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, which has over 23 years of operational experience since its inception in 2001 [3] - KE Holdings aims to build infrastructure and standards to enhance the efficiency of housing transactions and services, including home sales, rentals, renovations, and furnishings [3] Financial Reporting - The company will report its unaudited financial results for the first quarter of 2025 before the U.S. market opens on May 15, 2025 [1] - An earnings conference call is scheduled for 8:00 A.M. Eastern Time on the same day, with registration required for participants [2] Investor Relations - A replay of the conference call will be available until May 22, 2025, with specific dial-in numbers provided for different regions [2] - The company maintains an investor relations website where live and archived webcasts of the conference call can be accessed [2]

Revenue Growth - Net revenues increased by 20.2% to RMB93.5 billion in 2024 from RMB77.8 billion in 2023, driven by new home transaction services and expansion in home renovation and rental businesses [45]. - Total GTV rose by 6.6% to RMB3,349.4 billion in 2024 from RMB3,142.9 billion in 2023, reflecting the company's proactive growth strategy [45]. - Net revenues from home renovation and furnishing surged by 36.1% to RMB14.8 billion in 2024 from RMB10.9 billion in 2023, attributed to increased orders and enhanced delivery capabilities [46]. - Net revenues from home rental services skyrocketed by 135.0% to RMB14.3 billion in 2024 from RMB6.1 billion in 2023, mainly due to the growth in rental units under the Carefree Rent model [48]. - Total net revenues for the year ended December 31, 2024, reached RMB 93,457,498, an increase from RMB 77,776,932 in 2023, representing a growth of approximately 20% [147]. - Existing home transaction services generated RMB 28,201,003 in revenue, while new home transaction services contributed RMB 33,653,403, reflecting increases of 0.9% and 10.1% respectively compared to the previous year [147]. - Home renovation and furnishing segment reported net revenues of RMB 14,768,947 in 2024, significantly up from RMB 10,850,497 in 2023, with a contribution of RMB 4,539,251 [172]. - Home rental services achieved net revenues of RMB 14,334,479 in 2024, compared to RMB 6,099,747 in 2023, resulting in a contribution of RMB 714,973 [172]. Financial Performance - Gross profit increased by 5.6% to RMB22.9 billion in 2024 from RMB21.7 billion in 2023, with a gross margin of 24.6% compared to 27.9% in 2023 [58]. - Income from operations decreased to RMB3,765 million in 2024 from RMB4,797 million in 2023, resulting in an operating margin of 4.0% compared to 6.2% in 2023 [60]. - Net income fell to RMB4,078 million in 2024 from RMB5,890 million in 2023 [62]. - Net income attributable to KE Holdings Inc. for 2024 was RMB 4,064,900, a decrease of approximately 30.9% from RMB 5,883,224 in 2023 [149]. - The company reported a total comprehensive income of RMB 4,442,990 for 2024, down from RMB 6,546,627 in 2023, reflecting a decline of about 32.1% [150]. - Adjusted net income for 2024 was RMB 7,211,073, down from RMB 9,798,488 in 2023, reflecting a decrease of about 26.4% [203]. - Net income for 2024 was RMB 4,078,180, down from RMB 5,889,604 in 2023, with an effective tax rate of 40.6% [173][177]. Cash Flow and Investments - Net cash provided by operating activities decreased from RMB11,414,244 thousand in 2023 to RMB9,447,137 thousand in 2024 [78]. - Net cash used in investing activities increased from RMB3,977,440 thousand in 2023 to RMB9,378,025 thousand in 2024, reflecting higher investment in short-term and long-term assets [90]. - Net cash used in financing activities decreased from RMB7,218 million in 2023 to RMB5,795 million in 2024, with a notable repurchase of ordinary shares [93]. - Capital expenditures rose from RMB874 million in 2023 to RMB1,037 million in 2024, primarily for property, plant, and equipment [95]. - Cash, cash equivalents, and restricted cash decreased from RMB25,857,461 thousand at the beginning of 2024 to RMB20,301,414 thousand at the end of the year [78]. - The company reported a significant increase in customer deposits payable to RMB 6,078,623 as of December 31, 2024, compared to RMB 3,900,564 in 2023, reflecting a growth of 55.9% [153]. Assets and Liabilities - Total assets grew to RMB 133,149,283 as of December 31, 2024, compared to RMB 120,331,931 in 2023, representing an increase of approximately 10.7% [151]. - Total liabilities increased