Latest news with #Pinduoduo
Mint
3 days ago
- Business
- Mint
China's consumers are spending in smaller cities. It's the power of the new middle class.
After years of sluggish growth in China's property market, many investors have grown cautious about the country's broader consumption story. Yet beyond the megacities of Beijing and Shanghai, a different narrative is emerging—one that could offer fresh opportunities for long-term investors. In China's vast network of smaller cities—often categorized as 'lower-tier" or 'third- and fourth-tier" markets—consumer spending is showing surprising resilience. From personal care and budget cosmetics to domestic travel and local e-commerce, everyday consumption appears to be holding up far better than national headlines suggest. This divergence matters because China's economic future increasingly hinges on the spending power of its 'new middle class" living outside the country's wealthiest urban cores. While property prices in these regions have been under pressure—dragging on local government revenue and household wealth—residents in smaller cities are still spending on products and services that improve their quality of life. Official data offers some evidence. In the first half of 2024, per capita disposable income in China's third- and fourth-tier cities grew by nearly 5.8%, outpacing the 4.8% growth seen in first- and second-tier cities. Retail sales in these markets have also held up better in categories like food and daily necessities, reflecting consistent demand for affordable, everyday products. Hu Ling, a partner and managing director at AlixPartners, was quoted in Chinese media as saying, 'China's consumption market is gradually transitioning from being primarily driven by top-tier cities to a model of dual-engine growth." Consumers in smaller cities often face lower living costs and less financial pressure. That economic stability, paired with rising lifestyle expectations, has helped support spending in categories such as personal care, dining out, and domestic travel—even in the face of broader economic uncertainty. Budget-friendly domestic brands like Perfect Diary, Florasis, and HomeFacialPro have been gaining traction among younger consumers seeking quality without the premium price tags of international labels. Local tourism operators have also noted an uptick in short-distance travel bookings, especially among middle-class families and retirees eager for affordable leisure. 'Business is getting better," said Lin Meiyi, a travel agent in China's scenic Yunnan province. 'The clientele is more modest financially, I would say, compared to before the pandemic. Many come from towns instead of cities." Lower-tier cities are also fueling the rise of value-driven e-commerce. Platforms like Pinduoduo—which built its business around bulk discounts and group-buying models tailored to price-sensitive consumers—have seen notable engagement from rural and small-city users. In its most recent earnings report, Pinduoduo cited stronger-than-expected growth in categories like agricultural products and household essentials, much of it from outside the urban centers. Its strategy of building logistics infrastructure in smaller cities and rural areas has paid off, allowing it to reach consumers underserved by traditional retail. The market has responded: Pinduoduo's U.S.-listed shares are up more than 40% over the past year, outperforming most major Chinese tech peers. Analysts point to its deep reach in price-sensitive regions as a durable competitive edge as national consumption habits adjust. It's true that the downturn in China's property sector—especially acute in smaller cities—has dampened overall household wealth. But the link between housing markets and consumption may be more nuanced than previously assumed. In lower-tier cities, where real estate is more affordable and many homes are fully owned, households are generally less leveraged. That gives consumers greater flexibility to spend on smaller-ticket items, even if they're holding off on major purchases. Confidence among millennials in lower-tier cities is higher than in top-tier cities, with 75% of respondents expressing optimism about the national economy, compared with 65% in major cities, according to its McKinsey's 2024 China Consumer Report, which attributes this optimism in part to lower cost-of-living pressures and more stable local job markets. The implication for investors is clear: China's consumption recovery may be slower and more uneven than in past cycles, but it is still happening—just not always where the spotlight is. 'Consumers and business people from smaller cities and towns are importing ideas from developed regions," said Kane Hu, chief analyst at Peak Investment, a boutique brokerage in the western city of Chengdu, with roughly 80 clients and around 100 million yuan ($15 million) in assets. That creates opportunity for companies with strong regional presence, competitive pricing, and scalable operations. Domestic brands that can meet demand for affordable quality across a broad geographic footprint may be better positioned than premium brands concentrated in major metros. For global investors, the takeaway isn't to abandon China's consumption story—but to look closer at where growth is really happening. The most promising consumer activity may be taking place far from Beijing's luxury malls, in small cities with fewer headlines but plenty of untapped spending power. Write to editors@
