Financial Performance - Gross transaction value (GTV) decreased by 35.2% year-over-year to RMB629.9 billion (US$87.2 billion) in Q1 2024, with existing home transactions down 31.8% and new home transactions down 45.4%[2]. - Net revenues fell by 19.2% year-over-year to RMB16.4 billion (US$2.3 billion) in Q1 2024, primarily due to declines in existing and new home transaction services[9]. - Net income was RMB432 million (US$60 million) in Q1 2024, with adjusted net income at RMB1,392 million (US$193 million)[2]. - Total net revenues for the three months ended March 31, 2024, were RMB 16,377,314, down from RMB 20,278,080 for the same period in 2023, representing a decline of approximately 19%[51]. - The gross profit for the three months ended March 31, 2024, was RMB 4,122,086, compared to RMB 6,349,798 for the same period in 2023, indicating a decrease of about 35%[51]. - KE Holdings Inc. reported a net income of RMB 432,122 for the three months ended March 31, 2024, compared to RMB 2,749,746 for the same period in 2023, reflecting a significant decline[51]. - Adjusted net income for the three months ended March 31, 2024, was RMB 3,561,263 thousand (approximately US$ 192,818 thousand), compared to RMB 2,749,746 thousand in the same period of 2023[59]. Revenue Breakdown - Revenue from home renovation and furnishing increased by 71.1% year-over-year to RMB2.4 billion (US$0.3 billion), driven by synergies with home transaction services[13]. - Revenue from home rental services surged by 189.3% year-over-year to RMB2.6 billion (US$0.4 billion), attributed to the growth of rental units under the Carefree Rent model[14]. - Net revenues from existing home transaction services for the three months ended March 31, 2024, were RMB 9,181,199 thousand, with a contribution of RMB 4,501,720 thousand[66]. - New home transaction services generated net revenues of RMB 8,404,084 thousand, contributing RMB 2,272,348 thousand for the same period[66]. - Home renovation and furnishing services reported net revenues of RMB 1,407,931 thousand, with a contribution of RMB 431,012 thousand[66]. - Home rental services generated net revenues of RMB 907,354 thousand, with a contribution of RMB (81,490) thousand, indicating a loss in this segment[66]. Operating Expenses - Total operating expenses increased by 21.9% to RMB4.1 billion (US$0.6 billion) in Q1 2024 from RMB3.4 billion in Q1 2023[19]. - General and administrative expenses rose by 24.5% to RMB2,019 million (US$280 million) in Q1 2024 compared to RMB1,621 million in Q1 2023[20]. - Sales and marketing expenses increased by 25.5% to RMB1,624 million (US$225 million) in Q1 2024 from RMB1,294 million in Q1 2023[20]. Cash and Investments - As of March 31, 2024, the combined balance of cash, cash equivalents, restricted cash, and short-term investments was RMB60.8 billion (US$8.4 billion)[26]. - Cash and cash equivalents decreased to RMB 17,845,299 as of March 31, 2024, from RMB 19,634,716 as of December 31, 2023[45]. - The company’s long-term investments decreased to RMB 20,658,437 as of March 31, 2024, from RMB 23,570,988 as of December 31, 2023[45]. - The company reported a net increase in cash and cash equivalents of RMB 12,860,096 thousand for the three months ended March 31, 2024[64]. Shareholder Returns - The company allocated approximately US$220 million to share repurchases in Q1 2024, aiming to enhance shareholder returns[7]. - The company has established a share repurchase program allowing for the purchase of up to US$2 billion of its Class A ordinary shares and/or ADSs until August 31, 2024[29]. - Approximately 76.6 million ADSs (representing about 229.8 million Class A ordinary shares) have been purchased under the share repurchase program for a total consideration of approximately US$1,129.8 million[30]. Strategic Initiatives - The "one body, three wings" strategy is being actively advanced to adapt to the evolving market environment[6]. - The company will separately report the financials of home rental services starting Q1 2024 to enhance understanding of revenue structure and margin trends[27]. Assets and Liabilities - As of March 31, 2024, KE Holdings Inc. reported total assets of RMB 119,021,436, a decrease from RMB 120,331,931 as of December 31, 2023[45]. - Total current liabilities increased to RMB 41,755,435 as of March 31, 2024, from RMB 39,523,983 as of December 31, 2023, representing an increase of approximately 6%[46]. - The company’s total shareholders' equity decreased to RMB 69,124,976 as of March 31, 2024, from RMB 72,201,105 as of December 31, 2023[50].

