On May 22nd, PDD released its financial report for the first quarter of 2024, ending March 31st. According to the report, PDD achieved RMB 86.81 billion in revenue, surpassing the market's estimate of RMB 76.86 billion, an increase of 131% year-over-year. Adjusted net profit reached RMB 30.60 billion, also higher than the market's estimate of RMB 15.53 billion, marking a 202% year-over-year increase. Adjusted earnings per ADS were RMB 20.72, exceeding the market's estimate of RMB 10.54. Research and development expenses were RMB 2.91 billion, compared to the market's estimate of RMB 3.31 billion.

 

This is the fifth consecutive quarter that PDD's performance has exceeded market expectations.

 

On the same day, PDD (PDD.US) experienced significant volatility before the market opened, with its stock price initially rising more than 4% and then plummeting nearly 10%. It later rapidly rebounded, with gains at one point reaching 8%, surpassing Alibaba (BABA.US) in total market value. As of May 22nd, PDD's U.S. stock price surged 6.89% in pre-market trading, closing at $155.07.

 

（Source：The Wall Street Journal，2024.05.22）

 

Trading Services Become Revenue Pillar

 

According to PDD, the revenue growth is primarily attributed to the increase in revenue from online marketing services and trading services. Specifically, revenue from trading services surged by 327% to $44.36 billion, surpassing online marketing business to become PDD's largest source of revenue. Revenue from online marketing services and other sources amounted to $42.46 billion, a year-over-year increase of 56%. Revenue from trading services reached $44.36 billion, marking a 327% year-over-year growth.

 

（Source：The Wall Street Journal，2024.05.22）

 

Reasons for PDD's Significant Performance Growth

 

1. Recovery of Consumer Market

In the first quarter of 2024, China's GDP growth rebounded to over 5%, and traditional festivals like Spring Festival drove a noticeable recovery in the consumer market. PDD successfully seized this opportunity with its affordable prices, launching promotional activities such as the New Year shopping festival and non-stop operations during Spring Festival, attracting a large number of consumers and achieving substantial revenue growth.

 

2. Advantage in Low Prices

In the current economic environment, consumers are more price-sensitive, which happens to be PDD's advantage.

 

3. Expansion of Global Business

With the advancement of globalization, overseas markets have become a new growth point for e-commerce companies. PDD's cross-border e-commerce platform, Temu, has experienced continuous high growth overseas and has entered over 50 countries and regions worldwide. Through flexible semi-managed models and industry integration activities, it has helped merchants expand their overseas channels and seize international market opportunities. This proactive internationalization strategy has opened up new growth space for PDD.

 

4. Continuous Optimization of Platform Services and Cost Control

As PDD's performance rapidly grows, the company has optimized its supply chain, enhanced data analysis capabilities, optimized personnel structure, improved operational efficiency, and reduced operating costs. This is also a significant reason for the substantial increase in profits.

 

What sectors present investment opportunities with PDD's significant performance growth and stock price surge?

 

1. Chinese Internet Companies and Hang Seng Tech Index

As a representative of Chinese Internet companies, PDD is one of the leading stocks in the Chinese concept stocks, and the trend of Hang Seng Tech Index is closely related to the Chinese concept stocks. Therefore, PDD's strong performance may drive investment opportunities in the Chinese concept stocks and Hang Seng Tech Index. Currently, their valuations are relatively low, making them worth paying attention to.

 

2. Consumer Theme

PDD's growth highlights the recovery and potential of the consumer market, especially the role of e-commerce platforms in driving consumption. Therefore, sectors related to the consumer theme, such as retail, everyday consumer goods, and even agriculture and food supply chains, may become focal points for investors.

 

3. Industries with Advantages in International Expansion

PDD's internationalization strategy and successful expansion into overseas markets indicate that Chinese companies with a competitive advantage in the global market will have more opportunities. For example, industries with huge market potential like new energy vehicles and photovoltaics may be worth considering.

 

How to place a trade on uSMART mobile application

Log in to the uSMART SG APP, click on the "Search" icon at the top right corner of the screen, and enter the  "PDD" to access the details page for trading information and historical trends. Click the "Trade" button at the bottom right corner, select the "Buy/Sell" function, fill in the trading conditions, and submit the order. The visual guide is as follows:

 

This diagram is provided for illustrative purposes exclusively

 

 

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We have based this article on our internal research and information available to the public from sources we believe to be reliable. While we have taken all reasonable care in preparing this article, we do not represent the information contained in this article is accurate or complete and we accept no responsibility for errors of fact or for any opinion expressed in this article. Opinions, projections and estimates reflect our assessments as of the article date and are subject to change. We have no obligation to notify you or anyone of any such change. You must make your own independent judgment with respect to any matter contained in this article. Neither we or our respective directors, officers or employees will be responsible for any losses or damages which any person may suffer or incur as a result of relying upon anything stated or omitted from this article.

This document should not be construed in any jurisdiction as constituting an offer, solicitation, recommendation, inducement, endorsement, opinion, or guarantee to purchase, sell, or trade any securities, financial products, or instruments or to engage in any investment or any transaction of any kind, nor is there any intention to solicit or invite the purchase or sale of any securities.

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