Shares in PDD Holdings rose in premarket trading.

Shares of PDD Holdings rose on Monday after the owner of Temu reported higher-than-expected profits in the second quarter - despite steep declines since last year.

The Dublin, Ireland-headquartered company, which also runs operations in Shanghai, China, posted revenue for the three months ended June 30 of RMB112.4 billion, or $16.7 billion, an increase of 8% year-on-year but below Wall Street consensus of RMB116.35 billion, according to London Stock Exchange Group data.

The commerce group, which also owns Chinese shopping platform Pinduoduo, said net profits declined 12% from the same period of the previous year to RMB27.2 billion, but was above forecasts of RMB27.4 billion, per LSEG. It said non-GAAP net income was RMB28.5 billion, down 13% from the same period of the previous year, but about 5% higher than forecasts.

PDD's stock (PDD) in New York climbed more than 3% in premarket trading following the results, with shares having declined 22% since the start of the year.

The commerce group, which also owns Chinese shopping platform Pinduoduo, said operating profit rose by 8% to RMB27.8 billion.

"Since the start of the year, global trade and regulatory landscapes have continued to evolve, creating significant challenges while also presenting new opportunities," CEO Lei Chen said in a statement. "We feel a strong sense of responsibility that comes with our unique position in global trade and will work diligently to build a trustworthy platform that consumers can rely on over the long run."

The results were impacted by the expiration of the de minimis loophole last May for China and Hong Kong. The rule previously exempted retailers from paying import duties on packages sent to the U.S. valued at less than $800. At the beginning of July of this year, the European Union also removed its rule that allowed online shopping orders to be shipped duty-free when worth below EUR150 ($173), instead imposing a EUR3 flat fee per item.

Both steps were expected to especially affect Chinese fast-fashion chains, like Temu and rival Shein.

PDD is also likely to feel the added pressure from Shein preparing to make its stock-market debut in Hong Kong on about Sept. 1, a long-awaited initial public offering after the Singapore-headquartered group scrapped attempts to list shares in both New York and London following scrutiny over legal, ethical and sustainability concerns.

Neil Saunders, managing director of GlobalData's U.S. retail and consumer unit, recently told MarketWatch that as PDD does not specifically break down results for its Temu brand, investors may turn to Shein earnings to try to gauge its health.

-Nora Redmond