to RMB 61,701,288 as of December 31, 2024, up from RMB 48,130,826 as of December 31, 2023, representing a growth of 28.1% [153]. - Total shareholders' equity decreased slightly to RMB 71,447,995 as of December 31, 2024, compared to RMB 72,201,105 as of December 31, 2023, a decline of 1.0% [154]. - The accumulated deficit as of December 31, 2024, was RMB (32,472,121), reflecting a significant increase from RMB (37,127,085) as of December 31, 2023 [191]. Shareholder Returns and Dividends - A final cash dividend of US$0.12 per ordinary share, or US$0.36 per ADS, was approved, amounting to approximately US$0.4 billion [134]. - The company repurchased a total of 144,663,195 Class A ordinary shares represented by ADSs during the reporting period, at an aggregate consideration of approximately US$715.5 million [117]. - The board of directors approved an increase in the share repurchase authorization from US$2 billion to US$3 billion, extending the program until August 31, 2025 [116]. Employee and Governance - The company had a total of 135,072 employees as of December 31, 2024, with the largest group being agents and supporting staff at 108,609 [113]. - The company plans to continue granting share-based incentive awards to employees to encourage contributions to growth and development [114]. - The company has complied with all applicable principles and code provisions of the Corporate Governance Code during the reporting period [124]. Research and Development - Research and development expenses increased to RMB 2,283,424 in 2024, compared to RMB 1,936,780 in 2023, marking a rise of approximately 17.8% [149].

VIE Structure and Regulatory Risks - As of December 31, 2024, the VIEs collectively held 34.2% of the company's cash, cash equivalents, and restricted cash, and 10.9% of total assets[31]. - Revenues contributed by the VIEs accounted for 0.8% of total net revenues for the fiscal years 2022, 2023, and 2024[31]. - The VIEs and their subsidiaries owned approximately 2%, 5%, and 13% of the company's issued patents, registered trademarks, and copyrights to software programs, respectively, as of December 31, 2024[31]. - The company operates primarily through its PRC subsidiaries and VIEs, relying on contractual arrangements to direct activities and receive economic benefits[30]. - The company faces unique risks associated with its VIE structure, including potential regulatory changes that could affect the enforceability of contractual arrangements[35]. - The company has not received any formal inquiry or sanction from PRC authorities regarding its historical issuance of securities to foreign investors[41]. - The company is subject to evolving PRC laws and regulations, including those related to cybersecurity and data privacy, which could materially affect its operations[39]. - The company must obtain various licenses and permits for its operations, including those for real estate brokerage and value-added telecommunication services[40]. - The company’s holding structure may limit its ability to offer securities to investors, potentially leading to significant declines in the value of its ADSs[39]. - The PCAOB has not issued any new determination that it is unable to inspect or investigate completely registered public accounting firms headquartered in any jurisdiction as of the date of the annual report[42]. - If identified as a Commission-Identified Issuer for two consecutive years, the company would be subject to trading prohibitions under the HFCAA[43]. - The company does not expect to be identified as a Commission-Identified Issuer after filing the annual report on Form 20-F for the fiscal year ended December 31, 2022 or 2023[42]. - The VIEs may transfer cash to the WFOEs by paying service fees based on 100% of the balance of the gross consolidated profits after certain deductions[49]. - The company has not made any dividends or distributions to the Parent by its subsidiaries for the years ended December 31, 2022, 2023, and 2024[50]. - The company is legally required to monitor and verify property listings to ensure compliance with PRC laws, which is critical for maintaining trust with customers[91]. - The company may face regulatory investigations or penalties if it fails to maintain the quality and authenticity of property listings[91]. - The PRC anti-monopoly regulators have strengthened enforcement, which could impact the company's operations and compliance costs[97]. - The maximum fines for illegal concentration of business operators can reach up to 10% of the