:Temu parent PDD Holdings beat third-quarter revenue forecasts on Tuesday as heavy discounting boosted sales across its e-commerce platforms in China and overseas, sending its U.S.-listed shares almost 14 per cent higher in premarket trading.
PDD, home to Chinese discount online retailer Pinduoduo as well as cross-border international platform Temu, has received a big boost from the growing popularity of its international e-commerce arm, which is known for selling $4 earphones and $15 hoodies.
Analysts expect Temu, launched in September last year, to generate more than $16 billion in revenue this year. Since launching in the United States, Temu is now available in 48 countries, including across Europe and the Middle East, as well as South East Asia and Australia.
“PDD’s overseas initiative Temu was the major driver for revenue growth,” said Xiaoyan Wang, analyst at 86Research, who added that domestic Chinese revenue also outstripped growth at rivals Alibaba and JD.com by a “large margin”.
Deep discounts ahead of the Singles Day shopping event in China helped lift demand for products on Pinduoduo, which was able to leverage its reputation for low prices to capture more value-conscious consumers in the world’s second-largest economy.
Though the retail market in China was initially expected to bounce back strongly when strict COVID-19 curbs were lifted late last year, Chinese consumers have remained cautious as the country faces macroeconomic headwinds, including a property market downturn and record high youth unemployment.
Chinese retail sales in September rose 5.5 per cent, following 4.6 per cent growth in August.
PDD’s revenue was 68.84 billion yuan ($9.62 billion) in the quarter ended Sept. 30, compared with analysts’ average estimate of 54.59 billion yuan, according to LSEG data.
The company’s net income attributable to ordinary shareholders rose to 15.54 billion yuan in the third quarter, from 10.59 billion yuan a year earlier.
($1 = 7.1532 Chinese yuan renminbi)