10 Cheap Chinese Stocks to Buy Now

2. PDD Holdings Inc. (NASDAQ:PDD)

Forward P/E Ratio: 10.11

Earnings Growth This Year: 76.13%

Number of Hedge Fund Holders: 85

PDD Holdings Inc. (NASDAQ:PDD) is a multinational company primarily operating through e-commerce business. The strategic edge of the company lies in the strong network it has established to help with logistics and sourcing. During the fiscal third quarter of 2024, the company grew its total revenue by 44% year-over-year, to reach $14.16 billion.

GreenWood Investors in its Q4 2024 investor letter noted PDD Holdings Inc. (NASDAQ:PDD) to be one of the detractors from the fund’s portfolio in 2024. This was due to the transitory foreign exchange translation losses and the company’s decision to reinvest its margins into growth and supplier ecosystem improvements. The fund praised PDD’s relentless corporate culture, led by founder Colin Huang, which has enabled the company to achieve a gross merchandise value (GMV) comparable to Amazon’s in a much shorter time frame. Moreover, the fund is attracted to the company’s international expansion through Temu, which is growing sales at a rate four times faster than Amazon. It is one of the cheap Chinese stocks to buy now.

GreenWood Investors stated the following regarding PDD Holdings Inc. (NASDAQ:PDD) in its Q4 2024 investor letter:

“Aside from transitory foreign exchange translation losses (as opposed to trading losses), the two other notable detractors from our portfolio were MEI Pharma and PDD Holdings Inc. (NASDAQ:PDD) in 2024.

PDD Holdings founder Colin Huang is who inspired us to “run 3x faster,” as the relentless corporate culture of PDD has built an e-commerce company with roughly the same GMV (gross merchandise value) of Amazon in one-third the time it took Amazon to build itself. Shares reacted negatively when the company decided to reinvest its record margins into even faster growth and creating a healthier supplier ecosystem. As it looks set to create a second Amazon with its international site Temu, we are highly attracted to the opportunity. Sales are growing 4x faster than Amazon’s, yet shares are priced at less than a quarter of the Amazon earnings multiple.

PDD is a perfect example of why we want to look outside of the “Big Ten” companies that are nearly a third of global market indices. We would not want to compete with the demanding corporate culture of PDD and Temu. Its operating model is relentless at identifying efficiency throughout the manufacturing and selling supply chain. Not only is it a more formidable competitor than Amazon, and growing much faster, but the valuation is 4x more attractive than Amazon’s…” (Click here to read the full text)