Core Viewpoint - Guosheng Securities initiates a "Buy" rating for Beike-W (02423), highlighting its position as a leading residential service platform in China, supported by a unique ACN cooperation network and a vast "property dictionary" database, which creates strong competitive barriers [1] Group 1: Performance Overview - Beike, as the first stock of China's residential service platform, has a diverse business model including existing home transactions, new home transactions, home decoration, rental services, and emerging businesses, with projected revenue contributions in 2024 being 30%, 36%, 16%, 15%, and 3% respectively [1] - The company has achieved a total transaction volume of 3.3 trillion yuan and revenue of 93.5 billion yuan in 2024, with a three-year CAGR of 24% and adjusted net profits of 2.9 billion, 9.8 billion, and 7.2 billion yuan from 2022 to 2024 [1] Group 2: Competitive Barriers - The construction of the ACN network and the property dictionary has redefined the industry ecosystem, creating competitive barriers that are difficult to replicate due to the significant time and capital investment required [2] - The property dictionary, which has recorded over 289 million real housing units by 2024, serves as a foundational data asset for the company, enhancing its platform capabilities [2] Group 3: Market Performance - In the existing home transaction service, the company's GTV for 2023, 2024, and the first half of 2025 is projected to be 2 trillion, 2.2 trillion, and 1.2 trillion yuan respectively, with year-on-year growth rates of 28.6%, 10.8%, and 13.7%, achieving a market share of 31.1% in 2024 [3] - For new home transactions, the GTV is expected to be 1 trillion, 0.97 trillion, and 0.49 trillion yuan for the same periods, with year-on-year growth rates of 6.6%, -3.3%, and 26%, outperforming national residential sales growth rates [3] Group 4: Home Decoration Business - The home decoration business is rapidly expanding, with GTV of 16.9 billion and 7.5 billion yuan for 2024 and the first half of 2025, reflecting year-on-year growth of 27% and 16.5% respectively, and profit margins increasing to 30.7% and 32.3% [4] - The synergy from the real estate transaction business significantly reduces customer acquisition costs, enhancing profitability and positioning the home decoration business as an industry leader [4] Group 5: Investment Recommendations - Projected revenues for 2025, 2026, and 2027 are 94.6 billion, 95.3 billion, and 100.5 billion yuan, with year-on-year growth rates of 1.2%, 0.8%, and 5.5%, while net profits are expected to be 3.71 billion, 5.28 billion, and 6.1 billion yuan, with growth rates of -8.7%, 42.4%, and 15.5% [5] - The target price calculated using the DCF model is 61.3 yuan per share, corresponding to a PE ratio of 40.7 times for 2026, indicating a price upside of 54.5% [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company is positioned as a leading integrated real estate transaction and service platform in China, with a strong focus on both new and second-hand housing transactions, rental services, and home decoration [12][13] - The company has a stable market position in the second-hand housing sector, with significant growth potential due to the recovery of transaction volumes and a stable commission rate [8][30] - The "One Body Three Wings" strategy aims to expand into home decoration and rental services, creating new growth avenues [8][72] - Revenue is projected to grow significantly, with expectations of Non-GAAP net profits increasing from 7.4 billion yuan in 2025 to 10.8 billion yuan in 2027 [85] Summary by Sections 1. Company Overview - The company has over 20 years of experience in the real estate brokerage industry and is recognized as the first stock in China's residential service sector [12] - The company has a stable shareholding structure, with the founding team holding nearly 50% of voting rights [16][18] 2. Real Estate Brokerage Business - The second-hand housing transaction volume has shown a recovery, with a 30% year-on-year increase in 2023, reaching approximately 7.1 trillion yuan [30] - The company’s second-hand housing transaction volume