Financial Data and Key Metrics Changes - In Q2 2024, total GTV reached RMB 839 billion, up 7.5% year-over-year, while net revenues were RMB 23.4 billion, representing a year-over-year increase of 19.9% [9][10] - Gross margin increased by 0.5 percentage points year-over-year to 27.9%, and GAAP net income reached RMB 1.9 billion, rising by 46.2% year-over-year [9][14] - Non-GAAP net income grew by 13.9% year-over-year to RMB 2.69 billion, exceeding market consensus [9][10] Business Line Data and Key Metrics Changes - Revenue from existing home transactions reached RMB 7.3 billion, up 14.3% year-over-year, with PTV at RMB 570.7 billion, increasing 25% year-over-year [10][11] - New home GTV reached RMB 235.3 billion, growing by 20.2% year-over-year and 55% quarter-over-quarter, despite a market downturn [10][11] - Revenue from home renovation and furnishings grew by 85.3% year-over-year, while home rental services revenue surged by 167.1% year-over-year [12][13] Market Data and Key Metrics Changes - The existing home market saw a notable recovery, with transaction volumes in first-tier cities increasing significantly, particularly in June [19][20] - The proportion of national GTV from existing home transactions increased from around 40% last year to approximately 44% in the first half of this year [18][19] - The new home market's year-over-year sales decline narrowed month by month in Q2, but overall performance remained subdued [21][22] Company Strategy and Development Direction - The company is focusing on enhancing operational capabilities, expanding store and agent networks, and improving customer acquisition strategies [4][5] - Emphasis is placed on community-based business models to better meet customer needs and differentiate from traditional residential industry practices [6][7] - The company aims to balance scale, quality, and efficiency while investing in infrastructure and technology to support growth [15][16] Management's Comments on Operating Environment and Future Outlook - Management noted that supportive policies have contributed to market recovery, particularly in first-tier cities, and expressed optimism about the second half of the year [9][18] - The company anticipates challenges in the new home market but remains committed to improving operational efficiency and service quality [21][22] - Management highlighted the importance of adapting to changing customer needs and market dynamics to sustain growth [24][25] Other Important Information - The company has expanded its share repurchase program from US$2 billion to US$3 billion, reflecting a commitment to returning value to shareholders [15][16] - The number of active stores increased by over 2,400, or 6%, and the number of active agents rose by 40,000, indicating growth in operational capacity [3][4] Q&A Session Summary Question: Changes in the real estate market post-policy implementation - Management noted steady month-by-month improvement in the housing market, particularly in existing home transactions, with significant recovery in first-tier cities [18][19] Question: Performance of new home business compared to the industry - The new home business significantly outperformed the industry, with a notable increase in contracted transaction volume and revenue, indicating strong operational capabilities [23][24]