previous year's sales revenue[101]. - The company is subject to risks associated with potential changes in PRC regulations affecting its VIE structure[207]. - The contractual arrangements with VIEs are governed by PRC law, which may lead to uncertainties in enforcement and potential adverse effects on the company's ability to direct VIE activities and receive economic benefits[216]. - Conflicts of interest may arise with certain shareholders of the VIEs, potentially impacting the company's ability to enforce contractual arrangements and receive timely payments[217]. - The company may invoke equity pledge agreements to enforce shareholder obligations, but reliance on legal proceedings could disrupt business operations and introduce uncertainty[218]. - Personal disputes involving VIE shareholders could adversely affect equity interests and the enforceability of contractual arrangements, leading to potential loss of control over VIEs[219]. - PRC tax authorities may scrutinize contractual arrangements, and any findings of non-compliance could result in increased tax liabilities and penalties for the VIEs, adversely affecting the company's financial position[220]. - Bankruptcy or liquidation of VIEs could result in loss of access to material assets necessary for business operations, significantly impacting the company's financial condition[221]. - The evolving interpretation of the PRC Foreign Investment Law may affect the viability of the company's corporate structure and operations, particularly regarding foreign investment restrictions[222]. - Changes in China's economic, political, or social conditions could materially impact the company's business operations and financial results, as revenues are primarily derived from China[224]. - The PRC government's oversight and discretion over business operations may lead to material adverse changes in operations and the value of the company's securities[230]. - Recent regulatory changes regarding overseas listings and foreign investment may hinder the company's ability to conduct future financing activities, potentially affecting the value of its securities[231]. Financial Performance and Cash Flow - As of December 31, 2024, total assets amounted to RMB 133,149,283 thousand, an increase from RMB 120,331,931 thousand as of December 31, 2023[57][58]. - Cash and cash equivalents decreased from RMB 19,634,716 thousand in 2023 to RMB 11,442,965 thousand in 2024, representing a decline of approximately 41.6%[57][58]. - Total current liabilities increased to RMB 52,744,258 thousand in 2024 from RMB 39,523,983 thousand in 2023, reflecting a rise of about 33.4%[57][58]. - Total shareholders' equity remained stable at RMB 71,447,995 thousand in 2024 compared to RMB 72,201,105 thousand in 2023[57][58]. - Short-term investments rose to RMB 41,317,700 thousand in 2024 from RMB 34,257,958 thousand in 2023, indicating an increase of approximately 20.5%[57][58]. - Total non-current assets decreased to RMB 56,545,938 thousand in 2024 from RMB 50,578,308 thousand in 2023, a decline of about 11.8%[57][58]. - The amount due from Group companies increased significantly to RMB 87,092,970 thousand in 2024 from RMB 72,894,425 thousand in 2023, marking an increase of approximately 19.4%[57][58]. - Total liabilities increased to RMB 61,701,288 thousand in 2024 from RMB 48,130,826 thousand in 2023, reflecting a rise of about 28.2%[57][58]. - Restricted cash increased from RMB 6,222,745 thousand in 2023 to RMB 8,858,449 thousand in 2024, representing an increase of approximately 42.5%[57][58]. - The total current assets decreased to RMB 76,603,345 thousand in 2024 from RMB 69,753,623 thousand in 2023, a decline of about 9.5%[57][58]. - Total net revenues for the year ended December 31, 2024, reached RMB 93,457,498 thousand, a significant increase from RMB 77,776,932 thousand in 2023, representing a growth of approximately 20%[60]. - Gross profit for 2024 was RMB 22,944,055 thousand, up from RMB 21,718,014 thousand in 2023, indicating a year-over-year increase of about 5.6%[60]. - Net income attributable to KE Holdings Inc. for 2024 was RMB 4,064,900 thousand, compared to RMB 5,883,224 thousand in 2023, reflecting a decrease of approximately 30.8%[60]. - Operating cash flow from third parties for 2024 amounted to RMB 9,447,137 thousand, a notable increase from RMB 2,971,131 thousand in 2023[64]. - Cash flows from investing activities in 2024 resulted in a net outflow of RMB 9,378,025 thousand, compared to a net inflow in 2023, indicating a shift in investment