Investment Rating - Maintain BUY rating for Beike with a target price of US$22.00, down from the previous US$23.00, indicating a potential upside of 16.6% from the current price of US$18.87 [2][3]. Core Insights - Beike reported a 19% year-over-year decline in revenue for Q1 2024, totaling RMB16.4 billion, but this was better than both the forecast and consensus estimates due to strong performance in new business segments [2]. - The company is expected to see growth in Gross Transaction Value (GTV) starting from Q2 2024, driven by supportive policies and a rebound in market sentiment [2]. - Beike's core business continues to gain market share, supported by its established ACN ecosystem, while new business areas like home renovation and rental services are growing rapidly [2]. - The management has committed approximately US$220 million for share repurchase, representing about 1% of the market cap, to enhance shareholder returns [2]. Financial Performance - In Q1 2024, Beike's existing home transaction GTV fell 32% year-over-year to RMB453 billion, while new home transactions dropped 45% to RMB152 billion, compared to a 50% decline for the top 100 developers [2]. - The company generated RMB2.4 billion in revenue from home renovation and furnishing, marking a 71% year-over-year increase [2]. - Forecasts for Q2 2024 include total GTV of RMB796 billion, up 2% year-over-year, and total revenue of RMB21.5 billion, up 10% year-over-year [2]. Earnings Summary - Revenue projections for Beike are set to increase from RMB77.8 billion in FY23 to RMB90.2 billion in FY24, reflecting a year-over-year growth of 15.9% [6]. - Adjusted net profit is expected to reach RMB6.9 billion in FY24, down from RMB10.8 billion in FY23, indicating a decline of 13.1% [6]. - The company anticipates a gradual recovery in profitability, with adjusted net profit margins stabilizing around 10.4% in FY24 [8]. Market Outlook - Recent policy changes regarding down payment ratios and mortgage interest rates are expected to provide a marginal boost to property sales, although the impact may be less significant than in previous downturns [2]. - The overall property market is projected to show positive signs of recovery in the latter half of 2024, supported by demand-side easing and financing policy implementations [5].

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected price increase of over 15% within the next 6-12 months [1][6]. Core Views - The company's Q1 2024 performance showed a decline in both revenue and profit, with revenue at 16.4 billion yuan, down 19.2% year-on-year, and adjusted net profit at 1.39 billion yuan, down 60.9% year-on-year [1]. - The decrease in revenue is attributed to reduced income from existing and new housing businesses, although growth in home decoration and rental services helped mitigate the overall revenue decline [1]. - The company's gross margin fell by 6.1 percentage points to 25.2%, with gross profit decreasing by 35.1% to 4.1 billion yuan [1]. - The "One Body, Three Wings" strategy is being effectively implemented, with significant growth in home decoration and rental services, which now account for 35.0% of total revenue, up 21.7 percentage points year-on-year [1]. - Despite a challenging market environment, the company expects Non-GAAP net profits to grow from 10.79 billion yuan in 2024 to 11.62 billion yuan in 2026, with respective growth rates of 10.2%, 1.6%, and 6.0% [1]. Summary by Sections Performance Analysis - Q1 2024 revenue was 16.4 billion yuan, down 19.2% year-on-year; adjusted net profit was 1.39 billion yuan, down 60.9% year-on-year; net profit attributable to shareholders was 430 million yuan, down 84.3% year-on-year [1]. - The decline in revenue was primarily due to decreased income from existing and new housing businesses, while home decoration and rental services saw revenue growth [1]. Business Strategy - The company is focusing on its "One Body, Three Wings" strategy, which has led to rapid growth in home decoration and rental services, contributing significantly to overall revenue [1]. - Home decoration GTV reached 3.4 billion yuan, up 26.1% year-on-year, and rental income surged to 2.63 billion yuan, up 189.3% year-on-year [1]. Financial Forecast - The company maintains its profit forecast, expecting Non-GAAP net profits of 10.79 billion yuan in 2024, 10.96 billion yuan in 2025, and 11.62 billion yuan in 2026, with respective growth rates of 10.2%, 1.6%, and 6.0% [1]. - The stock's closing price corresponds to a PE ratio of 15.6x for 2024, 15.4x for 2025, and 14.5x for 2026 [1].

