Core Viewpoint - The report from Everbright Securities indicates that due to ongoing pressures in the real estate sector, the profit forecasts for Beike-W (02423) have been revised downwards for 2025-2027, with expected net profits of 3.718 billion, 4.774 billion, and 5.820 billion yuan, representing decreases of 11%, 8%, and 4% respectively. The company, being a leader in real estate brokerage, is expected to benefit from a recovery in the real estate market, with significant growth potential in home decoration and rental sectors, maintaining a "Buy" rating [1]. Group 1: Q3 Performance - In Q3, the company reported revenues, net profits, and Non-GAAP net profits of 23.1 billion, 750 million, and 1.29 billion yuan respectively, showing year-on-year changes of +2.1%, -36.1%, and -27.8% [1]. - The company's revenue growth has been declining throughout the year, with the second-hand housing GTV and revenue for Q3 at 505.6 billion and 6 billion yuan, reflecting year-on-year changes of +5.8% and -3.6% [2]. - The new housing GTV and revenue for Q3 were 196.3 billion and 6.6 billion yuan, showing year-on-year declines of -13.8% and -14.1% [2]. Group 2: Business Segments - The home decoration and rental businesses achieved revenues of 4.3 billion and 5.7 billion yuan in Q3, with year-on-year growth rates of +2.1% and +45.3% respectively [2]. - The profit margin for home decoration was 32.0%, an increase of 0.8 percentage points year-on-year, attributed to improved procurement costs and efficiency [2]. - The rental business achieved a profit margin of 8.7%, up 4.3 percentage points year-on-year, mainly due to improved gross margins in the "Worry-Free Rental" service [2]. Group 3: Financial Metrics - The company's gross margin in Q3 was 21.4%, a decrease of 1.3 percentage points year-on-year, primarily due to a lower proportion of high-margin new housing revenue [3]. - The sales, management, and R&D expense ratios were 7.5%, 8.1%, and 2.8%, showing year-on-year changes of -1.1, -0.3, and +0.3 percentage points respectively [3]. - The Non-GAAP net profit margin for Q3 was 5.6%, down 2.3 percentage points year-on-year, while the company continued to enhance shareholder returns with a buyback amounting to 280 million USD, the highest quarterly buyback in nearly two years [3].

Core Viewpoint - The new housing policy aims to alleviate the difficulties faced by first-time homebuyers, stabilize the real estate market, and promote economic growth in response to a significant decline in housing sales and prices [1][2][3] Policy Background - The introduction of the new housing policy is a necessary measure following a deep adjustment in the real estate market, with national housing sales area down 8.7% and sales revenue down 12.3% in the first half of 2025 [2] - The real estate sector contributes 17.2% to GDP and supports over 40 related industries, highlighting its critical role in the economy [2] Series of Benefits - The new policy includes multiple adjustments to financing, tax, and purchase requirements, aimed at revitalizing the housing market [4] - The minimum down payment for first-time homebuyers has been reduced from 30% to 20%, with some cities allowing as low as 15% [6] - The maximum interest rate for first-time home loans has been set at 3.6%, a reduction of 1.2 percentage points from previous levels [6] - The maximum public housing loan amounts have been increased to 120 million in first-tier cities, 100 million in second-tier cities, and 80 million in third and fourth-tier cities [6] - Some cities have relaxed purchase restrictions, making it easier for new residents to qualify for home purchases [7] - The tax rate for first-time home purchases has been lowered from 1.5% to 1%, and the exemption period for value-added tax on second-hand homes has been reduced from 5 years to 2 years [9] Official Interpretations - The policy defines "first-time homebuyers" as families with no more than one home, aged 22 to 45, with income at or below the local median [10] - The policy will be implemented in phases, starting with 22 cities on July 15, 2025, and expanding to others by October 1 [10] - The application process for the new policy is straightforward, requiring basic documentation such as proof of income and housing status [11] Future Outlook - The real estate market may see a gradual easing of price controls, allowing for a potential 5% price adjustment in certain areas [16] - There will be significant investment in the long-term rental apartment market, providing more housing options for those unable to purchase homes [16] - Policies encouraging elderly housing exchanges, such as "housing for pension," are expected to release approximately 12 million housing units [16] - The trial expansion of real estate taxes is anticipated, targeting families with three or more homes [16]

Core Insights - The real estate industry is entering a critical strategic window as it approaches the end of the 14th Five-Year Plan in 2025, prompting companies to plan for the 15th Five-Year Plan (2026-2030) with a long-term perspective [2][4][5] Group 1: Market Trends - The real estate sales scale is expected to shrink by 40% over the next decade, with sales projected to decline to approximately 8 trillion to 8.5 trillion yuan in 2025 [7] - By 2035, new housing sales area is predicted to decrease by another 40% compared to 2024, resulting in an estimated 5.8 billion square meters [9] - Despite the decline in new housing, the second-hand housing and renovation markets are expected to fill the gap, with the overall real estate market potentially reaching 5.7 trillion yuan by 2035, a 70% increase from 2024 [10][20] Group 2: Developer Landscape - The market share of the top ten developers is projected to rise to nearly 50% by 2035, reflecting a concentration of power among a few key players [12] - The market share of these top developers in first and second-tier cities is expected to double from 30% in 2024 to around 60% by 2035 [14] - Developers are increasingly focusing on first and second-tier cities, with 92.5% of land acquisitions in 2024 concentrated in these areas [15] Group 3: Second-Hand Market Dynamics - By 2035, second-hand housing transactions are expected to account for two-thirds of the total market volume, with sales projected to reach between 8 billion to 9 billion square meters [16] - The increase in second-hand housing sales is significant, as it is anticipated to match the total sales volume of new housing, which is expected to be around 4.5 billion square meters by 2035 [19] Group 4: Renovation Market Growth - The renovation market is expected to nearly double by 2035, driven by increased demand from second-hand housing transactions and improvement needs [22][23] - The overall demand for renovation and second-hand housing is projected to create a market of 5.7 trillion yuan, significantly offsetting the decline in new housing construction [20][21]