Subject: Re: PDD
For anyone commenting that Chinese stocks don't perform have you seen the chart for BYD!?

Yes BYD has been continuing to execute profoundly well and is an ideal example of the extent of innovation happening in China, not regarding only the higher quality product, but also the vastly high tech manufacturing. Firms in USA and Europe simply can't compete with BYD, fair and square.

I want to add some comments about PDD though. How have PDD been able to take so much market share from Alibaba within China over the last 6 years? It surprised me very much how successful PDD has been, and it has been the primary cause of harm for Alibaba' business in recent years.

After studying this in more detail, it appears that Tencent might be a big part of the problem for Alibaba, but by this very indirect means - propping up PDD which has eaten into Alibaba's sales and required Alibaba to greatly lower its margins - in all, crushing its expected EPS today, versus how it was projected say 5 years ago.

Tencent has likely (greatly) supported PDD's market share growth through its advertising platforms, particularly WeChat and QQ, by enabling targeted ad campaigns and leveraging its massive user base (for exapml, WeChat has 1.4 billion monthly active users).

Advertising is a huge expense for Alibaba, and perhaps their interest in getting into the not very profitable movie/media business is, for a large part, related to advertising opportunities given how expensive it is. Tencent had an incentive to help PDD so much because they have a stake in PDD.

This detracts from the hope that some may have of PDD having an inherent moat, as good as its business model of bulk-buying is, for it is difficult to qualify the strength of a company when it depends on a larger entity having a stake in the firm and supporting their growth. Most likely the very positive relationship between Tencent and PDD will continue, but also, it isn't something that you can reliably depend on.

That is may in part explain why PDD has a PE of 9, whilst Alibaba trades at a PE of 12, despite PDD growing much faster than Alibaba - the market may be discounting PDD for its dependence on (rock solid, or capricious) advertising via Tencent's massive social media reach. Alibaba, by contrast, is much more diversified, so I think has the stronger moat, even it isn't a great one given how PDD has managed to crush Alibaba's EPS.

- Manlobbi