increased by 13.7% to 1.1638 trillion yuan in the first half of 2025, contributing to a 4% rise in revenue to 13.6 billion yuan [46] - The new housing business has a market share of 12.6% as of June 30, 2025, with revenue growth of 29.9% year-on-year in the first half of 2025 [62] 3. Strategic Expansion - The company is expanding its home decoration business, which has significant market potential, with the home decoration industry expected to grow at a CAGR of 8.1% from 2025 to 2030 [72] - The rental business has seen rapid expansion, with over 590,000 units under management as of June 30, 2025, representing an 88% year-on-year increase [78] 4. Financial Projections - Revenue forecasts for 2025, 2026, and 2027 are 103.3 billion yuan, 117.1 billion yuan, and 130.6 billion yuan respectively, with Non-GAAP net profits expected to be 7.4 billion yuan, 8.8 billion yuan, and 10.8 billion yuan [85]

Summary of Beike's Conference Call Company Overview - **Company**: Beike (贝壳) - **Industry**: Real Estate Key Points and Arguments 1. **Short-term Performance**: Beike's short-term performance is impacted by the downturn in the real estate industry, but management has provided guidance for a gross operating profit margin of over 7% for the next three years and increased the buyback authorization to $5 billion, ensuring a solid cash reserve for investors [2][4][28]. 2. **Business Segmentation**: Beike's operations are divided into direct operations (Lianjia) and franchise operations (Beilian). The non-Lianjia stores have shown rapid growth, with active stores increasing by 35.8% to over 14,000, and active agents growing by 73,000 [2][5]. 3. **Revenue Sources**: Beike's revenue primarily comes from four segments: existing homes (27.5%), new homes (approximately 34%), home decoration (15%), and rental services (over 20%). The new home segment contributes significantly to revenue, while the rental segment is growing rapidly but has lower utilization, affecting overall profit margins [7][10]. 4. **ACN Network**: The ACN network enhances cooperation among agents, increasing overall revenue and attracting small and medium-sized agencies to the platform, which improves commission rates and expands into the new home market [2][12]. 5. **Data Support**: The "Property Dictionary" provides reliable data support, enhancing customer trust and brand image. Beike has committed to four standards for genuine listings and has compensated over 4.6 billion yuan to reinforce its market position [2][13]. 6. **Market Share**: Beike holds approximately 33%-34% market share in the second-hand housing market and about 13% in the new housing market, positioning it as an industry leader [4][10]. 7. **Profitability Trends**: The company's profit margins have fluctuated due to changes in revenue structure, with the rental business being the fastest-growing but with the lowest utilization, which has negatively impacted overall profit margins [8][9]. 8. **Future Strategy**: Beike aims to explore new avenues such as home decoration and rental services, with expectations of profitability in the home decoration segment by 2026 [10][22]. 9. **Competitive Advantages**: Beike's competitive advantages include both soft and hard moats, such as the ACN network and strategic store layouts in key cities like Beijing and Shanghai, which solidify its market position [11][15]. 10. **Investment Value**: Beike has a cash reserve of approximately 70 billion yuan, leading to a low valuation with a price-to-earnings ratio slightly above 10. The company is expected to maintain a dividend yield of at least 5% [28][29]. Additional Important Insights 1. **Market Conditions**: The current market environment is challenging, but Beike's stock buyback and dividend strategies provide a stable return for investors [29][30]. 2. **Future Performance Expectations**: Despite short-term pressures, Beike's management is optimistic about future performance, projecting a net profit margin exceeding 7% over the next three years [27]. 3. **Policy Impact**: Any policy adjustments in the fourth quarter could significantly benefit Beike, enhancing its potential for performance recovery [30].