Financial Data and Key Metrics Changes - In Q1 2024, revenue reached RMB 16.4 billion, down from RMB 20.3 billion in the same period last year, representing a year-over-year decline of 19.2% [18] - Gross margin decreased to 25.2% from 31.3% year-over-year [18] - GAAP net income was RMB 432 million, a significant drop from RMB 2.75 billion in Q1 2023 [28] - Non-GAAP net income also fell to RMB 1.39 billion from RMB 3.56 billion year-over-year [28] Business Line Data and Key Metrics Changes - Revenue from existing home transactions was RMB 5.7 billion, down 37.6% year-over-year, with GTV at RMB 453.2 billion, down 31.8% [19] - New home transaction revenue was RMB 4.9 billion, a decline of 41.5% year-over-year, with GTV at RMB 151.8 billion, down 45.4% [21] - Home renovation and furniture business revenue grew by 71.1% year-over-year to RMB 2.4 billion, with contracted sales reaching RMB 3.4 billion, up 26.1% [22] - Home rental services revenue surged by 189.3% year-over-year to RMB 2.6 billion, with over 250,000 units managed [25][63] Market Data and Key Metrics Changes - The overall housing market saw a year-over-year decline in Q1, but some cities experienced transaction volume increases compared to the same period last year [17] - The new home market remains sluggish, with sales from the top 100 developers down nearly 50% year-over-year [21] - Existing home transaction volume on the platform increased by 14% year-over-year in April, indicating a recovery trend [35] Company Strategy and Development Direction - The company is focusing on enhancing the quality and efficiency of its housing transaction business, actively connecting with high-quality brands and agents [46] - A strategic expansion of connected stores is underway, with over 1,000 new stores added, maintaining a high retention rate [46] - The company aims to improve customer acquisition through innovative online content and service models, including live streaming and short videos [40][42] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the existing home market, while acknowledging the ongoing challenges in the new home market [33] - Positive government policies aimed at stimulating demand and reducing inventory are expected to support market recovery [34][56] - The company anticipates improved liquidity in the new home market and a gradual recovery in market confidence [33] Other Important Information - The company has allocated USD 220 million towards share repurchase in Q1 2024, with total cash liquidity reaching RMB 75.6 billion [29] - The company is committed to enhancing shareholder returns and optimizing capital operations despite challenging market conditions [30] Q&A Session Summary Question: Views on recent policies and market outlook - Management noted that despite price adjustments, transaction volumes in the existing home market remain stable, with some cities exceeding expectations [33] - The new home market is sluggish, but policies aimed at inventory reduction are expected to improve liquidity and market sentiment [34] Question: Customer acquisition channels and online traffic efficiency - The company is focusing on building online infrastructure and enhancing customer connection methods through live streaming and short videos [40] - New service models are being developed to better understand and meet customer needs [40] Question: Investments in core home transition business - The company is focused on growth with enhanced quality and efficiency, connecting with more high-quality brands and agents [46] - The number of active stores increased by 1.4% compared to the previous quarter, with a high retention rate for newly connected stores [46] Question: Outlook for new home sales - The new home market remains tough, but the company believes it will show resilience due to improved channel service capabilities and strategic partnerships with developers [50][51] Question: Home replacement policies and overall housing demand - Management views the government’s destocking policies as positive for market sentiment and liquidity, with Beike actively promoting old-for-new models [56][58] Question: Progress in decoration and window home services - The home renovation and furniture business achieved strong growth, with significant improvements in customer acquisition and delivery capabilities [60][62]

