20260824-招银国际-Efficiency_gains_broaden_from_cost_control_to_operating_productivity_7页_1mb

Ke Holdings (BEKE US) Summary

Core Content

Ke Holdings (BEKE US) reported strong efficiency gains in 2Q26, with revenue declining 5.7% YoY to RMB24.5bn, slightly above the Bloomberg consensus and the firm's own forecast. Non-GAAP net profit surged 74.9% YoY to RMB3.2bn, significantly exceeding the consensus and estimates. Non-GAAP net profit margin reached 13.0%, a three-year high, reflecting improved operating productivity and efficiency.

Despite a decline in store and agent counts (-0.4%/-3.1%), existing home transaction (EHT) volume grew by approximately 25% YoY, while connected (non-Lianjia) store volume increased by 30%. The company's EHT transaction-volume share in covered cities rose by 4.7ppt YoY, and NHT share increased by 2.8ppt to around 35%. This demonstrates that Beike's earnings power is increasingly driven by productivity per store and agent rather than network expansion.

The company has adjusted its revenue forecasts for FY26-28E, cutting them by 6-12% due to factors such as the migration of the rental business toward net-basis revenue recognition and a more conservative outlook for the recovery in new home transactions (NHT). However, the non-GAAP net profit forecast for FY26E was raised by 13%, attributed to stronger efficiency gains and improved operating productivity.

Key Financial Highlights

• Revenue: 2Q26E reported RMB24.5bn, down 5.7% YoY, slightly above consensus.
• Non-GAAP Net Profit: Surged 74.9% YoY to RMB3.2bn, exceeding consensus by 32%.
• Non-GAAP Net Profit Margin: Reached 13.0% in 2Q26, a three-year high.
• EHT Transaction Volume: Grew by ~25% YoY, despite store and agent count declines.
• NHT GTV: Remained flat YoY, compared to a -10% market decline.
• Contribution Margins: EHT rose to 46.1%, NHT to 28.8%, both up from 39.9% and 24.4% in 2Q25.

New Businesses

• Home Renovation & Furnishing (HR&F): Revenue declined 30% YoY in 2Q26, but contribution margin improved to 39.6% from 32.1%, showing improved unit economics.
• Home Rental Services (HRS): Revenue dropped 15% YoY, but contribution margin rose to 15.3% from 8.4%, indicating a shift toward lower-risk, lighter net-revenue models.
• Forecast: HR&F revenue is expected to decline 27% YoY in 3Q26E, while HRS revenue is projected to fall 20% YoY. Both are expected to return to positive YoY growth in 1Q27E as the business normalizes.

3Q26E Outlook

• Revenue: Forecasted at RMB20.5bn, down 11% YoY and 8% below consensus.
• Non-GAAP Operating Profit: Expected to rise 83% YoY to RMB2.1bn, in line with consensus, indicating a non-GAAP OPM of 10.4% versus 5.1% in 3Q25.
• Core Businesses: Continued improvements in store and agent productivity are expected to support core housing transaction businesses.

Valuation and Target Price

• Target Price: US$22.40, down from US$24.00.
• Non-GAAP P/E: 20.4x for 2026E.
• SOTP Valuation: Based on a total enterprise value of RMB164,088 million, translating to a valuation per ADS of US$22.40.
• DCF Valuation: NPV of FCF is expected to be RMB38,151 million for 2026E, with enterprise value at RMB112,572 million.

Risk Factors

• Slower-than-expected property transaction recovery
• Higher-than-expected receivable impairment from developers
• Delayed profitability of new business lines

Analysts and Contact

• Analysts: Saiyi HE, Ye TAO, Miao ZHANG, Wentao LU, Shuyin GUO
• Contact Information:
  • Saiyi HE: (852) 3916 1739, hesaiyi@cmbi.com.hk
  • Ye TAO: (852) 3850 5226, franktao@cmbi.com.hk
  • Miao ZHANG: (852) 3761 8910, zhangmiao@cmbi.com.hk
  • Wentao LU: luwentao@cmbi.com.hk
  • Shuyin GUO: guoshuyin@cmbi.com.hk

Financial Summary

CMBIGM Ratings

• BUY: Stock with potential return of over 15% over the next 12 months.
• HOLD: Stock with potential return of +15% to -10% over the next 12 months.
• SELL: Stock with potential loss of over 10% over the next 12 months.
• NOT RATED: Stock not rated by CMBIGM.
• OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Important Disclosures

• The information in this report is not suitable for all investors.
• CMBIGM does not provide individually tailored investment advice.
• Past performance does not guarantee future results.
• The value of investments may fluctuate due to market conditions and other factors.
• Investors are advised to consult a professional financial advisor before making investment decisions.