Summary of the Conference Call for "I Love My Home" (2025) Company Overview - **Company**: I Love My Home - **Industry**: Real Estate Brokerage and Asset Management Key Financial Performance - **Brokerage Business**: Revenue increased by 13.57% year-on-year to 2 billion CNY, with a gross margin of 22.82%, up by 0.13 percentage points, driven by growth in existing home transactions in core cities and a slight increase in commission rates to 1.6%-1.7% [2][4] - **Asset Management**: Managed scale grew by 9% to 319,000 units, with an occupancy rate of 95.2%. Rental GDP slightly increased by 0.2% to 8.62 billion CNY. The new product "Encounter Preferred" saw a revenue decline of 17.4% but improved gross margin to 14.05% [2][5] - **New Home Business**: Revenue rose by 24% to 469 million CNY, with a gross margin of 3.42%, up by 0.06 percentage points. GDP increased by 32.6% to 18.3 billion CNY, benefiting from strategic adjustments and market stabilization [2][5] - **Net Profit**: The net profit attributable to shareholders was approximately 40 million CNY, a 30% increase year-on-year. The non-recurring net profit was close to 50 million CNY, over 200% growth, mainly due to the recovery in the second-hand housing market and cost control [2][6] Business Segment Performance - **Brokerage Business**: Achieved revenue of 2 billion CNY, with a gross margin of 22.82%. Core city transactions maintained double-digit growth, and commission rates slightly increased [4][12] - **Asset Management**: Management scale reached 319,000 units, with an average rental period reduced to 8.8 days and an occupancy rate of 95.2% [5] - **New Home Business**: Revenue growth of 24% and significant GDP growth of 32.6% [5][12] Market and Industry Insights - **Market Recovery**: The company believes the most challenging period has passed, with expectations for continued growth in 2025 driven by the recovery in the second-hand housing market, particularly in first-tier cities [7] - **New Home Market**: Despite an overall decline in the new home market, the company achieved over 30% GDP growth by focusing on risk control and efficiency improvements [8] - **Transaction Volume**: The company expects double-digit growth in transaction volume for 2025, with price trends dependent on future policy effects and market performance [2][13] Strategic Adjustments - **New Product "Encounter Preferred"**: This product uses a net income recognition method, reducing risk exposure and improving profitability through management fees paid by owners [22][23] - **Expansion Strategy**: The company shifted from a conservative to an expansion strategy in the new home business, with significant growth in revenue and a focus on diverse project participation [21] Future Outlook - **Performance Expectations**: The company anticipates better performance in the second half of 2025 compared to the first half, with expectations for improved operational performance and reduced non-operating factors [26] - **Market Conditions**: The overall market is expected to stabilize with potential policy adjustments, including interest rate cuts, to stimulate demand [15][18] Additional Insights - **Commission Rates**: The average commission rate for buying and selling business was between 1.6% and 1.7%, with a notable contribution from Beijing [10][11] - **Impact of Policy Changes**: Recent policy changes in Beijing and Shanghai have had limited effects, with marginal improvements in transaction volume expected [15][16] This summary encapsulates the key points from the conference call, highlighting the company's performance, strategic adjustments, and market outlook.

机构：申万宏源研究 研究员：袁豪/陈鹏 公司25Q2 实现净收入260.1 亿元，同比+11.3%；毛利润57.0 亿元，同比-12.5%；归母净利润13.0 亿元， 同比-31.2%；经调后归母净利润18.2 亿元，同比-32.4%。公司25Q2毛利率21.9%，同比-6.0pct；销售 +管理+研发费用率合计17.7%，同比-1.4pct；归母净利率5.0%，同比-3.1pct；经调后归母净利率7.0%， 同比-4.5pct。截至25Q2 末，公司现金、现金等价物、受限资金和短期投资合计531 亿元，同比-11.1%。 25Q2 一二手房经纪GTV 实现稳健增长，货币化率相对稳定。2025Q2 公司存量房交易额5,835 亿元，同 比+2.2%；其中链家、贝联GTV 占比37%、63%；二手房收入67 亿元，同比-8.4%；贡献利润26.8 亿 元，同比-22.9%；贡献利润率39.9%，同比-7.5pct；链家、贝联货币化率分别为2.53%、0.38%，环比持 平、+0.02pct；GTV 增速较收入更高源于贝联贡献占比更高，贝联GTV 增幅可观，但与平台服务费等 激励性减免相抵消，推动贝联收入持平。新 ...

Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - The company has shown a quarter-on-quarter improvement in profitability, with a focus on expanding and extending its share buyback program. Despite potential short-term performance pressure due to industry downturns, the company is expected to outperform the industry, especially if significant policies are implemented [2][4]. Summary by Sections Financial Performance - In Q2 2025, the company achieved revenue of 26 billion yuan (up 11.3%), with a net profit attributable to shareholders of 1.3 billion yuan (down 31.2%). Adjusted net profit was 1.8 billion yuan (down 32.4%). For H1 2025, these figures were 49.3 billion yuan, 2.2 billion yuan, and 3.2 billion yuan respectively, with year-on-year changes of +24.1%, -7.2%, and -21.3% [4]. Business Operations - The self-operated platform has driven GTV growth, with both Lianjia and Beilian's existing housing monetization ratios improving for two consecutive quarters. The profitability of existing homes, new homes, and rental businesses has improved quarter-on-quarter, while the home decoration business has achieved profitability at the city level. Effective fee management has significantly enhanced potential profit elasticity [2][4]. Shareholder Returns - The company has emphasized shareholder returns by increasing and extending its share buyback program. In H1 2025, it spent 394 million USD on share repurchases, buying back nearly 1.7% of the total shares issued at the end of 2024. The buyback authorization has been increased from 3 billion USD to 5 billion USD, with the program extended until August 31, 2028 [4]. Future Outlook - The company is expected to maintain a valuation premium due to its competitive advantages, relative scarcity, and potential earnings elasticity. The adjusted net profit forecasts for 2025-2027 are 6.63 billion, 7.18 billion, and 7.53 billion yuan, with corresponding PE ratios of 23.2, 21.4, and 20.4 [4].

Core Viewpoint - The newly issued "Anti-Money Laundering Work Management Measures for Real Estate Practitioners" will take effect on September 1, 2025, mandating real estate institutions to fulfill anti-money laundering obligations and cooperate with regulatory authorities [1][12]. Group 1: Regulatory Framework - The measures clarify the responsibilities of real estate developers and intermediaries in identifying suspicious transactions and reporting them to the authorities [4][6]. - Real estate institutions must maintain customer identity information and transaction records for at least ten years, with specific requirements for high-value and frequent transactions [4][6]. Group 2: Industry Impact - The new regulations are expected to enhance the role of the real estate industry as a "financial security facilitator," pushing the sector towards stricter compliance and oversight [1][12]. - Short-term impacts may include increased operational costs for real estate firms as they establish internal controls for anti-money laundering, while long-term effects could lead to industry consolidation and improved competitiveness among compliant firms [12]. Group 3: Historical Context - Previous cases of money laundering through real estate highlight the need for stringent regulations, as seen in the 2021 cases published by the Supreme People's Procuratorate and the People's Bank of China [6][9].

Core Viewpoint - The introduction of the "Anti-Money Laundering Work Management Measures for Real Estate Practitioners" marks a significant step in regulating the real estate sector against money laundering activities, aligning with the revised Anti-Money Laundering Law effective from January 1, 2025 [1][9]. Group 1: Regulatory Framework - The new measures consist of 25 articles and will take effect on September 1, 2025, establishing a regulatory framework for the real estate industry in anti-money laundering efforts [1]. - The measures signify the inclusion of the real estate sector in the key regulatory focus for anti-money laundering, creating a collaborative network with financial institutions and other specific non-financial entities [1][9]. Group 2: Money Laundering Risks in Real Estate - The real estate sector has been identified as a potential "hotbed" for money laundering due to its large transaction amounts, complex processes, and extensive industry chain [3]. - Historical practices in the industry included cash transactions and "ant moving" methods to launder money, where companies would pay suppliers in cash and subsequently split the funds into multiple accounts to avoid taxes [3][4]. - Other common laundering techniques involved "yin-yang contracts," where properties were sold at significantly lower prices to facilitate money laundering [3]. Group 3: Core Obligations for Real Estate Institutions - The measures outline three core obligations for real estate institutions: customer identity verification, suspicious transaction reporting, and record-keeping for at least ten years [6]. - Institutions are required to refuse transactions if customers do not provide identity information and must report any suspicious activities to the relevant authorities [6]. - The measures also mandate the establishment of internal controls and regular risk assessments to enhance the effectiveness of anti-money laundering efforts [6]. Group 4: Role of Industry Self-Regulation - The measures define the responsibilities of self-regulatory organizations within the real estate sector, including developing management norms and coordinating suspicious transaction reports [7]. - This approach aims to create a synergy between industry self-regulation and government oversight to strengthen the anti-money laundering framework [7]. Group 5: Compliance with International Standards - The introduction of these measures is a response to the revised Anti-Money Laundering Law and aims to align with international standards set by the Financial Action Task Force (FATF) [9]. - The measures are part of a broader effort to ensure that China meets international standards in the regulation of specific non-financial institutions ahead of the FATF's fifth round of mutual evaluations [9].