strategy[64]. - The company reported a total cost of revenues of RMB 70,513,443 thousand for 2024, which is an increase from RMB 56,058,918 thousand in 2023, marking a rise of approximately 25.8%[60]. - The share of income from subsidiaries for 2024 was RMB 3,734,104 thousand, compared to RMB 5,883,224 thousand in 2023, indicating a decline of about 36.5%[60]. - The company experienced a significant increase in operating expenses, which totaled RMB 19,179,088 thousand in 2024, compared to RMB 16,920,944 thousand in 2023, reflecting a rise of approximately 7.4%[60]. - Operating cash flow from third parties for the year ended December 31, 2023, was RMB 11,414,244 thousand, an increase from RMB 8,518,843 thousand in 2022, representing a growth of approximately 34.5%[65]. - Net cash provided by operating activities for 2023 was RMB 11,414,244 thousand, compared to RMB 8,518,843 thousand in 2022, indicating a significant increase of approximately 34.5%[66]. - Cash flows from investing activities resulted in a net outflow of RMB 3,977,440 thousand in 2023, compared to an outflow of RMB 8,472,355 thousand in 2022, showing an improvement of approximately 53%[66]. - The company reported a net cash used in financing activities of RMB 7,218,210 thousand for 2023, compared to RMB 1,213,082 thousand in 2022, reflecting a significant increase in financing outflows[66]. - The total cash, cash equivalents, and restricted cash at the end of 2023 was RMB 25,857,461 thousand, up from RMB 25,594,259 thousand at the end of 2022, representing a slight increase of approximately 1%[66]. - Investment in subsidiaries and net assets of VIEs increased to RMB 70,866,589 thousand by December 31, 2023, from RMB 59,780,970 thousand at the end of 2022, marking an increase of approximately 18.5%[69]. - The share of income from subsidiaries for 2023 was RMB 3,734,104 thousand, compared to RMB 5,618,262 thousand in 2022, indicating a decrease of approximately 33.4%[69]. - The company incurred share-based compensation costs of RMB 2,726,075 thousand for subsidiaries and VIEs in 2023, compared to RMB 3,215,549 thousand in 2022, reflecting a decrease of approximately 15.2%[69]. - The cash paid for business combinations in 2023 was RMB 9,893 thousand, a decrease from RMB 3,147,760 thousand in 2022, indicating a significant reduction in acquisition-related expenditures[66]. - The effect of exchange rate changes on cash and cash equivalents resulted in a net increase of RMB 44,608 thousand in 2023, compared to an increase of RMB 28,644 thousand in 2022, showing a positive trend in currency impact[66]. - The company incurred a net loss of RMB1,397 million in 2022 but generated net incomes of RMB5,890 million in 2023 and RMB4,078 million (US$559 million) in 2024[119]. - The company expects to continue incurring costs and operating expenses to support anticipated future growth, which may exceed expectations[119]. - The company’s business is sensitive to economic conditions, with potential adverse effects from a severe or prolonged downturn in the global or Chinese economy[120]. - Labor costs in the PRC are expected to continue increasing, which may adversely affect the company's profitability if these costs cannot be passed on to customers[191]. - Certain PRC subsidiaries have failed to make full social insurance and housing fund contributions, which could lead to fines and adversely affect the company's financial condition[192]. - The company has historically hired dispatched workers, and exceeding the 10% limit of dispatched workers could result in fines and operational challenges[193]. Market Conditions and Competitive Landscape - The housing-related industry in China has experienced a slowdown, affecting transaction volumes and prices, which may adversely impact the company's financial performance[78]. - The PRC government has implemented various measures to stabilize the housing market, including easing restrictions on residential property purchases and reducing mortgage rates[82]. - In 2023, the company reduced commission rates for existing home transactions in Beijing, splitting fees equally between sellers and buyers[83]. - The company's business is sensitive to economic conditions, and a prolonged downturn in the global or Chinese economy could materially affect its financial condition[75]. - The company faces increasing competition in the housing transactions and services industry, which could lead to declining market share and commission rates[157]. - The company derives a substantial portion of