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's Q2 performance shows resilience with a total transaction volume of 878.7 billion yuan, a year-on-year increase of 4.7%, and net income of 26 billion yuan, up 11.3% [2] - Non-real estate transaction service revenue reached 41% of total net income, indicating a diversified growth strategy [2][5] - The company is undergoing a significant transformation, focusing on balancing scale and efficiency, adapting to consumer demand changes, and leveraging rapid technological advancements [2][8] Business Strategy - Beike is shifting from a scale-focused approach to enhancing network potential and single-point efficiency in real estate transactions [3][4] - The company has established a solid competitive moat through its ACN cooperation network and real source system, addressing the scarcity of quality assets and transaction security [3] - Beike's operational strategy includes refined management and initiatives like a store points system to improve service quality [4] Performance Metrics - In H1, Beike's second-hand transaction volume increased by 26%, outperforming the market's estimated growth of 19%, while new home transaction volume rose by 19% [4] - The gross transaction value (GTV) for existing homes reached 583.5 billion yuan, a 2.2% increase, and new homes GTV was 255.4 billion yuan, up 8.5% [4][6] - The home decoration and furnishing business generated net income of 4.57 billion yuan, a 13% increase, with a profit margin of 32.1% [6] AI Integration - Beike is integrating AI into its operations to enhance efficiency and customer experience, positioning AI as a new production resource [8][10] - The AI CRM tool "Lai Ke" has been implemented in over 60 cities, with more than 335,000 agents using it, significantly improving operational efficiency [8][9] - The company aims to use AI to standardize processes and allow service providers to focus on building trust and delivering high-quality services [9][10] Future Growth - Beike's "one body, three wings" strategy is driving structural changes and creating new growth drivers beyond traditional real estate transactions [5][11] - The company is focusing on customer-centric product design in its development projects, utilizing data-driven insights to enhance living experiences [7] - Beike's exploration of AI and data integration is expected to redefine the residential service landscape, enhancing service delivery and operational efficiency [10][11]