Core Viewpoint - The introduction of the "Real Estate Industry Anti-Money Laundering Work Management Measures" marks a significant step in regulating the real estate sector against money laundering activities, aligning with the revised Anti-Money Laundering Law effective from January 1, 2025, and establishing a regulatory framework for the industry [1][10]. Summary by Sections Background and Context - The real estate sector has been identified as a potential avenue for money laundering due to its large transaction amounts, complex processes, and extensive industry chain, making it attractive to criminals [3]. - Previous practices included cash transactions and the use of "yin-yang contracts" to facilitate money laundering, highlighting the need for regulatory measures [3][4]. Key Provisions of the Measures - The Measures consist of 25 articles and will take effect on September 1, 2025, establishing a framework for anti-money laundering in the real estate sector [1]. - Three core obligations for real estate institutions are outlined: customer identity verification, suspicious transaction reporting, and data retention for at least ten years [6][7]. Implementation Details - Real estate institutions must verify customer identities and refuse transactions if customers do not provide necessary information, with a requirement to report suspicious activities [7]. - Institutions are also mandated to maintain accurate records of customer identities and transaction details for a minimum of ten years, enhancing the integrity of customer data [7]. Role of Industry Self-Regulation - The Measures assign responsibilities to industry self-regulatory organizations, including developing management norms and coordinating suspicious transaction reports, fostering collaboration between industry and government [8]. Alignment with International Standards - The introduction of these Measures is a response to the revised Anti-Money Laundering Law and aims to meet international standards set by the Financial Action Task Force (FATF) in preparation for the upcoming evaluation [10].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The report highlights that the company's GTV (Gross Transaction Value) in brokerage business shows steady growth, and the profit margins in diversified sectors are continuously recovering [6] - The company has a strong market position in the brokerage sector, with a focus on enhancing operational efficiency and expanding into home decoration and rental services as potential growth drivers [6] Financial Data and Earnings Forecast - Revenue projections for the company are as follows: - 2023: 77,777 million - 2024: 93,457 million - 2025E: 108,558 million - 2026E: 120,419 million - 2027E: 133,705 million - Year-on-year growth rates for revenue are projected at 28% for 2023, 20% for 2024, and gradually decreasing to 11% for 2026 and 2027 [5][7] - Net profit attributable to the parent company is forecasted as: - 2023: 5,883 million - 2024: 4,065 million - 2025E: 5,092 million - 2026E: 6,254 million - 2027E: 7,480 million - The net profit growth rates show a significant decline in 2023 and 2024, with a recovery expected in subsequent years [5][7] Business Performance Highlights - In Q2 2025, the company reported a total GTV of 878.7 billion, with a year-on-year increase of 4.7%. The breakdown includes: - Existing home transactions: 583.5 billion (up 2.2%) - New home transactions: 255.4 billion (up 8.5%) [6] - The company achieved a net income of 26.01 billion in Q2 2025, reflecting an 11.3% year-on-year increase, while the gross profit was 5.70 billion, down 12.5% year-on-year [6] - The company’s active store count reached 58,664, a 32.1% increase year-on-year, and the number of active agents rose to 492,000, up 19.5% year-on-year [6] Investment Analysis Opinion - The report concludes that the brokerage business is experiencing stable growth, and the profit margins in various sectors are on a recovery path. The company is expected to maintain its market share and benefit from the growth in home decoration and rental services [6]

Investment Rating - The report maintains a "Buy" rating for the company [6][31] Core Views - The company reported a 2Q revenue growth of 11% year-on-year to 26 billion RMB, which is in line with market expectations [1] - The adjusted net profit reached 1.8 billion RMB, exceeding expectations by 3.5% [1] - The management has increased the share buyback program from 3 billion USD to 5 billion USD, indicating confidence in future growth [1][31] - The company is expected to benefit from new housing policies in major cities, which may catalyze market recovery in 4Q [1][14][31] Financial Performance - 2Q revenue breakdown shows a decline in existing home revenue by 8%, while new home revenue increased by 9% [1] - Home renovation revenue grew by 13%, driven by increased transaction volume and higher average order values [2] - The gross margin decreased by 6 percentage points to 21.9%, primarily due to lower profitability in existing home transactions [1] - The adjusted operating profit margin is projected to improve from 6% in 2Q to a long-term target of 7% [1][31] Business Segments - The home renovation segment is showing significant operational efficiency improvements, with a 70%+ increase in support volume per employee [2] - AI tools are enhancing productivity in the real estate brokerage segment, with a notable increase in the number of transactions handled by agents [3] - The rental business is expected to leverage AI to automate approximately 80% of standardized tasks, improving overall efficiency [3] Future Outlook - Revenue forecasts for 2025-2027 have been adjusted downwards by 2.4%, 2.1%, and 2% respectively, reflecting a slower recovery in the real estate market [4][27] - The target price for the company has been raised to 25.21 USD, reflecting a shift from discount to premium valuation compared to global peers [31]

