Analysts Q&A Summary:
1) Analyst: Alicia Yap, Citigroup
– The question: Concerns about the macro policy changes, including tariffs affecting merchants, and the significant decline in net profit margins this quarter. What preparations and measures has the platform taken to adjust to these pressures and what is the outlook on profitability?
– The response: Cheng Lei emphasized proactive measures with investments in the merchant support program to help merchants adapt to policy changes. Jiajun mentioned the alignment of business cycles with long-term investment goals and acknowledged short-term profitability challenges while focusing on building a sustainable ecosystem.
2) Analyst: Kenneth Fong, UBS
– The question: Inquiry about the implementation of the upgraded 100 billion support program for merchants and concerns about its long-term impact on financial performance. Asked about the company’s limitations compared to first-party marketplaces concerning macro policy initiatives.
– The response: Zhao Zhen highlighted the expansion of merchant support initiatives, such as the reduction program and promotional efforts, to maintain competitiveness. Jiajun emphasized utilizing internal resources for better support to merchants and customers despite temporary financial challenges.
3) Analyst: Joyce Ju, Bank of America
– The question: Queries on the competitive advantage of PDD’s third-party model vs. first-party models in e-commerce, and current consumer momentum ahead of the June promotion.
– The response: Cheng Lei stressed the importance of fostering merchant success for platform sustainability and highlighted recent program expansions supporting small merchants. Zhao Zhen responded on the June promotions, focusing on providing price and service advantages to attract consumer interest.
Sentiment Score Distribution Table:
| Analyst Name | Firm Name | Sentiment Score (1-10) |
|————–|—————|————————-|
| Alicia Yap | Citigroup | 6 |
| Kenneth Fong | UBS | 7 |
| Joyce Ju | Bank of America | 6 |
Sentiment Score Conclusion:
Overall, the sentiment of the earnings call indicates a cautious optimism. Analysts have expressed concern over the slowed revenue growth and significant decline in profitability, attributing it to increased investment in merchant support amid external challenges. The sentiment scores reflect a neutral to slightly positive outlook, with analysts acknowledging the management’s long-term focus but remaining watchful of immediate profitability impacts. Potential concerns include the platform’s competitive position compared to first-party marketplaces and how quickly it can adapt and pass benefits from macro policies to consumers and merchants effectively. Management remains confident in its strategic investment in a sustainable, merchant-centric ecosystem.