According to Forbes, PDD Holdings reported Q3 revenue of RMB 108.3 billion ($15.2 billion), beating estimates of RMB 107.6 billion with 9% growth, while Baidu’s revenue declined 7% to RMB 31.2 billion ($4.4 billion) but still topped expectations, and Trip.com posted 16% revenue growth to RMB 18.4 billion ($2.6 billion) ahead of estimates. Asian markets mostly declined overnight following Wall Street’s lead due to AI valuation concerns and missing US economic data, with Hong Kong growth stocks taking particular punishment while Mainland China held up better. PDD management cited an “exceedingly competitive landscape” for e-commerce globally as growth slows from 2023-2024 peaks, while Trip.com benefited from strong Golden Week holiday travel bookings. Meanwhile, Yum China announced plans to expand from 17,514 stores currently to 20,000 by 2026 and 30,000 by 2030 during its Capital Markets Day presentation.
The bigger picture
Here’s the thing about these earnings beats – they’re happening against a pretty grim backdrop. Asian equities were mostly down overnight, with Korea and Japan getting hit the hardest. And it’s not just regional issues either. Wall Street’s AI valuation concerns are clearly spilling over, which is ironic given that Baidu’s struggles are partly because they’re getting left behind in that very AI race.
What’s really interesting is the divergence between Hong Kong and Mainland markets. Growth stocks got “absolutely punished” in Hong Kong, as Forbes put it, while mainland investors were actually net buyers to the tune of nearly $1 billion through Southbound Stock Connect. That tells you something about where the confidence is – or isn’t – right now.
PDD’s impressive run
PDD’s results are actually pretty remarkable when you consider the context. They’re doing this while facing what management called an “exceedingly competitive landscape” in both China and globally. Revenue growth has slowed from the crazy highs of 2023-2024, but they’re still posting 27% net margins. That’s insane for any company, let alone one in the brutally competitive e-commerce space.
And get this – these Q3 results came before the recent US-China trade reprieve. PDD is way more exposed to US trade issues than other Chinese internet companies because of their focus on small packages through Temu. The fact that they’re holding up this well through the trade spat is genuinely impressive. They’re basically threading the needle between aggressive expansion and maintaining profitability.
Baidu’s ongoing challenges
Baidu’s story is less rosy, but they still managed to beat expectations. A 7% revenue decline year-over-year isn’t great, but analysts were expecting worse. The problem is fundamental – search is getting disrupted by large language models, and Baidu’s own AI products aren’t profitable yet.
So what’s the play here? They’ve got this huge cash position but seem to be underinvesting in new initiatives. It’s like they’re stuck between the declining search business and AI bets that haven’t paid off. Beating estimates is nice, but can they actually reverse the revenue decline? That’s the billion-dollar question.
Trip.com’s travel boom
Trip.com’s results look almost too good to be true. 100% net margin? Yeah, that’s because of a one-time investment gain from selling some asset. Their actual EBITDA margin was around 30%, which is still fantastic. The real story here is the 16% revenue growth driven by Golden Week travel.
Chinese consumers are clearly still spending on experiences like travel, even as the broader economy faces headwinds. That’s a trend we’re seeing across multiple sectors – Gen Z spending on designer toys like Labubu shows similar patterns. People might be cutting back on big purchases, but they’re still opening their wallets for experiences and emotional purchases.
Looking ahead
All eyes are on the People’s Bank of China now. There’s loan prime rate decision coming Thursday, though nobody expects much change. The central bank seems to be looking at other measures to stimulate consumption growth instead.
Meanwhile, we’ve got the 15th Five-Year Plan implementation coming, which might include some limited fiscal stimulus. And Yum China’s massive expansion plans – 20,000 stores by 2026 – suggest some companies are betting big on continued consumer resilience. Basically, these earnings beats are welcome news, but they’re happening in a market that’s still pretty nervous about what comes next.
