Investment Rating - The report assigns a "Buy" rating to PDD with a target price of $155.15/ADS, based on an 18x PE valuation for 2024 [1][3] Core Views - Temu replicates PDD's domestic strategy of "absolute low prices" through a fully managed model, achieving extreme supply chain efficiency [1] - Temu's fully managed model centralizes product selection and pricing, ensuring the lowest prices across all categories and optimizing platform resource allocation [1] - Temu's low prices, combined with large-scale event marketing, have rapidly increased its market presence, outperforming competitors like Amazon and Shein in price competitiveness [1] - In 2024, Temu will continue to innovate its business model, focusing on the fully managed model while introducing a "local-to-local" model to diversify product offerings [1] - Temu's logistics strategy includes increasing the proportion of sea freight and potentially building warehouses in core markets like the US to enhance fulfillment capabilities [1] Financial Projections - Revenue is projected to grow from RMB 248.3 billion in 2023E to RMB 455.1 billion in 2025E, with a CAGR of 27.2% [2] - Non-GAAP net profit is expected to increase from RMB 60.6 billion in 2023E to RMB 104.1 billion in 2025E, with a CAGR of 28.2% [2] - Non-GAAP EPS is forecasted to rise from RMB 45.63 in 2023E to RMB 78.37 in 2025E [2] - ROE is projected to remain strong, ranging from 26% to 29% between 2023E and 2025E [2] Business Model and Strategy - Temu's fully managed model reduces barriers for merchants, attracting factories and suppliers with weak bargaining power, especially those sensitive to procurement costs [1][27] - Temu's pricing strategy ensures that prices across all categories are significantly lower than competitors like Amazon and Shein, with prices typically 30%-70% of Amazon's [132] - Temu's logistics strategy involves centralized shipping, which improves bargaining power with logistics providers and reduces costs [38] - Temu plans to expand its product categories, including large items, which will increase the proportion of sea freight and optimize cost structures [1][158] Market Expansion and User Demographics - Temu has expanded to 49 countries across Asia, Europe, North America, South America, Oceania, and South Africa as of January 2024 [18] - Temu's user base is more male-dominated and older compared to Shein, TikTok, and Amazon, with 40.7% of users aged 25-44 and 47.2% aged 45+ [11] - Temu's global MAU reached 183 million, with the US accounting for 65% of its MAU [18] Competitive Landscape - Temu's low-price strategy positions it as a strong competitor in the US market, especially during periods of high inflation, where consumers are more price-sensitive [84] - Temu's pricing advantage is evident across categories like women's clothing, 3C products, and home goods, where its prices are significantly lower than Amazon's [132] - Temu's fully managed model contrasts with Shein's OEM model and AliExpress's POP model, offering a unique approach to supply chain management [59] Future Outlook - Temu is expected to continue its rapid market expansion, leveraging its supply chain advantages and low-price strategy to capture market share in both developed and emerging markets [172] - The platform plans to enhance its logistics capabilities by building warehouses in the US and increasing the use of sea freight for large items [1][158] - Temu's introduction of the "local-to-local" model will further diversify its product offerings and improve resource allocation [1][142]
Temu：平台出海的标兵，供应链价值重塑