PDD - PDD Holdings: 9X P/E Strong Growth High Safety Margin

2024-07-20 11:47:57 ET

Summary

• Pinduoduo is a China-based e-Commerce growth play with a loyal customer following due to its focus on discount deals.
• The company generates significant revenue growth and is well-positioned to benefit from the expanding e-Commerce market in China.
• PDD Holdings, while not as cheap as competitors, is poised for sustainable growth.
• Given its fast EPS growth, positive gross profit trajectory and sizable free cash flows, Pinduoduo's 9X P/E ratio is inadequate and reflects a high safety margin.

PDD Holdings ( PDD ), also known as Pinduoduo, is a leading e-Commerce platform in China and one of the top three Chinese e-Commerce companies, next to Alibaba ( BABA ) and JD.com ( JD ), that dominate the market. PDD Holdings offers a variety of e-Commerce and related services such as fulfillment and logistics and Pinduoduo owns the hugely popular, deal-focused e-Commerce platform Temu. PDD Holdings is seeing strong tailwinds for its gross profits and net income and generating a ton of free cash flow. While not as cheap as either Alibaba or JD.com, PDD Holdings is well-positioned to deliver sustainable growth for shareholders and increase its stock buybacks in the future, making it a potential capital return play for investors!...

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