(Bloomberg) -- A top-ranked China stock fund that made a wager earlier this year on PDD Holdings Inc. says the big gain after the Chinese e-commerce platform’s stellar earnings shows how much its stock was undervalued.

PDD surged 18% in US trading after reporting stronger-than-anticipated revenue as its hit shopping app Temu grabbed consumers from rivals Shein and Amazon.com Inc. That took its gain from a May low to more than 130%, pushing its market value to over $175 billion and nearly bridging its gap with China e-commerce giant Alibaba Group Holding Ltd.

PDD Surges 18% After Hit App Temu Wrests Shoppers From Shein

Tuesday’s post-results move “shows that the market had seriously undervalued the company, and proves that the model runs as well overseas as it does in China, and dispels fears that it would be burning cash to gain market share abroad,” according to Yun Bingwang, a fund manager at Qingdao Luxiu Investment Management Co.

Yun’s bets on PDD amid a drop earlier this year helped make his Luxiu Lvjing Fund one of the best-performing among peers this year. The fund climbed 57% from the start of the year through Monday, before the latest gain in PDD. That puts it in the top 1% among 10,367 peer private-fund products, according to fund tracker Shenzhen PaiPaiWang Investment & Management Co.

PDD beat the average revenue estimate by 25% in the September quarter, underscoring its success in wooing Chinese bargain-seeking consumers at a time of economic uncertainty. Temu — which is also expanding globally — uses the same cut-rate pricing strategy employed by Shein as well as PDD’s own domestic app Pinduoduo.

Fund manager Yun said PDD had dropped earlier this year as the market had overestimated the strength of a shift to a preference for premium goods after the end of Covid restrictions. He bought on that dip on the belief that the company offers extreme value.

“Temu is taking the essence of PDD one step further, with its ‘one-stop’ management solution for merchants,” said Yun. “Starting with this earnings season it’s possible that more investors may realize that PDD is actually China’s Amazon, as Alibaba has failed prove its ability to expand its model overseas,” said Yun.

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