its revenues from major cities, particularly Beijing and Shanghai, exposing it to market risks[161]. - The company may face competition from related parties, such as Ziroom, in the home rental services sector[158]. - Expansion into new geographical areas poses risks due to varying housing market conditions and potential competition from established local players[176]. Strategic Initiatives and Business Development - The company launched its home renovation and furnishing services, Beiwoo, in April 2020, and completed the acquisition of Shengdu in April 2022[93]. - The corporate strategy was upgraded to "One Body, Three Wings" in 2023, adding the Beihaojia business to facilitate supply-side upgrades for new homes[93]. - The company has expanded into new service categories, including home renovation and furnishing, and launched its Beihaojia business, which focuses on upgrading new homes[172]. - The Beihaojia business primarily provides C2M product solutions for real estate developers, leveraging extensive data accumulation, but market acceptance remains uncertain[173]. - The company has upgraded its corporate strategy to "One Body, Three Wings," adding Beihaojia as a third wing, although this business model is still in its early stages[172]. - The company may incur additional costs due to project delays caused by factors such as labor shortages and material delivery delays[128]. - The company is subject to risks associated with maintaining relationships with real estate developers, which are critical for new property listings[125]. - The company’s home renovation and furnishing services are exposed to risks related to project cost overruns and quality issues[127]. - The company may be required to pay damages for breach of contract if it fails to renew agreements with landlords on satisfactory terms[134]. - The company relies on a large number of business partners, including real estate developers and financial institutions, to provide quality services, and any failure on their part could materially impact the company's reputation and financial condition[146]. - The company faces significant risks associated with strategic alliances, investments, or acquisitions, which may not yield expected results and could adversely affect financial performance[147]. Compliance and Internal Controls - The company has maintained a comprehensive data protection program and implemented strict internal policies to ensure compliance with data protection regulations[116]. - As of the date of the annual report, there had been no material incidents of data leakage or regulatory sanctions against the company[116]. - The PRC Data Security Law, effective September 2021, requires security reviews for data activities that may affect national security[111]. - The company is subject to various anti-corruption laws, and violations could adversely affect its reputation and financial condition[169]. - The company does not maintain business interruption insurance or key-man insurance, which could expose it to significant costs and disruptions[186]. - The company has concluded that its internal control over financial reporting was effective as of December 31, 2024, but failure to maintain this could lead to loss of investor confidence[200]. - The company may need additional capital for growth and operations, and may face challenges in obtaining this capital on acceptable terms[201]. - The company is subject to new internet advertising regulations effective May 1, 2023, which may impose additional compliance obligations and operational costs[196]. - Violations of advertising laws could result in penalties, including fines up to RMB2 million, which may adversely affect the company's financial condition[197]. - The company may face legal and regulatory proceedings that could materially affect its business and financial condition[165]. Intellectual Property and Data Management - The company’s intellectual property rights are essential for its competitive position, and failure to protect these rights could lead to significant business risks[149]. - The validity and enforceability of intellectual property rights in internet-related industries in China are evolving, increasing the risk of infringement claims against the company[155]. - The company generates and processes a large amount of data, facing risks related to cybersecurity and data privacy compliance[105]. - Regulatory authorities globally are considering new data protection laws, which could impose additional compliance costs on the company[117].

