On Thursday, CMB International Securities adjusted its price target for Pinduoduo Inc. (NASDAQ:PDD), increasing it to $155.40 from the previous $142.60, while reiterating a Buy rating. This move comes in response to Pinduoduo's impressive fourth-quarter results, which were published on March 20, 2023.
Pinduoduo reported a significant year-over-year revenue increase of 123% in the fourth quarter of 2023, reaching RMB 88.9 billion, surpassing the Bloomberg consensus by 11%. The surge in revenue was attributed to a stronger-than-expected international expansion and a better-than-expected monetization improvement of its domestic business.
The company's non-GAAP net profit also saw a substantial rise, with a 110% year-over-year increase to RMB 25.5 billion, which was 52% higher than consensus estimates. This growth was credited to the robust profit generation from the domestic side of the business and a likely narrower-than-expected loss from the Temu business, bolstered by rapid business scale expansion and improved optimization in consumer subsidy.
Despite predictions of heightened industry competition in 2024, Pinduoduo is expected to continue enhancing its monetization rate. This optimism is supported by an increase in the commission rate of its Ten Billion Subsidy program and the introduction of new advertising products. The company's overseas expansion is also on track, which is anticipated to bolster long-term revenue and earnings growth.
The revised price target reflects a 9% increase from the previous target and factors in the faster-than-expected development of Pinduoduo's international business, along with the better-than-expected monetization improvement of its domestic operations.
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