Yahoo
3 days ago
- Business
- Yahoo
PDD Holdings Inc. (PDD): A Bull Case Theory
We came across a bullish thesis on PDD Holdings Inc. (PDD) on LongYield's Substack. In this article, we will summarize the bulls' thesis on PDD. PDD Holdings Inc. (PDD)'s share was trading at $97.88 as of 28th May. PDD's trailing and forward P/E were 10.53 and 7.76 respectively according to Yahoo Finance. Pixabay/Public domain PDD Holdings Inc., the parent company of Pinduoduo and Temu, delivered strong top-line growth in Q1 2025, with revenue rising 10% year-over-year to RMB 95.7 billion (US$13.184 billion), driven by robust performance in online marketing and transaction services. While near-term profitability declined—operating profit fell 38% and net income dropped 47%—these figures reflect PDD's deliberate and strategic reinvestment into its ecosystem. The company significantly ramped up spending in sales and marketing (+43%) and R&D (+23%) to strengthen its merchant base, upgrade supply chains, and support long-term competitiveness. This aggressive reinvestment positions PDD for sustained value creation, especially as consumer behavior increasingly favors affordable, high-quality offerings—PDD's core strength. With a powerful balance sheet, including RMB 364.5 billion (US$50.3 billion) in cash and short-term investments and no significant debt, the company is well-capitalized to weather macro uncertainties and accelerate its global expansion through Temu. The international platform continues to gain traction and, with careful navigation of geopolitical risks, could become a major growth engine. PDD's unique value-for-money positioning, group-buying model, and focus on underserved SMEs differentiate it from peers like Alibaba and Strategic initiatives such as a RMB 100 billion merchant support program, supply chain investments, and consumer incentives reinforce its ecosystem advantage. Though short-term margins are compressed, the long-term outlook remains compelling. With unmatched financial flexibility, rising global brand awareness, and a focus on sustainable growth, PDD is well-positioned to emerge as a dominant global e-commerce player over the next decade. Previously, we have covered PDD Holdings Inc. (PDD) in February 2025, wherein we summarized a bullish thesis by Favona Hathaway on Substack. The company was highlighted for its rapid growth, strong financials, and dominant position in value-for-money e-commerce through its C2M model and global expansion via Temu. The article noted PDD's impressive revenue and profit CAGR since 2021, minimal debt, and potential for a 144% market cap upside by 2029, despite geopolitical and macroeconomic risks. Since our last coverage, the stock is down 21% as of 28th May. PDD Holdings Inc. (PDD) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 87 hedge fund portfolios held PDD at the end of the first quarter which was 85 in the previous quarter. While we acknowledge the risk and potential of PDD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PDD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock. Disclosure: None. This article was originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Down 17% in a week and on a P/E of 10! Should I buy this dirt cheap value stock?
Chinese stocks are normally valued at a discount to their US peers, even if they're in hyper-growth mode. Take PDD Holdings (NASDAQ: PDD), which is a Chinese e-commerce company that trades at the sort of valuation you'd expect to see from a FTSE 100 value stock. The Temu owner grew its revenue and earnings by 59% and 78%, respectively, last year. Yet the stock has tumbled 17% in a week and now trades at a price-to-sales (P/S) ratio of 2.6 and a price-to-earnings (P/E) multiple of just 10.5. At first glance, this looks unjustifiably cheap. So, should I add this value stock to my portfolio? Let's find out. Firstly, it's worth pointing out why US-listed Chinese stocks trade at such a wide discount to American peers. It all boils down to regulatory risk, as China's tech companies can quickly fall foul of regulators and have them breathing down their necks for all sorts of reasons. For example, as well as its international Temu shopping platform, PDD operates Pinduoduo in China. It focuses on value-for-money merchandise and has a strong emphasis on agricultural products, directly connecting farmers with consumers. It has had great success taking market share from larger e-commerce rivals like Alibaba in recent years. However, President Xi Jinping wants more 'high-quality development' in the Chinese economy, with fewer counterfeit goods. In response to these concerns, Pinduoduo has initiated efforts to enhance product quality. Last year, PDD said it was 'prepared to accept short-term sacrifices' to 'vigorously support high-quality merchants'. I read this as a clear signal that the firm's profits were going to come down significantly. To be fair, management was honest about this, saying: 'In the long run, the decline in our profitability is inevitable'. Essentially, Chinese companies have to align themselves with what the government wants. And this often doesn't involve the maximisation of shareholder profits, which puts off a lot of investors. Hence why most Chinese stocks trade at cheap multiples. And geopolitical risk associated with US-China tensions only adds to the downwards pressure. But