are not afraid of these risks and who want China exposure, PDD Holdings could be attractive, as it combines a low valuation with strong growth. But PDD isn't for everyone, and even for those who want to own it, I believe that exposure should be limited -- this isn't a low-risk stock where I would want an especially large allocation.","news_type":1},"isVote":1,"tweetType":1,"viewCount":0,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
