Pinduoduo Temu Business Valuation Revaluation and Profitability Analysis Report

Based on professional brokerage data analysis, PDD’s current stock price is $105.93 with a market capitalization of approximately $148.4 billion. The DCF model shows valuation revaluation potential under three scenarios [0]:

• Conservative Scenario
  : Fair value $763.05, +620.4% compared to current stock price
• Neutral Scenario
  : Fair value $18,787.44, +17,637.4% compared to current stock price
• Optimistic Scenario
  : Fair value $127,058.72, +119,857.3% compared to current stock price

Temu business is expected to achieve break-even in 2025, which will trigger the core logic of valuation revaluation:

1. Loss Reduction Effect
   : Currently, Temu’s operating profit margin is -8%, expected to improve to -4% in 2025 and potentially turn positive in 2026
2. Profit Contribution
   : GMV is expected to grow by 43% to RMB 530 billion in 2025, accounting for approximately 9% of PDD’s total GMV
3. Market Expectation Correction
   : The market’s perception of Temu’s losses will shift to profit expectations, driving valuation revaluation

• Logistics Cost Reduction
  : In the semi-hosted model, sellers are responsible for warehousing and local distribution, reducing Temu’s fulfillment costs
• Tariff Risk Transfer
  : Sellers bear tariff and customs clearance costs, reducing Temu’s compliance costs
• Operational Efficiency Improvement
  : Localized operations reduce cross-border logistics time, enhancing user experience and repurchase rate

• Semi-hosted proportion increases from 50% to 70%
• Operating profit margin improves from -8% to -4%
• Logistics cost rate decreases by 3-5 percentage points

• Semi-hosted proportion increases to 75%
• Operating profit margin improves from -4% to -1%
• Economies of scale emerge, unit costs continue to decrease

• Semi-hosted proportion reaches 80%
• Operating profit margin turns positive to +2%
• Starts to make a positive contribution to PDD’s overall profits

• 2025
  : PDD’s overall operating profit margin increases from 22.1% to 22.5%
• 2026
  : Temu breaks even, PDD’s overall operating profit margin increases to 23.0%
• 2027
  : Temu contributes to profits, PDD’s overall operating profit margin reaches 23.5%

1. Valuation Multiple Increase
   : From current 11x P/E to 20-25x range
2. Revenue Structure Optimization
   : Diversified revenue sources reduce reliance on a single market
3. International Recognition
   : Successful replication of domestic model gains favor from international investors

1. Geopolitical Risk
   : Changes in U.S. tariff policies may affect the effectiveness of the semi-hosted model
2. Increased Competition
   : Faces intense competition from platforms like Amazon and SHEIN
3. Regulatory Risk
   : Changes in cross-border e-commerce regulatory policies in various countries

1. Short-term (Q4 2025)
   : Focus on the confirmation time of Temu’s break-even in the U.S. market
2. Mid-term (2026)
   : Track the replication effect of the semi-hosted model in markets like Europe
3. Long-term
   : Focus on changes in the proportion of Temu’s profit contribution to PDD’s overall profits

[0] Gilin API Data: PDD Company Financial Data, DCF Valuation Model, and Real-time Quotes