Core Viewpoint - The report from GF Securities assigns a target price of HKD 58.37 per share for Beike-W (02423) based on a 2026 adjusted PE of 18x, reflecting a total reasonable value of RMB 182.4 billion, maintaining a "Buy" rating [1] Group 1: Market Performance - The second-hand market shows stable volume and price, positively impacting Beike's performance, with a significant rebound in transactions observed in January 2026, where the number of second-hand purchase transactions in 79 cities increased by 33% year-on-year [2] - Excluding market share growth factors, the current transaction volume corresponds to an annualized second-hand transaction volume of 860 million square meters, a 24% increase compared to 2025, indicating a higher probability of a "small spring" in 2026 [2] Group 2: Financial Performance - The cost of existing inventory is rising, putting pressure on 2025 performance, with an estimated GTV for existing homes at RMB 2.1 trillion, a year-on-year decrease of 6%, and a projected Q4 2025 GTV of RMB 432.3 billion, down 42% year-on-year [3] - The adjusted net profit for 2025 is estimated at RMB 5.5 billion, a decline of 24% year-on-year, with a projected Q4 2025 adjusted net profit of RMB 1 billion, down 26% year-on-year [3] Group 3: Market Position and Strategy - Beike's existing home business maintains a long-term market share of over 80% in first and second-tier cities, with significant contributions from key cities like Beijing, Shanghai, and Hangzhou, which accounted for 37% in 2025, showcasing resilience in core markets [4] - Regardless of market conditions, Beike's market share continues to grow, reaching 32% in 2025, an increase of 1 percentage point, with potential for further growth driven by higher transaction volumes in high-market-share cities and expansion in lower-market-share cities [4] Group 4: Future Performance Outlook - The company has high confidence in its 2026 performance driven by cost reduction and efficiency improvements, with a sensitivity analysis conducted under three scenarios for 2026 performance [5] - In the optimistic scenario, a 15% increase in transaction volume and stable prices would lead to an estimated adjusted net profit of RMB 8.7 billion, a 59% year-on-year increase, while the neutral scenario predicts a 33% increase to RMB 7.3 billion, and the pessimistic scenario forecasts a 10% increase to RMB 6 billion [5]