Core Insights - KE Holdings Inc. (BEKE) has reached an important support level and is considered a good stock pick from a technical perspective due to a recent "golden cross" event [1] - The golden cross indicates a bullish breakout, occurring when the 50-day simple moving average surpasses the 200-day simple moving average, which is a strong indicator of potential upward momentum [1] - BEKE's shares have increased by 37.4% over the past four weeks, and the company holds a 1 (Strong Buy) rating on the Zacks Rank, suggesting a favorable outlook for further price appreciation [1] Technical Analysis - A golden cross consists of three stages: the stock price bottoms out, the shorter moving average crosses above the longer moving average, and the stock maintains upward momentum [1] - The golden cross is contrasted with a death cross, which signals potential bearish price movement [1] Earnings Outlook - The positive earnings outlook for BEKE further supports the bullish case, as no earnings estimates have been cut for the current quarter [1]

Core Viewpoint - KE Holdings Inc. reported a significant decline in gross transaction value and net revenues for the first quarter of 2024, reflecting challenges in the housing market while also highlighting growth in home renovation and rental services [2][7][10]. Financial Performance - Gross transaction value (GTV) decreased by 35.2% year-over-year to RMB629.9 billion (US$87.2 billion) [2][7]. - Net revenues fell by 19.2% year-over-year to RMB16.4 billion (US$2.3 billion) [7][19]. - Net income was RMB432 million (US$60 million), a decrease from RMB2,750 million in the same period of 2023 [19][20]. - Adjusted net income was RMB1,392 million (US$193 million), down from RMB3,561 million year-over-year [19][20]. Segment Performance - Existing home transaction services GTV decreased by 31.8% to RMB453.2 billion (US$62.8 billion) [2][8]. - New home transaction services GTV dropped by 45.4% to RMB151.8 billion (US$21.0 billion) [2][10]. - Home renovation and furnishing revenues increased by 71.1% to RMB2.4 billion (US$0.3 billion) [11]. - Home rental services revenues surged by 189.3% to RMB2.6 billion (US$0.4 billion) [11]. Operational Metrics - The number of stores increased by 7.1% year-over-year to 44,216 [2]. - Active agents decreased by 3.0% year-over-year to 399,159 [2]. - Mobile monthly active users averaged 47.7 million, up from 45.4 million in the same period of 2023 [2]. Strategic Initiatives - The company is focusing on enhancing customer experience and service capabilities through innovative approaches such as short videos and live streaming [3]. - A "one body, three wings" strategy is being implemented to adapt to the evolving market environment [5]. Shareholder Returns - Approximately US$220 million was allocated to share repurchases in the first quarter [6][25]. - The company aims to provide sustained returns to shareholders while optimizing capital allocation [6]. Cash Position - As of March 31, 2024, the combined balance of cash, cash equivalents, restricted cash, and short-term investments was RMB60.8 billion (US$8.4 billion) [21]. Business Line Changes - The company has begun separately reporting financials for home rental services to provide better insight into revenue structure and margin trends [22][23].

