PDD Holdings reported better-than-expected net profit (down 5% YoY, compared to the estimations of Citi Research/ market consensus of a 42%/ 35% decline), Citi Research issued a research report saying. This was attributed to lower-than-expected sales and marketing expenses (down 18.5% QoQ, up 4% YoY).

However, management repeatedly reminded investors that, due to the Company's commitment to merchant support, its 2Q25 profit is unsustainable. The broker interpreted this as managing expectation and staying 'low profile.'

Citi Research also believed that comments regarding its cross-border e-commerce platform Temu's collaboration with local suppliers to develop localized operations and enhance logistics services may suggest its expansion into markets such as Europe, the US and Brazil.

After revising predictions, the broker adjusted its target price for PDD Holdings from US$154 to US$168, equivalent to its revised 2026 EPS forecast of 13x (previously 14x), with rating kept at Buy.