This is great timing as I actually looked at PDD recently before JD and came away more convinced by JD for exactly the capital allocation point you make. I liked that JD has started to move the needle including through large-scale buybacks. On that though, I’m still not entirely convinced by the JD management and I take it that’s why the others are preferred.
Great breakdown. Really highlights how in markets like this, trust and capital returns can matter as much as growth. PDD’s execution is impressive, but without shareholder signals, the discount makes sense.
Great point! Dividends are just part of the game when it comes to generating shareholder value. The companies you list either have share buybacks, or exposure to cloud/AI. As Brian notes, PDD does none of those things, so it leaves investors wondering what their long game is. Personally, I prefer companies that have clear long-term agendas.
I might speculate that PDD has been meekly playing to long game, evidently knowing that the Chinese government was coming out with new rules/laws to evidently protect sellers, and perhaps buyers. Rules published in early January. No cash to rich shareholders. Endless repeat on loop of their angelic investments to help sellers. If this speculation is true, then that was smart smart smart.
Yes, I think this is a good explanation of the share price. I think also, at least the last two earnings calls, all one gets the impression that the future is so uncertain, and so much investment is needed in the supply chain. It's like their number one goal is to make sure they do not hype up the price. That's my kind of company. And I have a soft place in my heart for this company because they do not waste their cash pile on fads.
ROCE, ROIC, ROE, GPA, ROA, GP Growth, NP Growth, GP Margin, NP Margin & NP/GP of Alibaba are pale compared to PDD.
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Outstanding Performances in all aspects tell all, that's why Lilu the Chinese Warrent Buffet has taken positions in PDD based on position date 30.Jun.2025 record.
Really great insights, thanks for sharing this!
This is great timing as I actually looked at PDD recently before JD and came away more convinced by JD for exactly the capital allocation point you make. I liked that JD has started to move the needle including through large-scale buybacks. On that though, I’m still not entirely convinced by the JD management and I take it that’s why the others are preferred.
Very interesting. Haven't thought about this cap allocation issue.
https://substack.com/@absolutetotalcompound/note/c-158918708?utm_source=notes-share-action&utm_medium=web
Great breakdown. Really highlights how in markets like this, trust and capital returns can matter as much as growth. PDD’s execution is impressive, but without shareholder signals, the discount makes sense.
Your content is gold, keep it coming!
Amazon zero dividends, P/E 34.
Palo Alto zero dividends, P/E 107.5.
Fair Issac zero dividends, P/E 54.80.
AMD zero dividends, P/E 96.56.
ON Semiconductor zero dividends, P/E 46.1.
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For those stocks above, noo discount but multiple markup instead.
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What's going on?
Great point! Dividends are just part of the game when it comes to generating shareholder value. The companies you list either have share buybacks, or exposure to cloud/AI. As Brian notes, PDD does none of those things, so it leaves investors wondering what their long game is. Personally, I prefer companies that have clear long-term agendas.
PDD is an AI user, using the AI Technology algorithm wisdom to analayis its enormous datas in the platform to enhance operational efficiency, etc.
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If AI users can not make better profit, how can the AI supplier survives.
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Easy logics.
Let's compare with my personal :
Rule of 15=√(15×15)
= √(Revenue Growth × ROA)
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Data Source: investing.com
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JD (Fin Jun 2025 TTM)
= √(Revenue Growth × ROA)
= √(14.5×6.1)
= 9.4047860156%
< 15%, No Competitive Moat Advantage
.
Meituan (Fin Jun 2025 TTM)
= √(Revenue Growth × ROA)
= √(20.4×13.1)
= 16.3474768695%
> 15% Having Competitive Moat Advantage
.
Alibaba (Fin Mar 2025 TTM)
= √(Revenue Growth × ROA)
= √(5.9×7.1)
= 6.4722484501%
< 15%, No Competitive Moat Advantage
.
PDD (Fin Jun 2025 TTM)
= √(19.9×19.6)
= 19.7494303715%
> 15%, Having Competitive Moat Advantage
The analysts lower the TP of Meituan and JD, raise PDD.
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There must be a reason or two.
Let's compare with the popular :
.
Rule of 40 = Revenue Growth + EBITDA Margin :
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Source: investing.com
.
JD (Fin Jun 2025 TTM)
= 14.5+3.2
= 17.7%
< 40%, No Competitive Moat Advantage
.
Meituan (Fin Jun 2025 TTM)
= 20.4+12.2
= 32.6%
< 40%, No Competitive Moat Advantage
.
Alibaba (Fin Mar 2025 TTM)
= 5.9+19.0
= 24.9%
< 40%, No Competitive Moat Advantage
.
PDD (Fin Jun 2025 TTM)
= 19.9+22.6
= 42.5%
> 40%, Having Competitive Moat Advantage
I might speculate that PDD has been meekly playing to long game, evidently knowing that the Chinese government was coming out with new rules/laws to evidently protect sellers, and perhaps buyers. Rules published in early January. No cash to rich shareholders. Endless repeat on loop of their angelic investments to help sellers. If this speculation is true, then that was smart smart smart.
Yes, I think this is a good explanation of the share price. I think also, at least the last two earnings calls, all one gets the impression that the future is so uncertain, and so much investment is needed in the supply chain. It's like their number one goal is to make sure they do not hype up the price. That's my kind of company. And I have a soft place in my heart for this company because they do not waste their cash pile on fads.
BABA > PDD
ROCE, ROIC, ROE, GPA, ROA, GP Growth, NP Growth, GP Margin, NP Margin & NP/GP of Alibaba are pale compared to PDD.
.
Outstanding Performances in all aspects tell all, that's why Lilu the Chinese Warrent Buffet has taken positions in PDD based on position date 30.Jun.2025 record.