Financial Performance - Total transaction value for Q1 2024 was RMB 629.9 billion (USD 87.2 billion), a year-on-year decrease of 35.2%[1] - Net revenue for Q1 2024 was RMB 16.4 billion (USD 2.3 billion), down 19.2% year-on-year[2] - Adjusted net profit for Q1 2024 reached RMB 1.392 billion (USD 193 million)[2] - In Q1 2024, net revenue decreased by 19.2% to RMB 16.4 billion ($2.3 billion) from RMB 20.3 billion in Q1 2023, primarily due to declines in existing and new housing business revenues[5] - Total transaction value in Q1 2024 fell by 35.2% to RMB 629.9 billion ($87.2 billion) compared to RMB 971.5 billion in Q1 2023, attributed to a high base effect from Q1 2023 and weakened supply and demand[5] - Revenue from existing housing business dropped by 37.6% to RMB 5.7 billion ($0.8 billion), with total transaction value decreasing by 31.8% to RMB 453.2 billion ($62.8 billion)[5] - New housing business revenue fell by 41.5% to RMB 4.9 billion ($0.7 billion), with total transaction value down 45.4% to RMB 151.8 billion ($21.0 billion)[6] - Gross profit in Q1 2024 decreased by 35.1% to RMB 4.1 billion ($0.6 billion), with a gross margin of 25.2%, down from 31.3% in Q1 2023[9] - Operating profit for Q1 2024 was RMB 12 million ($2 million), a significant drop from RMB 2.978 billion in Q1 2023, with an operating margin of 0.1%[11] - Adjusted operating profit for Q1 2024 was RMB 960 million ($133 million), down from RMB 3.83 billion in Q1 2023, with an adjusted operating margin of 5.9%[11] - In Q1 2024, the net profit was RMB 432 million (USD 60 million), a significant decrease from RMB 2,750 million in Q1 2023, representing a decline of approximately 84.3%[12] - Adjusted net profit for Q1 2024 was RMB 1,392 million (USD 193 million), down from RMB 3,561 million in Q1 2023, indicating a decrease of about 61.0%[12] - Basic and diluted earnings per American Depositary Share (ADS) for Q1 2024 were RMB 0.38 (USD 0.05) and RMB 0.37 (USD 0.05), respectively, compared to RMB 2.32 and RMB 2.26 in Q1 2023, reflecting a decline of approximately 83.7% and 83.7%[13] Revenue Breakdown - Revenue from home decoration and furnishing reached RMB 2.4 billion, a year-on-year increase of 71.1%[4] - Revenue from housing rental services was RMB 2.6 billion, up 189.3% year-on-year[4] - The revenue from emerging businesses and others increased by 112.9% year-on-year, contributing to 35% of total revenue, up 21.7 percentage points from the same period in 2023[4] - Home decoration and furnishing revenue increased by 71.1% to RMB 2.4 billion ($0.3 billion), driven by synergies between property transactions and home decoration services[6] - Rental services revenue surged by 189.3% to RMB 2.6 billion ($0.4 billion), mainly due to an increase in rental listings under the "worry-free rental" model[6] Cash and Assets - As of March 31, 2024, the total cash, cash equivalents, restricted cash, and short-term investments amounted to RMB 60.8 billion (USD 8.4 billion)[14] - The company's cash and cash equivalents decreased from RMB 19,634,716,000 as of December 31, 2023, to RMB 17,845,299,000 as of March 31, 2024, a decline of about 9.1%[25] - The total equity attributable to shareholders decreased from RMB 72,099,824,000 as of December 31, 2023, to RMB 68,993,774,000 as of March 31, 2024, a reduction of approximately 4.4%[27] - The company's short-term investments increased from RMB 34,257,958,000 as of December 31, 2023, to RMB 36,034,979,000 as of March 31, 2024, representing a growth of about 5.2%[25] Share Repurchase and Governance - The company repurchased approximately USD 220 million worth of shares in Q1 2024[4] - The share repurchase program allows the company to buy back up to USD 2 billion of Class A common stock and/or ADSs by August 31, 2024, with approximately 76.6 million ADSs repurchased for a total consideration of about USD 1,129.8 million as of March 31, 2024[15] - The board of directors includes experienced executives, ensuring strong governance and strategic oversight[23] Operational Insights - The company utilizes non-GAAP financial metrics to assess operational performance, including adjusted operating profit and adjusted net profit, which help identify underlying business trends[19] - The company emphasizes that non-GAAP metrics should