Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>KE Holdings (BEKE) reported C2Q24 revenue 12%/9% higher than our estimates/consensus, and non-GAAP NI 19%/49% higher than our estimates/consensus, due to market share gain and take rate hike.</li>
<li>We particularly like its business scalability, as its agent efficiency kept stable despite growing connected agents.</li>
<li>We maintain the stock as BUY rating and raise TP to US$24 to reflect the better growth outlook from market share gains.</li>
</ul>


KE Holdings (BEKE) reported C2Q24 revenue 12%/9% higher than our estimates/consensus, and non-GAAP NI 19%/49% higher than our estimates/consensus, due to market share gain and take rate hike.
We particularly like its business scalability, as its agent efficiency kept stable despite growing connected agents.
We maintain the stock as BUY rating and raise TP to US$24 to reflect the better growth outlook from market share gains.


[KE Holdings Inc. (BEKE US, BUY, TP US$24) TP Change]: Market Share Gain Is the Main Catalyst

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Beike reported (12 Aug) 2Q24 results: revenue increased 20% YoY to RMB23.4bn, and was 9% ahead of both our forecast and Bloomberg consensus estimates, thanks to a beat on GTV of both new home transactions (NHT) and existing home transactions (EHT), and stronger-than-expected expansion of NHT aided by strong industry demand.</li><li>Non-GAAP net income was RMB2.7bn, 48% better than both our estimate and consensus, thanks to a beat on revenue and more optimizedthan-expected operating expense spend.</li><li>We remain constructive on Beike’s market share gains for its core business aided by its well-established infrastructure and nimble business operation capability, and are positive on its new business development prospect. Our SOTP-based target price is fine-tuned to US$21.5 (was US$22.0), including US$20.6 for Beike Core and US$0.9 for Shengdu, translating into 20.8x 2024E PE (non-GAAP). BUY</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Beike reported (12 Aug) 2Q24 results: revenue increased 20% YoY to RMB23.4bn, and was 9% ahead of both our forecast and Bloomberg consensus estimates, thanks to a beat on GTV of both new home transactions (NHT) and existing home transactions (EHT), and stronger-than-expected expansion of NHT aided by strong industry demand.Non-GAAP net income was RMB2.7bn, 48% better than both our estimate and consensus, thanks to a beat on revenue and more optimizedthan-expected operating expense spend.We remain constructive on Beike’s market share gains for its core business aided by its well-established infrastructure and nimble business operation capability, and are positive on its new business development prospect. Our SOTP-based target price is fine-tuned to US$21.5 (was US$22.0), including US$20.6 for Beike Core and US$0.9 for Shengdu, translating into 20.8x 2024E PE (non-GAAP). BUYContent is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Ke Holdings (BEKE US) - Solid Market Share Gains Amid Uncertain Environment

<ul><li>We attended (3 Jun) Ke Holdings’ (Beike) 2024 Investor Day, and key takeaways are: 1) Empowered by its strong technological capabilities and supported by the well-established infrastructure network, Beike is heading towards a one-stop residential services platform for better living with ~RMB26.7tn TAM in 2031E (RMB17.7tn TAM for housing transactions and RMB9tn TAM for new business);</li><li>2) Beike’s “customer-first” mindset has been embedded in each of the business pillars, which we think should support its longterm business development;</li><li>3) for new business development, Beike will leverage the integrated platform to address pain points in the home renovation industry, develop network effects among properties, customers and services providers to create economies of scale for its home rental business, and enhance its C2M model in collaboration with partners to create products that are well suited for the market for Beihaojia business. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We attended (3 Jun) Ke Holdings’ (Beike) 2024 Investor Day, and key takeaways are: 1) Empowered by its strong technological capabilities and supported by the well-established infrastructure network, Beike is heading towards a one-stop residential services platform for better living with ~RMB26.7tn TAM in 2031E (RMB17.7tn TAM for housing transactions and RMB9tn TAM for new business);2) Beike’s “customer-first” mindset has been embedded in each of the business pillars, which we think should support its longterm business development;3) for new business development, Beike will leverage the integrated platform to address pain points in the home renovation industry, develop network effects among properties, customers and services providers to create economies of scale for its home rental business, and enhance its C2M model in collaboration with partners to create products that are well suited for the market for Beihaojia business. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Ke Holdings (BEKE US) - Takeaways from 2024 Investor Day

<ul>
<li>KE Holdings (BEKE) reported C1Q24 revenue/non-GAAP NI in-line/35% above consensus and guided a modest revenue growth of 10% YoY in C2Q24</li>
<li>We maintain our view that C1Q24 would be the trough as subsequent improvement, albeit at slower magnitude, should happen from C2Q24</li>
<li>We maintain the stock as BUY rating but lower TP to US$21 to reflect a postponed recovery schedule.</li>
</ul>


KE Holdings (BEKE) reported C1Q24 revenue/non-GAAP NI in-line/35% above consensus and guided a modest revenue growth of 10% YoY in C2Q24
We maintain our view that C1Q24 would be the trough as subsequent improvement, albeit at slower magnitude, should happen from C2Q24
We maintain the stock as BUY rating but lower TP to US$21 to reflect a postponed recovery schedule.


[KE Holdings (BEKE US, BUY, TP US$21) TP Change]: New Stimulus Might Be Needed to Spur the Market

Overseas Chinese Equities, Aequitas Research

Ming Lu

Overseas Chinese Equities

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>In 1Q24, Revenues of Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY.</li>
<li>KE’s revenue decreased by 20% YoY in 1Q24 due to the weak property market.</li>
<li>Bilibili’s value added services revenue grew by 17% YoY and advertising revenue grew by 31% YoY.</li>
</ul>


In 1Q24, Revenues of Xpeng, Tongcheng, Kanzhun, and Gaotu grew by 62% YoY, 50%, YoY, 43% YoY and 34% YoY.
KE’s revenue decreased by 20% YoY in 1Q24 due to the weak property market.
Bilibili’s value added services revenue grew by 17% YoY and advertising revenue grew by 31% YoY.


China Consumption Weekly (27 May 2024): Xpeng, Tongcheng, Kanzhun, Gaotu, KE, Bilibili, and Weibo

China

KE Holdings Inc. operates as an integrated online and offline platform for housing transactions and services. The Company offers existing and new home sales, home rentals, home renovation, real estate financial solutions, and other services. KE Holdings conducts businesses in China.

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KE Holdings (BEKE US)