Core Insights - Beike reported its Q2 2025 financial performance, showing a total transaction value (GTV) of 878.7 billion yuan, a year-on-year increase of 4.7% [2] - The company's net revenue reached 26 billion yuan, reflecting an 11.3% year-on-year growth, while net profit was reported at 1.307 billion yuan, with adjusted net profit at 1.821 billion yuan [2] Business Segments - The existing home business GTV reached 583.5 billion yuan, up 2.2% year-on-year, while the new home business GTV was 255.4 billion yuan, marking an 8.5% increase [2] - The home decoration and furnishing business generated net revenue of 4.6 billion yuan, a 13% increase, and the housing rental service net revenue was 5.7 billion yuan, showing a significant growth of 78% [2] - Non-real estate transaction services accounted for 41% of total net revenue, the highest proportion in the company's history [2] Share Buyback Program - Beike announced an expansion and extension of its existing share repurchase program, increasing the buyback authorization from 3 billion USD to 5 billion USD, with the program's duration extended to August 31, 2028 [2] - In Q2 2025, Beike repurchased approximately 250 million USD worth of shares, and in the first half of the year, the total expenditure on share buybacks was about 394 million USD, representing around 1.7% of the total shares outstanding as of the end of 2024 [2] - Since the initiation of the buyback program in September 2022, Beike has repurchased a total of 2.02 billion USD worth of shares, accounting for approximately 10.3% of the total shares outstanding prior to the program's launch [2]

Financial Data and Key Metrics Changes - Total Gross Transaction Value (GTV) reached RMB 878.7 billion, representing a year-over-year increase of 4.7% [10] - Revenue for Q2 was RMB 26 billion, up 11.3% year-over-year [10] - Gross margin declined by six percentage points year-over-year to 21.9% [11] - GAAP net income was RMB 1.31 billion, falling 31.2% year-over-year [11] - Non-GAAP net revenue reached RMB 1.82 billion, down 32.4% year-over-year [12] Business Line Data and Key Metrics Changes - Existing home sales transactions rose by 26%, outpacing the market growth rate of 19% [12] - New home orders increased by 19%, while the market declined by 6% [12] - Revenue from in-home transactions was RMB 6.7 billion, down 8.4% year-over-year [15] - Revenue from new home transactions was RMB 8.6 billion, rising by 8.6% year-over-year [17] - Home renovation and furniture business revenue reached RMB 4.6 billion, increasing by 13% year-over-year [20] - Home rental services revenue reached a record high of RMB 5.7 billion, up 78% year-over-year [22] Market Data and Key Metrics Changes - The total value of housing transactions nationwide was stable overall, but new home sales dropped by 5.2% year-over-year in the first half [56] - Existing home transactions rose 8.3% year-over-year, driven by a 19% increase in the number of transactions [57] - Rental yield reached 2.5% in June, about 40% higher than its lowest point [58] - The market downturn has picked up speed, with existing home transactions falling by over 5% month-over-month [60] Company Strategy and Development Direction - The company aims to shift focus from scale to efficiency, enhancing operational capabilities and productivity [34][66] - The strategy includes deeper operational efforts and leveraging AI for productivity gains [37][70] - The company will not adopt an asset-heavy model and will focus on delivering C2M product solutions for developers [24][50] Management's Comments on Operating Environment and Future Outlook - Management noted that the real estate market is facing challenges due to international trade friction and policy impacts [8] - Future market recovery will depend on the pace of policy changes and supply-demand balance improvements [60][61] - The company is committed to maximizing long-term value through operational improvements and AI-driven initiatives [30][31] Other Important Information - The company has a robust cash liquidity of around RMB 70 billion, allowing for active share buybacks and dividends [29] - The share repurchase program has been extended to August 31, 2028, with an increased authorization [30] Q&A Session Summary Question: Overview of the secondary home market and future trajectory - Management indicated that the secondary home market showed stability in Q1 but weakened significantly in Q2, with expectations for stronger policy support to boost demand [55][56] Question: Actions taken to deliver value to investors amid sector downturn - Management emphasized a shift from growth to efficiency, focusing on enhancing operational capabilities and consolidating lower-performing stores and agents [64][66] Question: Opportunities from new property development models - Management highlighted that new home products meeting national standards are expected to improve market dynamics and enhance the company's value to developers [76][80] Question: Key growth drivers in the home renovation and furnishing business - Management noted that operational efficiency improvements and centralized procurement have driven revenue growth and margin improvements in the home renovation segment [85][87]