20260825-招银国际-Focus_on_more_visible_growth_opportunities_amid_a_challenging_environment_6页_1mb

PDD Holdings (PDD US) Summary

Core Content

PDD Holdings (PDD US) reported its second-quarter 2026 financial results, showing revenue growth of 8.1% year-over-year (YoY), which was slightly below the Bloomberg consensus. This was primarily due to a 6% miss in transaction services revenue, attributed to a more prudent revenue growth strategy in the TEMU business. However, the company outperformed in online marketing services and others revenue, which grew by 2% above the consensus. Operating profit (OP) increased by 7.6% YoY to RMB27.8bn, 2% above the consensus, driven by a 1.8ppt improvement in gross profit margin (GPM) and better control of sales and marketing expenses.

The company is focusing on visible growth opportunities amid a challenging environment, emphasizing growth in consumer staples categories within the domestic market and adopting a more disciplined approach to investment in the TEMU business due to overseas regulatory uncertainties. As a result, the analysts have lowered their 2026E revenue and non-GAAP net profit forecasts by 3% each. The SOTP-based target price (TP) has been cut by 4% to US$148.4, implying a 14.6x 2026E price-to-earnings (PE) ratio. The current share price is trading at approximately 8x 2026E PE, and the company holds RMB456.4bn in cash, restricted cash, and short-term investments, representing over 50% of its market capitalization. This valuation is considered undemanding, with potential catalysts expected from a return to positive earnings growth in 4Q26E. The analysts maintain a BUY rating.

Key Financial Metrics

Revenue

• 2Q26: RMB112.4bn (+8.1% YoY), 2% above consensus
• FY24A: RMB393,836mn
• FY25A: RMB431,846mn
• FY26E: RMB467,457mn
• FY27E: RMB510,684mn
• FY28E: RMB544,483mn

Net Profit

• 2Q26: RMB27.182bn
• FY24A: RMB112,434.5mn
• FY25A: RMB99,364.5mn
• FY26E: RMB98,793.3mn
• FY27E: RMB125,138.7mn
• FY28E: RMB139,793.1mn

Adjusted Net Profit

• 2Q26: RMB28.489bn
• FY24A: RMB122,343.6mn
• FY25A: RMB107,301.4mn
• FY26E: RMB104,870.2mn
• FY27E: RMB131,266.9mn
• FY28E: RMB146,326.9mn

Gross Profit Margin (GPM)

• 2Q26: 57.3%, expanded by 1.4ppt QoQ and 1.8ppt above consensus
• FY24A: 55.9%
• FY25A: 55.9%
• FY26E: 57.4%
• FY27E: 57.7%
• FY28E: 57.6%

Operating Profit

• 2Q26: RMB27.8bn (+7.6% YoY), 1.0ppt above consensus
• FY24A: RMB108,423mn
• FY25A: RMB94,624mn
• FY26E: RMB109,033mn
• FY27E: RMB130,875mn
• FY28E: RMB145,827mn

Operating Margin

• 2Q26: 24.7%, 1.0ppt above consensus
• FY24A: 24.8%
• FY25A: 23.1%
• FY26E: 23.3%
• FY27E: 25.6%
• FY28E: 26.8%

Target Price and Valuation

• Target Price (TP): US$148.40 (down from US$154.80)
• Current Price: US$87.07
• 12-Month Price Performance:
  • Absolute: -18.6% over 6 months
  • Relative: -27.4% over 6 months
• Market Cap: US$128,297.6mn
• Shareholding Structure:
  • Zheng Huang: 24.8%
  • Tencent: 13.8%

SOTP Valuation Breakdown

Total SOTP Valuation: US$218,608mn (RMB1,530,255mn)

Financial Performance Highlights

• Online Marketing Services and Others Revenue:
  • 2Q26: RMB57.6bn (+3.5% YoY), 2% above consensus
  • YoY Growth: 3.5% (2Q26), 1.6% (diff)
• Transaction Services Revenue:
  • 2Q26: RMB54.7bn (+13.3% YoY), 6% below consensus
  • YoY Growth: 13.3% (2Q26), -6.2% (diff)
• Total Revenue:
  • 2Q26: RMB112.4bn (+8.1% YoY), -2.5% below consensus
  • YoY Growth: 8.1% (2Q26), -2.5% (diff)

Risks

1. Slower-than-expected global business expansion
2. Geopolitical issues impacting business development
3. Slower-than-expected margin expansion

Analyst Ratings

• BUY: Stock with potential return of over 15% over the next 12 months
• HOLD: Stock with potential return of +15% to -10% over the next 12 months
• SELL: Stock with potential loss of over 10% over the next 12 months
• NOT RATED: Stock is not rated by CMBIGM
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark

CMB International Global Markets Limited

• Address: 45/F, Champion Tower, 3 Garden Road, Hong Kong
• Tel: (852) 3900 0888
• Fax: (852) 3900 0800
• Parent Company: CMB International Capital Corporation Limited (a subsidiary of China Merchants Bank)

Important Disclosures

• The report is for informational purposes only and does not constitute investment advice.
• Past performance is not indicative of future results.
• The value of investments may fluctuate and is not guaranteed.
• CMBIGM is not a registered broker-dealer in the United States and is not subject to U.S. rules regarding research reports and analyst independence.
• The research analyst is not registered or qualified as a research analyst with FINRA.