Investment Rating - The report gives a "Buy" rating for the company, Beike-W (2423.HK), with a current stock price of HKD 49.55 [1]. Core Views - Beike is a leading integrated online and offline real estate transaction service platform, with a strong foundation in real estate brokerage and a strategic focus on three wings: home decoration, rental services, and Beihome [6][11]. - The company is expected to achieve a total transaction volume of CNY 3.3 trillion in 2024, with net revenue reaching CNY 934.6 billion, marking a historical high [6][21]. - The company emphasizes shareholder returns, with a significant cash reserve and a share buyback plan in place [28]. Summary by Sections 1. Leading Integrated Real Estate Transaction and Service Platform - Beike began operations in 2001 and has expanded its services to include second-hand and new home transactions, home decoration, and rental services [11]. - The company has established a "one body, three wings" strategy, with a projected total transaction volume of CNY 3.3 trillion in 2024 [6][11]. 2. Real Estate Brokerage: Strong Leadership and Operational Advantages - Beike holds a dominant position in the real estate brokerage industry, with a total transaction volume of CNY 3.3 trillion in 2024, significantly ahead of competitors [51]. - The company has implemented the "True Source" standard and the ACN network, enhancing service quality and operational efficiency [54]. 3. Three Wings Business: Home Decoration, Rental, and Beihome Potential - The home decoration segment is rapidly growing, with a projected transaction volume of CNY 169 billion in 2024, reflecting a CAGR of 329.7% from 2021 to 2024 [6]. - The rental business has expanded significantly, with managed properties increasing from 70,000 in 2022 to 420,000 in 2024 [6]. 4. Profit Forecast and Investment Recommendations - The report forecasts EPS of CNY 1.58, CNY 1.83, and CNY 2.11 for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 28.7, 24.8, and 21.5 [7]. - The company is expected to maintain a stable commission rate in the new home market, while the second-hand home commission rate may face pressure [6].

Investment Rating - The investment rating for the company is "Buy" [10] Core Views - The company's brokerage business has a strong competitive moat that is difficult for competitors to surpass, with its direct brand, Lianjia, occupying a core market position. The company is expanding its market share in lower-tier cities through its platform, Beilian. The second-hand market is improving while the new housing market in lower-tier cities remains sluggish, providing a comfortable operating environment for the company. The second-hand business is expected to increase in volume, while the new housing business is expected to see price increases, leading to continuous performance growth and amplified profit elasticity due to operational leverage. The home decoration and rental businesses may not contribute significantly to profits in the short term but are expected to provide substantial performance growth in the medium term. Given its competitive advantages, relative scarcity, potential performance elasticity, and the influx of incremental funds post-listing, the company is expected to enjoy a certain valuation premium in the short term. From a medium to long-term perspective, there is still room for improvement in brokerage business share, and the home decoration and rental sectors can contribute to potential growth, with data assets holding significant value elasticity, making the company a strategic allocation target [2][9][10]. Summary by Sections Company Overview - The company is a leading integrated online and offline real estate transaction and service platform, focusing on digitalizing and smartening the residential service industry. It provides a one-stop, high-quality, and efficient service including second-hand and new housing transactions, rentals, home decoration, and home services. In 2023, the company's total transaction volume (GTV) reached 3.14 trillion yuan, with the proportion of second-hand and new housing brokerage business maintaining over 95% [18][22]. Competitive Moat - The company has built a competitive moat through high and lengthy infrastructure construction, creating a barrier that competitors find hard to cross. The ACN network breaks traditional competitive dilemmas, enabling a win-win cooperation model and expanding single-store economies to regional economies. The company's self-operated brand, Lianjia, has successfully captured customer mindshare through its property dictionary, genuine listings, and service commitments, resulting in significant premium in customer acquisition and commission rates compared to industry averages [6][36]. Market Share and Profit Elasticity - The company’s market share in the second-hand and new housing GTV was 28.6% and 9.7% respectively in 2023. The brokerage business is transitioning from scale victory to efficiency priority, with Lianjia promoting a large store model and leveraging the Beilian platform for continuous expansion. The impact of commission reductions in Beijing is gradually diminishing, and the commission rate for second-hand transactions has shown signs of recovery [7][9]. Business Expansion and Future Growth - The home decoration business has rapidly grown, with revenue exceeding 10 billion yuan in 2023. The company is shifting focus from blind expansion to solidifying internal capabilities and enhancing management efficiency. The rental business, "Shengxin Rent," has also expanded rapidly, contributing over 15% to rental income, and is expected to maintain good growth momentum. The company is exploring new profit points through its data assets and partnerships with developers [8][9][10]. Financial Performance - The company achieved revenue of 77.8 billion yuan in 2023, with the second-hand and new housing businesses accounting for 36% and 39% respectively. The home decoration business saw significant growth, reaching 10.9 billion yuan, while rental income reached 9.8 billion yuan, accounting for 16%. The overall gross margin improved to 27.9%, and the company successfully turned a profit with a net profit of 5.9 billion yuan in 2023 [30][32]. Valuation and Shareholder Returns - The company emphasizes shareholder returns through substantial dividends and buybacks, ensuring a solid bottom-line return for shareholders. The adjusted net profit forecasts for 2024-2026 are 8.11 billion, 8.91 billion, and 10.23 billion yuan, with corresponding PE ratios of 25.8, 23.4, and 20.4 times. Given its competitive advantages and potential performance elasticity, the company is expected to enjoy a valuation premium in the short term [9][10].

