PDD

Pinduoduo Inc - ADR

TMT, Consumer


Presented:12/01/2020
Price:$136.54
Cap:$92.71B
Current Price:$128.21
Cap:$178.05B

Presented

Date12/01/2020
Price$136.54
Market Cap$92.71B
Ent Value$77.63B
P/E RatioN/A
Book Value$3.48
Div Yield0%
Shares O/S679.01M
Ave Daily Vol8,461,452
Short IntN/A

Current

Price$128.21
Market Cap$178.05B
Pinduoduo, Inc. operates as a holding company, which engages in the development and management of an e-commerce platform. Its Pinduoduo mobile application offers a selection of merchandise for buyer acquisition and engagement. The company was founded by Hua Lin Cai and Zheng Huang on April 20, 2015 and is headquartered in Shanghai, China.

Publicly traded companies mentioned herein: Alibaba Group Holding Limited (BABA), JD.com (JD), Pinduoduo Inc (PDD)

Highlights

The presenter is long shares of Pinduoduo Inc (PDD), one of the largest interactive e-commerce platforms and the second-largest online marketplace in China by the number of users and orders. The presenter sees the stock as a quality compounder as PDD increasingly becomes a must engage platform for both merchants and brands. As PDD expands from low cost value positioning into the mass market, he believes the company will achieve long term net margins (25-30%) coupled with strong GMV and revenue growth. As a result, the presenter applies a 30-35x P/E (on 2022 normalized EPS) to reach a price target range of $160-190 per share, or up to 30% upside from the stock's current price of ~$140 per share.

PDD's core platform sells discount products and encourages shoppers to make group purchases. More recently, the company has reached a user scale where it is increasingly indispensable and he views its penetration into the online grocery business as a lucrative opportunity to grow revenues and margins.

PDD launched Duo Duo Maicai ("More Grocery Shopping") in August, a new service which allows shoppers in lower tier-cities to pre-order groceries online and pick them up from local mom and pop stores the next day or wait for door-to-door deliveries within 3-5 days at reasonable prices.The presenter highlights that PDD has a first-mover advantage in the online grocery business and has focused on maintaining or increasing its share. He also believes this segment represents a massive TAM expansion opportunity. 

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Idea Discussion

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