Jean Pierre Verster of Protea Capital Management presented his investment thesis on PDD Holdings (US: PDD) at Best Ideas 2025.
Thesis summary:
PDD is a holding company that operates two mega online marketplaces: Pinduoduo (China) and Temu (ex China in 86 countries), following a “consumer-to-merchant” business model. The company has a recent market cap of USD 135 billion, is quite secretive, and has very strong valuation metrics.
PDD Holdings is registered in the Cayman Islands, headquartered in Ireland, functionally operates mainly from Shanghai, and has depository shares listed on the Nasdaq. It was founded by Colin Huang (ex Google engineer) in 2015 as Pinduoduo, a China social buying platform focusing on agricultural products. The company grew very strongly and launched Temu in 2022.
PDD has exhibited very strong revenue and profit growth over the past few years, and is an asset-light business. PDD has a high net cash position (~33% of market cap) and high cash generation, with ROCE and ROE of 30+%. Management has proven its ability with Pinduoduo and is repeating this success with Temu. PDD operates an attractive two-sided marketplace with “scale economies shared” business model. The company is continuing to gain market share from incumbent online marketplaces (e.g. BABA, AMZN). The founder still owns ~25% of the company (now one of China’s richest persons).
Based on an analysis that considers an earnings-based valuation and an EVA valuation, Jean Pierre projects fair value of USD ~240 per share in January 2029, a four-year CAGR of ~25%.
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About the instructor:
Jean Pierre Verster is the founder and CEO of Protea Capital Management, an investment management firm headquartered in Johannesburg, South Africa. The firm manages long-only equity portfolios as well as long/short equity hedge funds, investing globally. Jean Pierre serves as an independent non-executive director at Capitec Bank, the largest retail bank in South Africa by number of clients, where he was appointed chairman of the audit committee in 2015 for a 9-year term. Jean Pierre also serves on the Regulation Advisory Committee of the Johannesburg Stock Exchange. He is a regular contributor in South Africa’s financial media across print, radio and television.
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