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]

Core Insights - The article discusses the legacy of key figures in the real estate industry, particularly focusing on the impact of Left Hui and the current challenges faced by Peng Yongdong, the CEO of Beike, in maintaining the company's values and performance after Left's passing [1][2][4]. Group 1: Leadership and Legacy - Left Hui is recognized as the only acknowledged leader in the real estate transaction service sector, despite the presence of other prominent developers [2]. - Peng Yongdong faces the challenge of proving that Left's spirit and values continue to thrive within Beike, especially during a period of significant transformation [5][11]. - The comparison between Peng and Left creates pressure for Peng, as Left is seen as a spiritual icon for the industry [4][5]. Group 2: Business Model and Transformation - Beike's recent "tenant separation" policy aims to enhance operational efficiency by splitting roles between sourcing properties and client development, reflecting a response to market changes [16][17]. - The policy is a reaction to structural changes in the market, such as an increase in property listings and a decrease in average transaction prices, necessitating a more specialized approach to real estate transactions [19][20]. - The initial implementation of the policy has faced challenges, with slow progress reported in the early months [13][22]. Group 3: Financial Performance and Employee Sentiment - Despite a challenging market, Beike reported significant growth in transaction volume and revenue, with a 34% year-on-year increase in total transaction value in Q1 2025 [71]. - However, employee dissatisfaction has risen due to drastic reductions in base salaries and commission structures, leading to a perception of exploitation [62][65]. - Peng Yongdong's substantial salary increase post-Left's death has drawn criticism, especially in light of the company's struggles and employee pay cuts [61][66]. Group 4: Industry Challenges and Criticism - Beike's commission structure has come under scrutiny, with reports of high fees imposed on developers and franchisees, raising concerns about fairness and transparency [73][74]. - The integrity of Beike's "true source" initiative is questioned, as reports of false listings and data manipulation have surfaced, undermining the company's foundational promises [77][81]. - The article highlights a growing disconnect between the company's operational practices and the original vision of creating a healthy work environment and improving consumer experiences [83].

Core Viewpoint - Beike has launched the "1+5+2" strategic system to empower store development, committing 400 million yuan to enhance mechanisms, service commitments, and business support for high-quality growth in the real estate industry [1][4]. Group 1: Strategic Initiatives - The "1+5+2" support measures include a regional co-governance council as the foundation, focusing on five areas: mechanism construction, fairness and transparency, service commitments, business assistance, and honor creation [2][4]. - Ten key initiatives have been introduced, such as a store points system and risk coverage, aimed at alleviating operational pressure on store owners and enhancing collaborative efficiency [2][4]. Group 2: Market Challenges - Real estate brokerage stores face significant challenges, including a shift to a buyer's market, slower transaction speeds, and increased management difficulties [3][4]. - The uncertainty in the market has heightened the pressure on store owners, necessitating a focus on long-term strategies to navigate these challenges [4]. Group 3: Operational Support - Beike aims to increase certainty for store owners through initiatives like ACN network collaboration and the establishment of regional co-governance councils, with 1,899 councils and 534 business circles set up by June 2025 [4]. - The store points system has already covered over 12,000 stores, distributing rights valued at over 110 million yuan, promoting both performance and service quality [4][5]. Group 4: Local Implementation and Impact - In Chengdu, the points system will be implemented starting July 2024, with 3,610 local stores already participating, averaging 12,700 yuan in rights value per store [5]. - The initiative has reportedly improved team dynamics and customer satisfaction, demonstrating the effectiveness of the mechanism [5]. Group 5: Long-term Vision - Beike emphasizes a commitment to long-termism, viewing brand owners and store owners as collaborative partners, and aims to enhance the overall service experience for consumers [2][8]. - The company continues to invest in industry infrastructure and service standards, positioning itself for sustainable growth and improved service quality in the future [8].

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $25.12, down from a previous $27.88, reflecting a 27x PE for 2025, which is higher than the global comparable company's average of 22.7x [4][28]. Core Insights - The company reported a 54.1% year-on-year revenue growth in Q4, reaching 31.13 billion RMB, exceeding consensus expectations by 7% [1]. - The Gross Transaction Value (GTV) increased by 55.5% year-on-year to 1.14 trillion RMB, also surpassing expectations by 9% [1]. - The revenue growth across different segments includes existing homes (47.5%), new homes (72.7%), home decoration (12.8%), and rental services (108.7%) [1]. - Adjusted net profit decreased by 21.6% year-on-year to 1.34 billion RMB, falling short of expectations by 40%, primarily due to one-time expenses [1][4]. Revenue and Profit Forecast - For 2025, the company expects revenue to reach 110.04 billion RMB, with a year-on-year growth of 17.74% [6][22]. - The adjusted net profit forecast for 2025 is 8.12 billion RMB, reflecting a decrease of 29.6% from previous estimates due to rising personnel costs and a declining take rate [4][22]. - The company anticipates a significant increase in market share in the existing home segment, projecting a 5-7 percentage point increase in market share in first-tier cities [2][13]. Segment Performance - The existing home business outperformed expectations with a 47.5% year-on-year revenue growth in Q4, and GTV growth of 59.1%, particularly strong in first-tier cities [2]. - The new home business also exceeded expectations with a 72.7% year-on-year revenue growth in Q4, and GTV growth of 49.3% [2]. - The home decoration segment showed a 12.8% year-on-year revenue growth, with a significant increase in contract amounts [3]. Operational Efficiency and Innovations - The company is leveraging AI tools to enhance operational efficiency, including AI-driven customer service and property management systems, which have shown improvements in operational metrics [15][18]. - The home decoration business is expected to achieve quarterly breakeven due to improved supply chain management and the introduction of new product offerings [3][16][17]. Market Context - The report highlights a recovery in the real estate market, particularly in existing homes, driven by favorable policies and a significant increase in transaction volumes [13]. - The rental business has seen a substantial increase in managed properties, with operational efficiencies improving customer satisfaction and reducing vacancy periods [14].