KE (BEKE) Q4 2024 Earnings Call March 18, 2025 08:00 AM ET Company Participants Siting Li - Investor RelationsYongdong Peng - CEO, Co-Founder, Chairman & Executive DirectorTao Xu - CFO & Executive DirectorJizhou Dong - Head of China Consumer & Property Conference Call Participants Timothy Zhao - Equity Research AnalystGriffin Chan - AnalystEddy Wang - AnalystXiaodan Zhang - Equity Research Analyst Operator Hello, ladies and gentlemen. Thank you for standing by for KE Holdings Inc. Fourth Quarter and Fiscal ...

Summary of Key Points from Conference Call Industry Overview - **US GDP Growth Forecast**: The 2025 US GDP growth forecast has been downgraded from 2.4% to 1.7% on a Q4/Q4 basis, marking the first below-consensus forecast in 2.5 years. This downgrade is attributed to more adverse trade policy assumptions rather than recent economic data, which remains relatively strong [1][1][1]. Company-Specific Insights MediaTek - **Automotive Sector Growth**: MediaTek's earnings estimates have been raised due to expected growth in the automotive Total Addressable Market (TAM). By 2026E/2027E, the automotive business is projected to contribute 3.6%/6.8% to total revenue, up from 1.8% in 2025E. This growth is driven by market share gains in automotive cockpit SoC solutions and upgrades to mid to high-end segments with higher Average Selling Prices (ASPs) [2][4][4]. BEKE (KE Holdings) - **Southbound Connect Inclusion**: KE Holdings' H-shares have been included in the Southbound Connect, which is expected to support share price growth. Southbound turnover share in the Hong Kong exchange has increased to over 20% year-to-date, with southbound holdings averaging 8% of total share count. The company is also seeing strong secondary home transaction momentum post-Chinese New Year [4][4][4]. Coupang - **Earnings Growth and Operating Leverage**: Coupang is expected to achieve over 20% top-line growth in 2025E, driven by Product Commerce and Developing Offerings. The company anticipates significant operating leverage from 2027, with a potential to reach over 10% adjusted EBITDA margin by that year [4][4][4]. GDS - **P-REIT Issuance**: GDS announced its first monetization of data center assets in China through a sale to a private REIT, receiving Rmb1.2 billion in net cash proceeds. This transaction is seen as a step towards recycling capital for further investments in AI infrastructure [5][5][5]. China Spirits - **Sales Management Measures**: Leading spirits companies, including Wuliangye, are implementing sales management measures that are expected to lead to positive sales growth in 2025. Channel inventory has decreased significantly, and wholesale prices have increased during the Lunar New Year [8][8][8]. Macro Insights - **High-tech Manufacturing in China**: High-tech manufacturing has been a significant growth driver in China, contributing an average of 1.1 percentage points to annual real GDP growth over the last decade. The sector is expected to continue outperforming the broader manufacturing sector, contributing an average of 1.0 percentage point to GDP growth from 2025 to 2029 [9][9][9]. Additional Notes - **US Internet Sector**: The Q4'24 earnings review highlights key themes such as investment in AI and consumer health, with several large-cap stocks rated as Buys [10][10][10]. - **Germany's Fiscal Shift**: Political changes in Germany are expected to unlock significant public spending, potentially benefiting various sectors beyond defense [12][12][12]. This summary encapsulates the critical insights from the conference call, focusing on industry trends, company-specific developments, and macroeconomic factors that could influence investment decisions.

