(Adds executive and analyst comments, updates share reaction)
By Chavi Mehta and Casey Hall
March 20 (Reuters) - PDD Holdings Inc , which
owns discount e-commerce platforms Pinduoduo and Temu, missed
expectations on Monday for fourth-quarter revenue as China's
post-reopening consumer recovery remains patchy.
U.S.-listed shares of PDD Holdings fell as much as 13.9% in
premarket trading.
PDD reported revenue of 39.82 billion yuan ($5.79 billion)
for the quarter ended Dec. 31, up 46% year-on-year, but this
fell short of estimates for 41.01 billion yuan, based on
Refinitiv data.
The group had reported 65% revenue growth in its third-
quarter earnings last November.
PDD's fourth quarter included only the first few weeks of
China's reopening from its strict zero-COVID rules in December.
The company's revenue growth compares with single-digit
gains reported by Chinese competitors Alibaba and
JD.com for the same period, leading Bo Pei, an analyst
at US Tiger Securities, to note that "investors do seem to be a
bit overreacting to the miss."
PDD Holdings Chairman and Chief Executive Chen Lei told
analysts on a call following the earnings announcement there was
"strong resilience" in China's consumption market in the
quarter.
"Sales volumes of daily essential products on the
platform showed steady growth, meanwhile consumer demand for
high quality merchandise is growing, categories like mobile
phones, beauty and cosmetics and baby products all had decent
growth," he said.
JD.com warned in March that consumer confidence in China
would take time to rebuild amid economic uncertainties.
China's total retail sales contracted 1.8% in December,
while the country's economic growth in 2022 slumped to one of
its worst levels in half a century.
Discounting campaigns by rivals have also intensified
competition for PDD, which has gained market share since it
first came on the scene in 2015 by targeting price conscious
consumers with discounted goods.
"We believe that healthy competition is beneficial to
consumers and the entire industry but when competition
intensifies, sometimes peers react [by going] in a different
direction," Chen said in an apparent nod to increased
discounting in the market.
"We need to focus on our own healthy development and embrace
industry competition even when sometimes it involves
unsustainable practices from peers," he added.
PDD's fast-growing international platform Temu, which was
launched in September to U.S. shoppers, sells a variety of
goods, from shoes, jewellery, electronics and homewares directly
from Chinese merchants.
Temu's gross merchandise value - the total sales before
expenses - increased to $192 million in January from $3 million
in September, based on analysis from data company YipitData.
Temu's 2023 expansion will include rollouts in Canada,
Australia, New Zealand and the UK.
"Different markets and different regions have many
differences and we still have a lot to learn and a lot to
improve," Chen said. ?
($1 = 6.8799 Chinese yuan renminbi)
(Reporting by Chavi Mehta in Bengaluru and Casey Hall in
Shanghai; Editing by Shinjini Ganguli, Jane Merriman and Susan
Fenton)
