Skip to main content

Featured Post

Market Daily Report: Bursa Malaysia Ends Higher In Line With Most Regional Markets

KUALA LUMPUR, Sept 20 (Bernama) -- Bursa Malaysia ended higher on Friday in line with most Asian markets, mirroring gains from Wall Street, where investors welcomed the US Federal Reserve's substantial interest rate cut. The FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 3.17 points, or 0.19 per cent, to 1,668.82 at the close from Thursday's close of 1,665.65. It opened 5.03 points higher at 1,670.68, trading between 1,668.48 and 1,674.04 throughout the session. In the broader market, gainers outpaced decliners 732 to 468, while 465 counters were unchanged, 850 untraded and 32 suspended. Turnover swelled to 4.19 billion units worth RM5.97 billion, from Thursday's 3.99 billion units worth RM4.08 billion. UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, noted the FBM KLCI's gains were led by utilities, logistics, and banking stocks, reflecting improved market sentiment. Additiona
Post a Comment

PDD Holdings Shares Plunge 18% After Warning of Revenue Slowdown

PDD Holdings Inc, the parent company of the e-commerce platform Temu, saw its shares dive as much as 18% following a warning from the company that its rapid revenue growth is unsustainable. This decline comes as PDD faces mounting competition from rivals such as ByteDance’s TikTok and Alibaba Group Holding Ltd, which are also targeting budget-conscious consumers.

Key Points:

  1. Revenue and Profitability Concerns: Co-founder Chen Lei emphasized that PDD’s current revenue growth trajectory is not sustainable and that a decline in profitability is inevitable. This warning led to a sharp decline in the company's stock during pre-market trading in New York.

  2. Financial Performance: For the June quarter, PDD reported revenue of 97.1 billion yuan (approximately RM59.59 billion), missing the average analyst estimate of 100 billion yuan. However, the company’s net income was higher than expected at 32 billion yuan, compared to a projected 27.5 billion yuan.

  3. Intense Competition: PDD has been aggressively expanding its e-commerce business Temu to bolster its global presence amid a struggling Chinese economy. However, the company faces fierce competition from established players like Alibaba and JD.com, as well as newer challengers like Kuaishou Technology. This has led to concerns that PDD will need to invest more in supporting merchants and maintaining its competitive edge.

  4. Merchant Backlash and Regulatory Scrutiny: PDD has encountered challenges in China, including a merchant backlash in July when hundreds of vendors protested against what they perceived as unfair penalties imposed by the company. Additionally, Temu is facing increasing regulatory scrutiny, particularly in the European Union, where a proposal to close an import tax loophole for cheap online goods could impact Chinese retailers like Temu.

  5. Global Expansion and Competitive Landscape: Despite these challenges, PDD’s global expansion through Temu has shown some success. Temu quickly became one of the most downloaded apps in the U.S. after its debut in 2022, competing with other giants like Shein and Amazon in certain segments. However, the company’s increased spending to tackle global competition is expected to put pressure on profitability, potentially leading to a downward revision of earnings estimates for the second half of the year and into 2025.

  6. Outlook: Bloomberg Intelligence noted that PDD’s guidance on lower profitability, coupled with its first revenue miss in 10 quarters, could dampen the growth outlook for the next 12 months. The company’s need to invest more heavily in response to global competition suggests that margins may come under pressure, affecting future earnings.

PDD Holdings is facing a challenging environment as it balances the need for continued growth with the pressures of intense competition and regulatory scrutiny, both in China and abroad.

Labels:

Comments

Post a Comment

Popular posts from this blog

INTC Share Watch and News

Stock Info Market Monitor Company Profile Intel Corporation designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in notebooks, netbooks, desktops, servers, workstations, storage products, embedded applications, communications products, consumer electronics devices, and handhelds. The company also offers system on chip products that integrate its core processing functionalities with other system components, such as graphics, audio, and video, onto a single chip. It also provides chipset products that send data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive, and CD or DVD drives; motherboards that has connectors for attaching devices to the bus, and products designed for desktop, server, and workstation platforms; and wired and wireless connectivity products, including network adapters and embedded wireless cards used to translat
1 comment
Read more

Analysts See Asset Resilience of Bank of Chengdu Benefiting Hong Leong Bank

Analysts predict that the asset quality of Bank of Chengdu, in which Hong Leong Bank Bhd holds a 19.76% stake, will remain robust due to its strict risk management policies and proactive measures. Key Takeaways: Strong Risk Management Practices : According to CIMB, Bank of Chengdu has adopted a conservative risk culture, performing thorough assessments of location, developer reputation, project viability, and management integrity before financing property projects. The bank closely monitors early warning signals like construction progress, sales progress, budget overruns, and fund usage by developers to mitigate potential risks. Proactive Measures Against Property Slowdown : The bank's precautionary measures allowed it to reduce exposure to problematic property loans and exit risky loans before China's property market slowdown. This conservative approach is expected to benefit Hong Leong Bank by minimizing potential asset quality concerns. Continued Optimism and Buy Recommendat
Post a Comment
Read more

Investors Keep Buying US Junk Debt Despite Weak Protections

  When US-based construction material supplier Wilsonart issued a junk bond to raise US$500 million (RM2.13 billion) for an acquisition this summer, a research firm warned potential investors about the bond's weak protections. The bond’s covenants could allow the company to move valuable assets to another entity and raise more money, potentially disadvantaging bond investors, according to Covenant Review , a research firm. This warning comes amid growing concerns in credit markets as more companies engage in practices like "liability management exercises," where they borrow more against the same assets. These practices, often favoring some creditors over others, have been dubbed "creditor-on-creditor violence," prompting some creditors to unite to protect their interests. Despite the warnings, investors eagerly purchased Wilsonart's offering, underscoring a paradox in US credit markets. While investors face the consequences of weak covenants, they continu
Post a Comment
Read more