PDD: Positive On 2023 Outlook Driven By Favorable Policies and Overseas Expansion
We are positive on PDD’s performance in 1Q23 and potential performance in the rest of 2023. In 1Q23, China’s retail did not experience pent-up demand. Consumers are cautious about their spending as slower than expected economic recovery presents some levels of uncertainties. The weaker economic growth is calling for a set of breakthrough policies to take effect. Huge stimulus has been put into the system. The M2 supplies in the last 12 months were all above 10% Y/Y; it was 12.7% Y/Y in March 2023 and 12.9% Y/Y in February 2023. There is a saying in China - no bear market in easing era. As the government’s priority is economic development in 2Q23 – 4Q23, we believe more effective and direct breakthrough policies are likely to come out, and leading e-commerce companies including PDD are likely to benefit from these policies.
T.H. Capital is an independent research and investment advisory firm specializing in China. We offers real-time, on-the-ground, bottom-up research across a wide spectrum from macro and industry analysis to company specific projects; from China ADRs to international names that have meaningful exposure to China market. We deliver relevant, comprehensive and data driven research adding immense value to clients.
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