Investment Rating - Maintains a **Buy** rating with a target price raised to **USD 23.3** (previously USD 21.5), reflecting a 15.2% upside from the current price of USD 20.23 [1][5] Core Views - **Revenue Growth**: Q3 2024 revenue increased by 27% YoY to RMB 22.6 billion, slightly below Bloomberg consensus and CICC estimates by 1.5% and 4.7%, respectively, due to weak existing home transaction (EHT) sentiment [1] - **Non-GAAP Net Income**: Q3 2024 non-GAAP net income was RMB 1.8 billion, with a gross margin of 7.9%, in line with expectations, driven by cost control measures [1] - **Market Share Expansion**: Continued market share gains in both existing home transactions (EHT) and new home transactions (NHT), along with successful new business expansion, support a positive outlook [1] - **Q4 2024 Outlook**: EHT and NHT gross transaction value (GTV) are expected to grow over 40% YoY, supported by strong performance in October and November, though additional expenses of RMB 1-1.5 billion may reduce Q4 non-GAAP net income to RMB 220 million [2] Business Performance - **EHT Performance**: EHT GTV grew 9% YoY but declined 17% QoQ due to slowing transaction sentiment post-June peak, with contribution margin dropping 7 percentage points to 41% due to increased fixed costs from agent expansion [2] - **NHT Performance**: NHT GTV grew 18.5% YoY, significantly outperforming the industry's 19% decline, driven by partnerships with state-owned developers [2] - **Policy Impact**: Policy Package 924 and subsequent measures have significantly boosted transaction sentiment, with better sustainability compared to previous policy supports [2] Financial Projections - **Revenue Growth**: FY2024E revenue is projected at RMB 91.0 billion, growing 17.1% YoY, with FY2025E and FY2026E revenues expected at RMB 107.7 billion (+18.3% YoY) and RMB 121.8 billion (+13.0% YoY), respectively [4] - **Non-GAAP Net Profit**: FY2024E non-GAAP net profit is estimated at RMB 8.1 billion, with FY2025E and FY2026E projections of RMB 9.4 billion (+16.7% YoY) and RMB 10.9 billion (+16.0% YoY), respectively [4] - **Valuation Metrics**: The target price implies a 2025E non-GAAP P/E of 21.4x, with core business valued at USD 22.3 per ADS and Shengdu at USD 0.9 per ADS [1][10] Corporate Social Responsibility - **Employee Welfare**: Plans to invest RMB 1.2 billion over the next 3-4 years in employee welfare, including transitioning to fixed salary structures and providing social insurance for brokers, enhancing long-term value [3] Valuation Summary - **DCF Valuation**: The discounted cash flow (DCF) valuation for the core business is RMB 193.7 billion, with a total enterprise value of RMB 201.7 billion, translating to a valuation of USD 23.3 per ADS [9][10] - **SOTP Valuation**: The sum-of-the-parts (SOTP) valuation includes RMB 193.7 billion for the core business and RMB 8.0 billion for Shengdu, resulting in a total valuation of RMB 201.7 billion (USD 28.0 billion) [10]

Investment Rating - The report maintains a "BUY" rating for Ke Holdings (BEKE US) with a target price raised to US$23.30 from US$21.50, indicating a potential upside of 15.2% from the current price of US$20.23 [3]. Core Insights - Ke Holdings reported a revenue increase of 27% year-over-year (YoY) to RMB22.6 billion for Q3 2024, although this was slightly below consensus estimates due to mixed performance in existing home transactions [1]. - The company is expected to benefit from favorable policies in Q4 2024, with guidance indicating over 40% YoY growth in both existing and new home transaction volumes [1]. - The report highlights the company's proactive expansion strategy, which has led to an increase in fixed costs but is expected to enhance long-term value through improved employee compensation and social responsibility initiatives [1]. Financial Performance Summary - Revenue for FY24E is projected at RMB91.0 billion, with a YoY growth of 17.1%, and net profit is expected to be RMB5.19 billion [2]. - Non-GAAP net profit for Q3 2024 was RMB1.8 billion, with a margin of 7.9%, aligning with estimates [1]. - The company anticipates a non-GAAP net profit of RMB2.2 billion for Q4 2024, reflecting a margin of 7.7% [1]. Business Segment Performance - Existing home transaction (EHT) gross transaction value (GTV) rose 9% YoY but fell 17% quarter-over-quarter (QoQ), while new home transaction (NHT) GTV increased by 18.5% YoY, outperforming the industry [1]. - The report notes a divergence in performance between EHT and NHT businesses, with EHT facing challenges due to low transaction sentiment [1]. Future Outlook - The report projects continued growth in both EHT and NHT segments, driven by recent policy support and market share gains [1]. - The company plans to invest RMB1.2 billion over the next 3-4 years in staff welfare and social insurance for agents, which is expected to enhance its long-term value [1].