it's not all domestic issues, including weak Chinese consumer spending, for PDD. Temu's explosive growth has relied on shipping low-cost goods to US consumers directly from Chinese merchants. However, President Trump has abolished the de minimis tax exemption that encouraged this, as well as slapping sky-high tariffs on Chinese imports. In Q1, PDD's revenue grew just 10% to $13.2bn, a significant deceleration. Meanwhile, profits fell nearly 50% to $2bn! The risk here is that Temu users face paying far higher costs, which could undermine the platform's raison d'être (dirt cheap bargains). Instead of being able to 'shop like a billionaire', as Temu puts it, consumers might have to settle for shopping like a humble millionaire. Or not at all on the app. Given the significant challenges the company faces, I don't think the earnings figures can be relied upon. In other words, the P/E ratio of 10 might be misleading if growth decelerates and margins take a hit. If a US-China trade deal is struck, perhaps PDD's strong international growth might resume. But given the murky outlook, I'm going to focus on other growth stocks for my portfolio. The post Down 17% in a week and on a P/E of 10! Should I buy this dirt cheap value stock? appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Ben McPoland has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Hindustan Times
5 days ago
- Entertainment
- Hindustan Times
China's Temu sends stickers to Indian mom who thought she ordered home essentials
A desi mum who thought she'd scored a great deal on home essentials was left equal parts shocked and amused when Temu delivered stickers of the items she'd ordered — instead of the actual products. Dubai-based Indian-origin woman Suchita Ojha shared an Instagram video of her mother's hilarious mix-up, which has left thousands of people in splits. Ojha said her mother is 'obsessed with Temu' - the online marketplace launched by PDD Holdings, the parent company of China's Pinduoduo. Temu connects consumers directly with manufacturers and wholesalers, primarily based in China, allowing them to buy goods at a discount. Sometimes, however, the discounts can lead to confusion - as Ojha's mother discovered when she ordered what she thought was a vacuum cleaner and cooking utensils at a great price. She missed the product description which explained that Temu is selling stickers of the products, not the products themselves. Ojha's video captures the hilarity that ensued when she opened her packages and realised that she'd received stickers. A post shared by Suchita Ojha (@suchiojha) 'Context: She didn't even read that it was stickers, she just saw the picture and ordered randomly,' the Dubai-based woman wrote on Instagram, explaining that her mother did not read the product description. When reached out to Temu for a response, the company said: 'We always encourage users to read product descriptions and reviews carefully so their purchases match what they're looking for. Mixups like this happen, and we hope the user gives Temu another try!' The Instagram Reel has gone viral with over 2.2 million views and a ton of comments. Viewers on Instagram were also much amused by the mix-up. 'The description literally says stickers. But this is so funny,' read one comment under the video. 'Didn't know we could get trauma from Temu,' another person joked. 'AED 5!? itna paisa mein itna hi milega,' a third quipped.
Yahoo
6 days ago
- Business
- Yahoo
JPMorgan Cuts PDD Holdings (PDD) Price Target on Growth Concerns
Analysts at JPMorgan have reiterated a Neutral rating on PDD Holdings Inc. (NASDAQ:PDD) and cut the price target to $105 from $125 on May 28. The adjustment comes on the Chinese commerce giant delivering disappointing quarterly results. Its net profit fell 47% in Q1 2025, hurt by tariffs and stiff competition. A financial analyst reviewing stock prices on a graph with a positive outlook. While the company's first-quarter revenue rose 10% to 95.67 billion yuan, it fell short of the 104.41 billion yuan analysts expected. It also marked the slowest top-line growth since 2022. Exacerbating the underperformance is that net profit fell to 14.74 billion yuan, missing consensus estimates of 26.12 billion yuan. Consequently, PDD margins plunged to 19% from 36%. Analysts at JPMorgan expect PDD holding's share price to consolidate until it releases Q2 2025 results in August. Similarly, revenue growth is expected to remain flat if trade tariffs stay in place, even though the Chinese marketplace could sustain growth. JPMorgan analysts remain wary of the fact that PDD Holdings faces setbacks in its global ambitions. The Chinese company is exploring ways of scaling its Temu shopping platform, which has become a hit with budget-conscious customers in the US. However, escalating tensions with the US resulting in trade tariffs have already forced the company to raise prices on the platform. PDD Holdings is a multinational commerce group that owns and operates a portfolio of businesses. It operates the Pinduoduo platform and Temu, an online platform that enables merchants to streamline their manufacturing and operations. While we acknowledge the potential of PDD Holdings Inc. (NASDAQ:PDD) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than PDD and that has 100x upside potential, check out our report about the cheapest AI stock. READ NEXT: and . Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
