Earnings Alert: 2Q22 core revenue increased by 49%, beating market expectation; expect momentum to sustain
- 2Q22 core revenue excluding merchandise sales grew 49% to c.Rmb 32bn, above consensus of 13% growth
- Non-GAAP net profit rose 161% to Rmb11bn in 2Q22 led by robust revenue growth and lower business-related expenses amid Covid resurgence
- Revised up FY22F/FY23F earnings by 47%/ 31% due to stronger revenue and margin improvement
- Maintain BUY with higher TP of US$117 based on 5x P/S
2Q22 results highlights
– Total revenue increased by 36% y-o-y to Rmb31,440m, above market expectations of 3% growth.
– Core revenue excluding merchandise sales increased by 49% y-o-y to c.Rmb31,389m, ahead of market expectations of 13% growth.
– Segment-wise, online marketing revenue increased by 39% to Rmb22,425m; transaction services revenue rose 107% to Rmb3,008m.
– Gross margin increased by 9ppts to 74.7% in 2Q22 due to better economies of scale. The 3P gross margin increased by 3ppts to 74.8% in 2Q22.
– Selling and marketing expenses increased 9% to c.Rmb11,343m. R&D expenses increased by 12% to Rmb2,611m.
– Non-GAAP net earnings jumped by 161% to c.Rmb10,776m in 2Q22, way above consensus forecast of c.Rmb4,500m, due to stronger than expected revenue growth and lower business-related expenses amid Covid resurgence.
Our View
– Management shared that the solid revenue growth was mainly driven by consumption sentiment recovery in 2Q22 and increase in merchant activities during the 618 shopping festival. During the period, the platform saw robust demand from diverse categories including FMCG, agriculture and electronics as well as cosmetics.
– Management disclosed that the high earnings in 2Q22 was due to many external factors combined and should not be a good benchmark for 2H22. The company will step up investment activities on marketing and R&D to offer a better user experience in 2H22.
– We are confident that Pinduoduo can continue to outpace the industry in 2H22, driven by resilient demand for essential products (e.g. fresh grocery) and wider product offering.
– Factoring in stronger-than expected revenue and margin improvement in 2Q22, we revised up FY22F and FY23F non-GAAP net earnings by 47% and 31% and forecast FY24F non-GAAP net earnings at Rmb36,314m. We revised up FY22F and FY23F revenue by 5% and 1% respectively, to reflect strong performance in 2Q22. We now forecast FY22F/ FY23F/ FY24F revenue to grow at 26%/23%/19% respectively. We maintain our TP at US$117, based on 5x FY23F P/S.