Group 1 - The core viewpoint is a bullish outlook on KE Holdings Inc. (NYSE: BEKE) as signs of stabilization emerge in China's property market [1] - The analysis acknowledges that while the housing market in China is showing some stabilization, it is expected to remain challenging due to primary market conditions [1] Group 2 - Astrada Advisors specializes in delivering actionable recommendations that enhance portfolio performance and uncover alpha opportunities, backed by a strong track record in investment research [1] - The firm has expertise across technology, media, internet, and consumer sectors in North America and Asia, allowing it to identify high-potential investments and navigate complex industries [1] - Astrada Advisors integrates rigorous fundamental analysis with data-driven insights to provide a nuanced understanding of key trends, growth drivers, and competitive landscapes [1]

Company Overview - KE Holdings Inc. (BEKE) shares increased by 5.4% to close at $20.52, with notable trading volume compared to typical sessions, and a total gain of 17.5% over the past four weeks [1][2] Growth Drivers - The company is benefiting from the recovery of China's real estate market, increased transaction volumes, strategic expansion of its agent network, technology-driven efficiencies, supportive government policies, and improved corporate governance [2] Earnings Expectations - BEKE is projected to report quarterly earnings of $0.31 per share, reflecting a year-over-year increase of 55%. Revenue is expected to reach $4.01 billion, which is a 41% increase from the same quarter last year [2] Stock Performance Insights - Trends in earnings estimate revisions are strongly correlated with near-term stock price movements, indicating that the current earnings growth expectations may signal potential strength in the stock [3] Consensus and Market Position - The consensus EPS estimate for BEKE has remained unchanged over the last 30 days, suggesting that the stock's price may not continue to rise without changes in earnings estimates [4] - KE Holdings holds a Zacks Rank of 3 (Hold), indicating a neutral outlook in the market [4]

Investment Rating and Strategy - The analyst gives a hold rating for KE Holdings (NYSE: BEKE) due to the need for more evidence that the current demand improvement trend is sustainable [1] - The analyst seeks growth acceleration supported by improving macroeconomic demand before reconsidering the rating [1] Analyst Background and Approach - The analyst is an individual investor managing personal capital accumulated over the years [1] - The analyst employs a diversified investment approach, including fundamental investing, technical investing, and momentum investing [1] - The analyst uses Seeking Alpha as a platform to track investment ideas and connect with like-minded investors [1] Disclosure and Independence - The analyst has no stock, option, or derivative positions in the mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with the mentioned companies [2]

Investment Rating - The report maintains a "Buy" rating for the company, citing its strong market position and expected growth in adjusted net profit for 2024/2025/2026 [3][6] Core Views - The company benefits from favorable real estate policies, which are expected to drive market recovery and enhance its market share [6] - The company's new home GTV monetization rate reached a historical high in 2024Q3, with a GTV of 227.6 billion yuan, up 18.5% YoY, outperforming the industry [5] - The company's rental service business revenue grew 118% YoY in 2024Q3, driven by the rapid expansion of its "Worry-Free Rent" managed properties [6] - The company has consistently delivered on its shareholder return commitments, with $5.8 billion used for share repurchases in the first three quarters of 2024 [6] Financial Performance - The company's revenue for 2024Q3 was 22.6 billion yuan, up 26.8% YoY, with a gross margin of 22.7%, down 5.2 percentage points QoQ due to increased fixed costs [7] - Adjusted net profit for 2024Q3 was 1.78 billion yuan, down 17.5% YoY, but exceeded Bloomberg consensus expectations [7] - The company's existing home GTV in 2024Q3 was 477.8 billion yuan, up 8.8% YoY, with expectations of significant YoY and QoQ growth in Q4 due to policy tailwinds [7] Business Segments - The home decoration and furnishing segment saw a GTV of 4.1 billion yuan in 2024Q3, up 24.6% YoY, with a contribution margin increase of 2.1 percentage points to 31% [9] - The rental service business contributed a profit margin of 4.4% in 2024Q3, down 1.4 percentage points QoQ due to seasonal cost increases [6] Market Data - The company's closing price was $19.98 per ADS, with a total market capitalization of $24.1 billion and total assets of 1,227.96 billion yuan as of November 21, 2024 [1] - The company's net assets were 707.75 billion yuan, with a net asset per share of 19.5 yuan [1]