not be viewed in isolation and encourages investors to review financial data comprehensively[19] - The company aims to reshape service operation models to provide more efficient real estate transaction and living services[21] - The management's forward-looking statements involve inherent risks and uncertainties that could lead to significant differences in actual performance[22] - The company is committed to protecting its systems and infrastructure from cyberattacks, which is crucial for maintaining trust in its brokerage brands[22] - The company has established a strong online and offline integrated real estate transaction and service platform[21] Asset and Liability Changes - As of December 31, 2023, total assets amounted to RMB 120,331,931,000, while total assets as of March 31, 2024, decreased to RMB 119,021,436,000, representing a decline of approximately 1.1%[25] - Total current assets increased from RMB 69,753,623,000 as of December 31, 2023, to RMB 70,543,525,000 as of March 31, 2024, reflecting a growth of about 1.1%[25] - Total liabilities rose from RMB 48,130,826,000 as of December 31, 2023, to RMB 49,896,460,000 as of March 31, 2024, indicating an increase of approximately 3.7%[26] - The total non-current assets decreased from RMB 50,578,308,000 as of December 31, 2023, to RMB 48,477,911,000 as of March 31, 2024, reflecting a decline of about 4.1%[25] - The company's total current liabilities increased from RMB 39,523,983,000 as of December 31, 2023, to RMB 41,755,435,000 as of March 31, 2024, an increase of approximately 5.7%[26] - The total non-current liabilities decreased from RMB 8,606,843,000 as of December 31, 2023, to RMB 8,141,025,000 as of March 31, 2024, a reduction of about 5.4%[26]

Group 1 - KE Holdings Inc. Sponsored ADR (BEKE) has gained approximately 16.7% year-to-date, outperforming the Finance sector average gain of 5.1% [2][3] - The Zacks Consensus Estimate for BEKE's full-year earnings has increased by 18.8% over the past three months, indicating improved analyst sentiment [2] - KE Holdings Inc. is ranked 1 (Strong Buy) in the Zacks Rank system, which focuses on earnings estimates and revisions [2] Group 2 - KE Holdings Inc. is part of the Real Estate - Operations industry, which consists of 38 stocks and is currently ranked 91 in the Zacks Industry Rank [3] - The Real Estate - Operations industry has an average year-to-date gain of 3.3%, showing that BEKE is performing better than its industry peers [3] - BrightSphere Investment Group (BSIG), another Finance stock, has returned 16.4% year-to-date and is also ranked 1 (Strong Buy) [2][3]

Core Viewpoint - KE Holdings Inc. will report its unaudited financial results for Q1 2024 on May 23, 2024, before the U.S. market opens [1] Group 1: Financial Results Announcement - The earnings conference call is scheduled for 8:00 A.M. Eastern Time on May 23, 2024 [1] - Participants must register online at least 20 minutes prior to the call to receive dial-in numbers and access information [1] Group 2: Company Overview - KE Holdings Inc. is a leading integrated online and offline platform for housing transactions and services in China [3] - The company operates Lianjia, a prominent real estate brokerage brand, and has over 22 years of experience since its inception in 2001 [3] - The company aims to build infrastructure and standards to enhance the efficiency of housing transactions and services [3]

Core Insights - Investors in the Real Estate - Operations sector may consider KE Holdings Inc. Sponsored ADR (BEKE) and Zillow (Z) as potential undervalued stocks [1] - KE Holdings Inc. has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Zillow has a Zacks Rank of 3 (Hold) [1] Valuation Metrics - KE Holdings Inc. has a forward P/E ratio of 15.79, significantly lower than Zillow's forward P/E of 25.55 [2] - The PEG ratio for KE Holdings Inc. is 0.33, compared to Zillow's PEG ratio of 1.42, indicating better value relative to expected earnings growth [2] - KE Holdings Inc. has a P/B ratio of 2.01, while Zillow's P/B ratio is slightly higher at 2.08 [2] Value Grades - KE Holdings Inc. has earned a Value grade of B, whereas Zillow has received a Value grade of F, suggesting that KE Holdings Inc. is currently viewed as the better investment option [3]