Financial Performance - Gross transaction value (GTV) reached RMB736.8 billion (US$105.0 billion), a 12.5% year-over-year increase[2] - Net revenues increased by 26.8% to RMB22.6 billion (US$3.2 billion) compared to RMB17.8 billion in the same period of 2023[9] - Net income was RMB1,168 million (US$167 million), with adjusted net income at RMB1,782 million (US$254 million)[3] - Total net revenues for the three months ended September 30, 2024, increased to RMB 22,584,647, representing a 27.5% growth compared to RMB 17,810,705 for the same period in 2023[63] - Net income attributable to KE Holdings Inc. for the three months ended September 30, 2024, was RMB 1,171,073, compared to RMB 1,170,290 in the previous year[65] - Net income for the nine months ended September 30, 2024, was RMB 5,219,541, compared to RMB 3,500,932 for the same period in 2023, reflecting a year-over-year increase of 49.0%[69] - Total revenue for the nine months ended September 30, 2024, was RMB 9,388,339, compared to RMB 7,689,643 for the same period in 2023, reflecting a growth of 22.1%[74] Revenue Breakdown - Net revenues from new home transaction services grew by 30.9% to RMB7.7 billion (US$1.1 billion)[12] - Net revenues from home rental services surged by 118.4% to RMB3.9 billion (US$0.6 billion)[15] - New home transaction services revenue rose to RMB 7,726,316, a 30.9% increase from RMB 5,901,966 year-over-year[63] - Home rental services revenue surged to RMB 3,941,234, reflecting a 118.5% increase compared to RMB 1,804,374 in the previous year[63] - Net revenues for existing home transaction services increased to RMB 6,307,085 for the three months ended September 30, 2024, compared to RMB 6,217,054 for the same period in 2023, reflecting a growth of approximately 1.4%[78] - Contribution from new home transaction services rose to RMB 1,483,195 for the three months ended September 30, 2024, up from RMB 1,913,932 in the same period of 2023, indicating a decline of about 22.5%[78] - Home renovation and furnishing services generated net revenues of RMB 3,176,739 for the three months ended September 30, 2024, compared to RMB 4,213,041 in the same period of 2023, representing a decrease of approximately 24.6%[78] - Home rental services reported net revenues of RMB 1,804,374 for the three months ended September 30, 2024, a significant increase from RMB 3,941,234 in the same period of 2023, showing a decline of about 54.2%[78] - Emerging and other services achieved net revenues of RMB 620,541 for the three months ended September 30, 2024, compared to a loss of RMB 64,122 in the same period of 2023, indicating a turnaround in performance[78] - Total contribution from all services for the three months ended September 30, 2024, was RMB 3,069,848, up from RMB 2,549,227 in the same period of 2023, reflecting an increase of approximately 20.4%[78] - The company reported a total net revenue of RMB 21,904,172 for the nine months ended September 30, 2024, compared to RMB 19,278,973 for the same period in 2023, marking a growth of about 13.5%[78] Expenses and Costs - Total cost of revenues increased by 35.0% to RMB17.4 billion (US$2.5 billion) from RMB12.9 billion in the same period of 2023[16] - Total operating expenses rose by 11.0% to RMB4.4 billion (US$0.6 billion) in Q3 2024, compared to RMB4.0 billion in Q3 2023[25] - Research and development expenses increased by 21.5% to RMB573 million (US$82 million) in Q3 2024, driven by higher headcount and technical service costs[27] - The company reported share-based compensation expenses of RMB 814,129 for the three months ended September 30, 2024, compared to RMB 606,576 for the same period in 2023, marking an increase of 34.2%[69] - The total commission and compensation expenses for the nine months ended September 30, 2024, were RMB 10,700,539, a decrease from RMB 11,407,196 in the same period of 2023, indicating a reduction of approximately 6.2%[78] Profitability Metrics - Gross profit increased by 5.2% to RMB5.1 billion (US$0.7 billion) in Q3 2024, with a gross margin of 22.7%, down from 27.4% in Q3 2023[23] - Adjusted EBITDA was RMB2,154 million (US$307 million) in Q3 2024, down from RMB2,515 million in Q3 2023[29] - Basic and diluted net income per ADS were RMB1.04 (US$0.15) and RMB1.00 (US$0.14) in Q3 2024, compared to RMB0.99 and RMB0.97 in Q3 2023[32] - Adjusted net income was RMB1,782 million (US$254 million) in Q3 2024, compared to RMB2,159 million in Q3 2023[30] - For the three months ended September 30, 2024, adjusted net income was RMB 2,159,339, an increase from RMB 1,781,892 for the same period in 2023, representing a growth of 21.2%[69] Balance Sheet Highlights - As of September 30, 2024, the combined balance of cash, cash equivalents, restricted cash, and short-term investments was RMB59.5 billion (US$8.5 billion)[36] - As of September 30, 2024, total assets amounted to RMB 122,795,712, an increase from RMB 120,331,931 as of December 31, 2023[52][60] - Current assets decreased slightly to RMB 69,678,235 from RMB 69,753,623, while cash and cash equivalents dropped to RMB 9,576,948 from RMB 19,634,716[52][54] - Total liabilities increased to RMB 51,902,049 from RMB 48,130,826, with current liabilities rising to RMB 43,147,206 from RMB 39,523,983[54][60] - Shareholders' equity decreased to RMB 70,893,663 from RMB 72,201,105, indicating a decline in the company's net worth[61][60] - The company reported a decrease in employee compensation and welfare payable from RMB 8,145,779 to RMB 6,136,481[54] - Short-term investments increased significantly to RMB 43,654,035 from RMB 34,257,958, reflecting a strategic shift in asset allocation[52] - The company holds restricted cash of RMB 6,243,476 as of September 30, 2024, slightly up from RMB 6,222,745[52] - Goodwill remained stable at approximately RMB 4,839,219, showing consistency in the company's acquisitions[52] - The company reported a decrease in accumulated deficit from RMB 5,672,916 to RMB 2,178,008, indicating improved financial health[61] Strategic Initiatives - The company allocated approximately US$200 million for share repurchases in the third quarter[8] - The management governance framework has been upgraded to ensure steady and sustainable growth[5] - The company is focusing on expanding its market presence and enhancing its service offerings to drive future growth[78] - New product and technology developments are underway to improve service efficiency and customer satisfaction[78] - The company plans to hold an earnings conference call on November 21, 2024, to discuss financial results[38]

