T. H. Data Flash - Pinduoduo (PDD) – September & 3Q21E: Better Positioned To Weather The Slowdown In China’s Economy And The Agriculture Initiative Is Encouraged By The Government
We are positive on PDD’s performance in 3Q21E. While the data from the government shows an overall weakness in China’s economy as social retail sales grew 8.5% Y/Y in July 2021, 2.5% Y/Y in August and 4.4% in Sept. 2021, we believe the impact to PDD can be limited. On the one hand, the weaker economy can lead people to be more price cautious, which is positive for PDD. On the other hand, we believe PDD’s two focuses can enable it to better weather the weaker economy. The two focuses are: 1) bring agricultural goods from farmland to people’s homes, which is likely to be the driver of user growth; and 2) increase AOV via its “billion-subsidy channel”. The efforts on agriculture initiatives, in our view, is in line with what the government is calling for.
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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