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Shifting to R&D investment

■ PDD’s 3Q21 revenue was Rmb21.5bn, up 51% yoy, but below our expectation. PDD maintained non-GAAP net profit for the quarter of Rmb4bn, above our expectation, because of a reduction in the selling and marketing expenses ratio.
■ With the launch of the new “10 Billion Agriculture Initiative”, PDD is shifting its strategy focus from selling and marketing investment to R&D investment.
■ Reiterate Add with a new DCF-based TP of US$135.

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