Financial Performance - Gross transaction value (GTV) reached RMB736.8 billion (US$105.0 billion), a 12.5% year-over-year increase[4] - 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[5][15] - Net income was RMB1,168 million (US$167 million), with adjusted net income at RMB1,782 million (US$254 million)[6] - 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[68] - Net income attributable to KE Holdings Inc. for the three months ended September 30, 2024, was RMB 1,171,073, compared to RMB 1,158,042 for the same period in 2023, reflecting a 1.1% increase[70] - The company reported a total comprehensive income of RMB 1,049,224 for the three months ended September 30, 2024, up from RMB 927,825 in the same quarter of 2023[70] - The net income for the nine months ended September 30, 2024, was RMB 3,500,932, representing a decrease of 32.9% from RMB 5,219,541 in the same period of 2023[75] Revenue Breakdown - Net revenues from home renovation and furnishing grew by 32.6% to RMB4.2 billion (US$0.6 billion) year-over-year[21] - Net revenues from home rental services surged by 118.4% to RMB3.9 billion (US$0.6 billion) compared to RMB1.8 billion in the same period of 2023[22] - Contribution from new home transaction services net revenues increased to RMB 7,726,316 for the three months ended September 30, 2024, compared to RMB 5,901,966 in the same period of 2023, representing a growth of approximately 30.9%[84] - Home renovation and furnishing net revenues for the nine months ended September 30, 2024, reached RMB 10,662,113, up from RMB 7,209,569 in the same period of 2023, indicating a growth of about 48.5%[84] - Home rental services net revenues for the three months ended September 30, 2024, were RMB 3,941,234, significantly higher than RMB 1,804,374 for the same period in 2023, reflecting an increase of approximately 118.5%[84] - Total contribution from existing home transaction services for the three months ended September 30, 2024, was RMB 2,549,227, down from RMB 3,069,848 in the same period of 2023, indicating a decline of approximately 17%[84] Expenses and Costs - Total cost of revenues increased by 35.0% to RMB17.4 billion (US$2.5 billion) in Q3 2024[23] - 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[30] - Total operating expenses rose by 11.0% to RMB4.4 billion (US$0.6 billion) in Q3 2024, with sales and marketing expenses increasing by 18.6% to RMB1.9 billion (US$0.3 billion)[32][33] - 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[34] - Operating expenses for the three months ended September 30, 2024, totaled RMB 4,407,769, an increase from RMB 3,969,722 in the same period last year[68] Cash and Assets - 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)[45] - Cash and cash equivalents were reported at RMB 9,576,948 as of September 30, 2024, a decrease from RMB 19,634,716 as of December 31, 2023[64] - Short-term investments increased significantly to RMB 43,654,035 as of September 30, 2024, up from RMB 34,257,958 as of December 31, 2023, representing a growth of approximately 27%[64] - The company reported a net decrease in cash and cash equivalents of RMB 1,706,229 for the three months ended September 30, 2024[82] Shareholder Information - The company allocated approximately US$200 million to share repurchases in Q3 2024[14] - The company has repurchased approximately 102.2 million ADSs (representing approximately 306.5 million Class A ordinary shares) for a total consideration of approximately US$1,493.4 million under its share repurchase program[46] - Basic and diluted net income per ADS attributable to KE Holdings Inc.'s ordinary shareholders 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[41] - The weighted average number of ADS used in computing net income per ADS, diluted, for the three months ended September 30, 2024, was 1,167,050,588[72] Liabilities and Equity - Current liabilities increased to RMB 43,147,206 as of September 30, 2024, compared to RMB 39,523,983 as of December 31, 2023, reflecting a growth of approximately 6.5%[65] - Total shareholders' equity decreased to RMB 70,893,663 as of September 30, 2024, down from RMB 72,201,105 as of December 31, 2023, indicating a decline of about 1.8%[66] - Total non-current liabilities increased to RMB 8,754,843 as of September 30, 2024, from RMB 8,606,843 as of December 31, 2023, marking an increase of approximately 1.7%[65] - The company’s accumulated deficit improved to RMB (2,178,008) as of September 30, 2024, from RMB (5,672,916) as of December 31, 2023, showing a significant reduction in losses[66]