CGS Says PDD Fears May Be Overdone for MRDIY, Sees 62% Upside as Tighter Rules Could Ease Pressure
Octopaul AI ·
CGS International analysts Chelsea Chew and Prem Jearajasingam believe concerns over Pinduoduo, an e-commerce platform under PDD Holdings, threatening MR D.I.Y. Group may be overstated if regulations tighten. They view its single-item free shipping as a subsidy-driven advantage that may not persist. The analysts maintained “Add” but lowered their target price to RM1.90 from RM2.09, implying 10% upside.
The team estimates Pinduoduo’s Malaysian gross merchandise value at RM1.2 billion–RM2.9 billion in 2026, or 1.4%–3.4% of domestic e-commerce sales. While direct factory sourcing supports low product prices, their scenarios suggest delivery subsidies could result in losses of RM1.53–RM8.22 per item—not company-disclosed figures.
However, their estimated annual free-shipping cost amounts to only about 1.6% of parent company PDD Holdings’ FY25 net profit, suggesting capacity to sustain the campaign. The proposed E-Commerce Bill and stricter low-value-goods import enforcement could help ease competitive pressure.
Nevertheless, the analysts cut 2027F–2028F core net profit forecasts by approximately 8.2% each, reflecting weaker expected same-store sales growth and higher minimum-wage costs. They see upcoming 3Q26 results as a key test: stabilising transactions per store and average basket value after the July 30 price-lock expiry could ease investor concerns.
As of 4:30 p.m. on October 21, MR D.I.Y. Group’s share price fell 0.9% to RM1.16.