Core Insights - KE Holdings Inc. reported a strong financial performance in Q3 2024, with significant year-over-year growth in gross transaction value (GTV) and net revenues, indicating a recovery in the housing market and effective business strategies [2][8][30]. Business and Financial Highlights - Gross transaction value (GTV) reached RMB736.8 billion (US$105.0 billion), up 12.5% year-over-year, driven by increases in both existing and new home transactions [2][8]. - Net revenues increased by 26.8% to RMB22.6 billion (US$3.2 billion), primarily due to growth in new home transaction services and expansion in home renovation and furnishing [8][30]. - Net income was RMB1,168 million (US$167 million), slightly down from RMB1,170 million in Q3 2023, while adjusted net income was RMB1,782 million (US$254 million) [30][31]. - The number of stores increased by 12.1% to 48,230, and the number of active agents rose by 11.0% to 476,420, reflecting the company's expanding operational footprint [2][8]. Segment Performance - Existing home transaction services generated net revenues of RMB6.2 billion (US$0.9 billion), relatively stable compared to the previous year, while GTV increased by 8.8% [9][10]. - New home transaction services saw net revenues rise by 30.9% to RMB7.7 billion (US$1.1 billion), supported by an 18.4% increase in GTV [11][12]. - Home renovation and furnishing revenues increased by 32.6% to RMB4.2 billion (US$0.6 billion), driven by synergies with home transaction services [12]. - Home rental services experienced a significant growth of 118.4%, with revenues reaching RMB3.9 billion (US$0.6 billion) [13]. Cost and Profitability - Total cost of revenues increased by 35.0% to RMB17.4 billion (US$2.5 billion), impacting gross profit, which rose by only 5.2% to RMB5.1 billion (US$0.7 billion) [14][21]. - Gross margin decreased to 22.7% from 27.4% year-over-year, attributed to a lower contribution from higher-margin existing home transaction services [21][25]. - Operating income was RMB727 million (US$104 million), down from RMB911 million in the same period last year, with an operating margin of 3.2% [25][26]. Cash and Shareholder Returns - The company maintained robust cash reserves, with a total of RMB59.5 billion (US$8.5 billion) in cash, cash equivalents, and short-term investments as of September 30, 2024 [34]. - Approximately US$200 million was allocated for share repurchases in Q3 2024, reflecting the company's commitment to returning value to shareholders [6][35].

