Core Viewpoint - The overall performance of Beike's latest earnings report is better than expected, with significant revenue growth, but the persistent issue of increasing revenue without profit remains unresolved [1][12][46]. Group 1: Existing Home Business - The GTV (Gross Transaction Value) of the existing home business increased by 28% year-on-year, outperforming the expected 24% growth, indicating the continued impact of policy benefits [1][15]. - Revenue from the existing home business grew by 20%, but this was lower than the GTV growth, reflecting a decline in the comprehensive commission rate [1][17]. - The comprehensive commission rate for existing homes decreased by 1.4 basis points to 1.18%, attributed to a higher proportion of non-self-operated business and potential commission discounts to stimulate transactions [1][17]. Group 2: New Home Business - The new home business saw a remarkable growth in transaction value, with a year-on-year increase of 53%, significantly exceeding market expectations [2][20]. - However, the revenue growth rate for new homes was lower than expected due to a decline in the comprehensive realization rate, which fell by 20 basis points [2][24]. - The new home business's revenue increased by 64% year-on-year, but the growth rate showed a deceleration compared to the previous quarter [2][24]. Group 3: Secondary Business Lines - The secondary business lines, including home decoration, rental, and home services, generated total revenue of 8.38 billion, a year-on-year increase of 39%, surpassing expectations [3][27]. - The rental business experienced a significant growth of 94% year-on-year, indicating a strong market position despite a generally weak rental market [3][29]. - The home decoration business, while improving, still underperformed expectations with a revenue growth of 22% [3][29]. Group 4: Profitability Issues - Despite revenue growth, the adjusted net profit remained nearly flat year-on-year, highlighting the ongoing issue of revenue growth not translating into profit [4][6][34]. - The overall gross profit margin decreased to 20.7%, down 2.3 percentage points from the previous quarter, primarily due to rising commission costs and a higher proportion of low-margin rental business [5][37]. - The operating profit margin fell from 3.2% to 2.5%, reflecting the challenges in maintaining profitability amidst rising costs [5][43]. Group 5: Market Outlook - The performance of Beike is significantly influenced by macroeconomic conditions in the real estate market, making future predictions challenging [12][13]. - Long-term prospects for Beike remain positive due to its dominant market position and execution capabilities, despite short-term volatility [12][13]. - Current valuation corresponds to an adjusted net profit multiple of approximately 16-17x PE, with potential for higher multiples if profit growth resumes [12][13].

Core Viewpoint - Beike (BEKE.US) reported strong Q1 2025 financial results, exceeding market expectations, with significant growth in both existing and new home transactions, as well as rapid expansion in non-property services [1][2]. Financial Performance - In Q1 2025, Beike achieved a total transaction volume of 843.7 billion RMB, a year-on-year increase of 34%, and total revenue of 23.3 billion RMB, up 42.4% year-on-year [1]. - The existing home business generated a transaction volume of 580.3 billion RMB, a 28.1% increase year-on-year, with net income of 6.9 billion RMB, up 20.0% [2]. - The new home business saw a transaction volume of 232.2 billion RMB, a 53.0% increase year-on-year, with net income of 8.1 billion RMB, up 64.2% [2]. - Non-property services reported a net income growth of 46.2% year-on-year, accounting for 35.9% of total net income, with rental services net income reaching 5.1 billion RMB, a 93.8% increase [3]. Profitability - Beike's net profit for Q1 2025 was 0.855 billion RMB, a 97.9% increase year-on-year, while adjusted net profit was 1.393 billion RMB, remaining stable year-on-year [3]. - The gross margin decreased from 25.2% in the previous year to 20.7%, attributed to a lower contribution from the higher-margin existing home business and increased fixed salary costs [3]. Market Context - The positive performance is linked to a series of policies aimed at stabilizing the real estate market, which have led to favorable conditions in both new and second-hand home markets [3]. - Beike's CEO expressed confidence in the company's long-term growth strategy and ongoing investments in AI applications [3]. Investor Reaction - Despite the strong performance, Beike's stock fell by 5.29% to $19.16 per share on May 15, 2025, with H-shares also showing a slight decline [4]. - This negative reaction may be related to conservative guidance for Q2 2025, with expected revenue of 26 billion RMB, which is 10% lower than UBS's forecast [5]. Future Outlook - Beike anticipates a conservative growth outlook for Q2 2025, with second-hand home transaction volume expected to remain flat year-on-year and new home transaction volume projected to grow by 10% [5]. - The company expects home decoration and rental income to grow by double digits and 70% year-on-year, respectively [5].

Core Insights - The company reported a total transaction value (GTV) of 843.7 billion RMB for Q1 2025, representing a year-on-year growth of 34.0% [1] - Net revenue for the quarter reached 23.3 billion RMB, showing a year-on-year increase of 42.4% [1] - The net profit for the quarter was 855 million RMB [1] Business Segments - The existing home business achieved a GTV of 580.3 billion RMB, with a year-on-year growth of 28.1%, and net revenue of 6.9 billion RMB, up 20.0% year-on-year [1] - The new home business recorded a GTV of 232.2 billion RMB, reflecting a year-on-year increase of 53.0%, with net revenue rising 64.2% to 8.1 billion RMB [1] Operational Metrics - As of the end of Q1, the number of active stores on the platform reached 55,210 [1] - The platform had 490,862 active agents [1]