Investment Rating - The investment rating for the company is "Buy" with an initial recommendation [9]. Core Viewpoints - The company's brokerage business has a strong competitive moat that is difficult for competitors to surpass, with its direct brand, Lianjia, occupying a core market position. The company is expanding its market share through its platform, Beilian, particularly in lower-tier cities. The second-hand market is improving while the new housing market in lower-tier cities remains sluggish, providing a comfortable operational environment for the company. The second-hand business is expected to increase in volume, while the new housing business is expected to see price increases, leading to continuous performance enhancement and amplified profit elasticity due to operational leverage. Although the home decoration and rental businesses may not contribute significantly to profits in the short term, they are expected to provide substantial performance growth in the medium term. Given its competitive advantages, relative scarcity, potential performance elasticity, and the influx of incremental funds post-listing, the company is expected to enjoy a certain valuation premium in the short term. From a medium to long-term perspective, there is still room for improvement in brokerage business share, and home decoration and rental services can contribute to potential growth, making the company a strategic investment choice [2][8]. Summary by Sections Company Overview - Beike is a leading integrated online and offline real estate transaction and service platform, dedicated to advancing the digitalization and intelligence of residential services. The platform offers a one-stop, high-quality, and efficient service that includes second-hand and new housing transactions, rentals, home decoration, and home services. In 2023, the company's Gross Transaction Value (GTV) reached 3.14 trillion yuan, with the proportion of second-hand and new housing brokerage business maintaining over 95% of the GTV [17][22]. Competitive Moat - The company has established a competitive moat through high and lengthy infrastructure construction, which is difficult for competitors to overcome. The ACN network breaks the traditional competitive dilemma, enabling a win-win cooperation model and expanding the scale economy from single stores to regional economies. The company has successfully occupied customer mindshare through its self-operated brand, Lianjia, and has achieved significant premium in customer acquisition and commission rates compared to industry averages [5][6]. Market Share and Profit Elasticity - The company’s market share in second-hand and new housing GTV was 28.6% and 9.7% respectively in 2023. The brokerage business is transitioning from scale victory to efficiency priority, with Lianjia promoting a large store model and continuously expanding through the Beilian platform. The overall operational leverage is expected to further amplify profit elasticity [6][8]. Business Expansion - The home decoration business has rapidly grown, with revenue exceeding 10 billion yuan in 2023. The company is shifting from blind expansion to focusing on regional density, digital systems, and supply chain construction. The rental business, "Shengxin Rent," has also expanded rapidly, contributing over 15% to rental income and is expected to maintain good growth [7][8]. Financial Performance - The company achieved a revenue of 77.8 billion yuan in 2023, with the second-hand and new housing businesses accounting for 36% and 39% respectively. The home decoration business revenue reached 10.9 billion yuan, contributing 14% to total revenue. The company successfully turned a profit in 2023, achieving a net profit of 5.9 billion yuan, with adjusted net profit reaching 9.8 billion yuan [30][33]. Future Outlook - The company is expected to continue enjoying a valuation premium due to its competitive advantages and potential performance elasticity. The adjusted net profits for 2024-2026 are projected to be 8.11 billion, 8.91 billion, and 10.23 billion yuan respectively, with corresponding PE ratios of 25.8, 23.4, and 20.4X [8][9].