Investment Rating - The investment rating for the company is "Buy" with a maintained rating for the next six months [4]. Core Views - The company is expected to benefit from favorable tax policies related to housing transactions, which are likely to stimulate both rigid and improved housing demand. The cancellation of the value-added tax on non-standard residential properties is anticipated to significantly reduce transaction costs in high-value cities, thus enhancing market activity [1]. - The company has shown resilience in its performance, with a total transaction value (GTV) of 1.47 trillion yuan in the first half of 2024, despite a year-on-year decrease of 16.2%. However, there is an expectation of recovery in the fourth quarter due to a package of policies that have revitalized the market [2]. - The company's home decoration business is experiencing rapid growth, with a total transaction value reaching 7.6 billion yuan in the first half of 2024, reflecting a year-on-year increase of 24% [3]. Summary by Sections Financial Performance - In the first half of 2024, the company reported a net income of 39.7 billion yuan, which is nearly flat compared to the same period in 2023. However, net profit decreased by 42.38% to 2.3 billion yuan [2]. - The company’s total revenue is projected to grow from 77.8 billion yuan in 2023 to 88.7 billion yuan in 2024, representing a growth rate of 14% [7]. - The non-GAAP adjusted net profit is forecasted to be 85.86 billion yuan for 2024, up from a previous estimate of 73.14 billion yuan [3]. Market Dynamics - The recent tax policy changes are expected to catalyze demand in the first-tier cities, particularly with the potential removal of the standard for ordinary and non-ordinary residential properties [1]. - The company’s stock performance is anticipated to outperform the market, with a target price reflecting a relative return of over 20% [12]. Business Strategy - The company is undergoing an internal restructuring to enhance operational efficiency under its "One Body, Three Wings" strategy, which is expected to support long-term growth in its home decoration segment [3]. - The management changes, including the appointment of a new CEO for the home decoration line, are aimed at optimizing business operations and improving collaboration across different segments [3].

Core Viewpoint - KE Holdings Inc. (BEKE) has experienced a downtrend, losing 12.1% over the past week, but a hammer chart pattern suggests a potential trend reversal due to increased buying interest and optimism among analysts regarding future earnings [1]. Group 1: Technical Analysis - The formation of a hammer chart pattern indicates a possible bottoming out, suggesting that selling pressure may be exhausting [1]. - A hammer pattern occurs when a stock opens lower, makes a new low, but then closes near or above its opening price, signaling a potential loss of control by bears [2]. - Hammer candles can appear on various timeframes and should be used alongside other bullish indicators for confirmation [2]. Group 2: Fundamental Analysis - There has been a positive trend in earnings estimate revisions for BEKE, with a 0.7% increase in the consensus EPS estimate over the last 30 days, indicating analysts expect better earnings [3]. - BEKE holds a Zacks Rank of 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks, which typically outperform the market [3]. - The Zacks Rank serves as a timing indicator, suggesting that BEKE's prospects are improving, reinforcing the potential for a turnaround [3].

Lingering optimism about the future of the country's enterprises continued to drive demand for them higher; rising tensions elsewhere in the world also played a role.To the detriment of many publicly traded companies headquartered in the U.S., the hot action on the equity markets Wednesday continued to be in Chinese stocks. That's what a massive government stimulus program will do; the one announced by government officials in the giant Asian country in late September is providing some powerful rally fuel. M ...

KE Holdings Inc. Sponsored ADR (BEKE) shares rallied 7.5% in the last trading session to close at $15.45. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 4.8% loss over the past four weeks.The increased investor optimism in the stock can be attributed to the favorable operating environment.This company is expected to post quarterly earnings of $0.21 per share in its upcoming report, which represents a year-ov ...

Shares of KE Holdings Inc. Sponsored ADR (BEKE) have gained 2.3% over the past four weeks to close the last trading session at $15.22, but there could still be a solid upside left in the stock if short-term price targets of Wall Street analysts are any indication. Going by the price targets, the mean estimate of $21.93 indicates a potential upside of 44.1%.The mean estimate comprises nine short-term price targets with a standard deviation of $3.18. While the lowest estimate of $19 indicates a 24.8% increase ...