【行业研究报告】拼多多-Investment to enhance long-term development prospect

21Mar2023
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
PDDHoldings(PDDUS)
Investmenttoenhancelong-termdevelopment
prospect
PDDHoldings(PDD)announced(20Mar)4Q22results:revenuewasup46.2%
YoYtoRMB39.8bn,7/5%belowour/Bloombergconsensusestimates.Non-
GAAPnetincomeattributabletoPDDincreasedby43.4%YoYtoRMB12.1bn,
1/8%aheadofourforecast/Bloombergconsensus,thankstobetter-than-
expectedgrossmargin.WelowerourDCF-basedTPtoUS$106.0(prior
US$116.9)toaccountforPDD’sproactivemovetoenhancemerchantsROIand
consumerengagementamidintensifiedindustrycompetitionintheshort-term,
butmaintainBUYasweremainpositiveonPDD’sestablishedconsumer
mindshareindomesticmarket,whichshouldaidsteadyGMVgrowthin2023
andinternationalexpansionpotentialoverthelong-run.
2022resultsimpliedanexpansioninmonetizationrate.For2022,
PDD’stotalrevenuereachedRMB130.6bn,up39%YoY,or50%if
PDD’stotalrevenuereachedRMB130.6bn,up39%YoY,or50%if
excludingtheimpactofmerchandisesalesbusiness,drivenby42%
increaseinonlinemarketingservicesandothers,and95%increasein
transactionservicesfee.ThoughPDDstoppedtodiscloseannualGMVas
managementthinksGMVisnolongeragoodmetrictotrackcompany
development,weestimatetheonlinemarketingservices(OMS)revenue
growthhasoutpacedGMVgrowthin2022,andmonetizationrateforOMS
hasexpandedby0.2ppYoYto3.2%.Non-GAAPnetincomewasup186%
YoYtoRMB39.5bn,translatinginto30.3%non-GAAPnetmargin,which
expanded15.6ppYoY,drivenby:1)controlledinvestmentpacefordomestic
business;and2)narrowinglossesgeneratedfromDuoduoGrocery(DDG).
Transactionservicesrevenuemaintainedrapidgrowthin4Q22.Online
marketingservicesandothersrevenueroseby38%YoYtoRMB31.0bnin
4Q22(78%oftotalrevenue).In4Q22,transactionservicesrevenuegrew
by86%YoYtoRMB8.8bn.Weattributethestronggrowthtorobust
developmentofDDG,andincrementalmonetizationfromtenbillionsubsidy
program,whichwebelievecouldsustainin2023.
Investmenttoenhanceconsumerengagementweighedonmargin.
PDD’sGPMroseto77.6%in4Q22(4Q21:76.1%),5.2ppbetterthanour
forecast.Non-GAAPS&MexpenseswereRMB17.2bnin4Q22,up59%
YoY,equivalentto43.2%oftotalrevenue(4Q21:39.7%,3Q22:37.9%).
Thisisworsethanourestimateat37.7%,whichinourviewcouldbe
attributedtoPDD’smovetoenhancecustomerengagementthroughmore
couponsprovided,anditsinvestmenttosupportTemu’sinternational
expansion.PDD’soverallnon-GAAPOPMwas29.1%in4Q22(4Q21:30.8%;
3Q22:34.6%),inlinewithourforecast.FactoringinPDD’sinvestmentto
enhanceitsconsumerengagement,weareforecasting19%YoYnon-GAAP
OPgrowthforcoredomesticbusinessin2023E(previousforecast:26%YoY).