MCH Top Holding Pinduoduo Surges on Q3 Earnings Beat | ETF Trends

Shares of Pinduoduo (PDD) jumped on Monday after the e-commerce giant reported strong third quarter earnings that beat analyst estimates. 

Pinduoduo traded around 14% higher to $76.43 in premarket trading on Monday, with momentum carrying into Tuesday, as the fund is up over 6% to $78.55 in midday trading. Pinduoduo has been a strong performer this year: the stock has increased over 43% in the past month, bringing its year to date returns to 40%.  

Pinduoduo, a subsidiary of PDD Holdings, leverages technology to promote and enable the traditional agriculture industry. It has created China’s largest agriculture platform, which connects farmers with consumers directly through its interactive social commerce shopping experience  

During the third quarter, Pinduoduo reported revenue growth of 65% year-over-year to 35.5 billion yuan, beating the average forecast of 30.94 billion yuan from analysts surveyed by Refinitiv. The company’s revenue from online marketing services and transaction services jumped 58% and 102% year-over-year, respectively, as the platform boosted consumption through different methods including coupons and promotional events. 

Pinduoduo said that the profit surge reported in the third quarter is unlikely to continue, however, as the company steps up investments to enhance its platform and improve the supply chain.

“Investment in certain projects was affected in the third quarter,” Jun Liu, VP of Finance of Pinduoduo, said. “We will continue to step up our investment in R&D and create long-term value through innovations.” 

Pinduoduo is the top holding in the Matthews China Active ETF (MCH), weighted 8.7% as of November 29. Shares of MCH are up 19.4% over a one-month period as of November 28. 

MCH is a high-conviction equity portfolio that seeks companies benefiting from China’s domestic consumption. It uses an all-cap fundamental GARP approach, driven by proprietary research, and combines long-term core holdings with more opportunistic ideas to provide consistency through cycles. MCH offers concentrated exposure to China, but is more forward-thinking than many indexes in terms of how it looks at complex and large geography.   

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