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>Beike (BEKE) reported C3Q24 revenue in-line with our estimate and consensus but non-GAAP operating profit 26%/25% below, mainly due to higher commission rebate and agent salaries;</li>
<li>Strong rebound in home transaction volumes in October and November, led to our C4Q24 revenue 16% above consensus. But the rebound needs more stimulus to sustain;</li>
<li>We maintain the stock as BUY and raise TP to US$25 to reflect the near term rebound and steady market share gains.</li>
</ul>


Beike (BEKE) reported C3Q24 revenue in-line with our estimate and consensus but non-GAAP operating profit 26%/25% below, mainly due to higher commission rebate and agent salaries;
Strong rebound in home transaction volumes in October and November, led to our C4Q24 revenue 16% above consensus. But the rebound needs more stimulus to sustain;
We maintain the stock as BUY and raise TP to US$25 to reflect the near term rebound and steady market share gains.


[KE Holdings Inc. (BEKE US, BUY, TP US$25) TP Change]: C3Q24 Review: C4Q24 Rebound but What’s Next?

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 (21 Nov) 3Q24 results: revenue increased 27% YoY to RMB22.6bn, 1.5%/4.7% below Bloomberg consensus/CMBI estimates, mainly due to the mixed performance where existing home GTV (EHT) was dragged by low home transaction sentiment and new home transactions (NHT) were benefited from market share gains.</li><li>Non-GAAP net income was RMB1.8bn, representing a margin of 7.9%, in-line with both our estimates and consensus, thanks to fee controlling measures. We remain positive on Beike given its continuously increasing market share in EHT &amp; NHT businesses and smooth expansion of new business.</li><li>Our SOTP-based target price is lifted to US$23.3 (was US$21.5), including US$22.3 for Beike Core and US$0.9 for Shengdu, translating into 21.4x 2025E PE (non-GAAP). Maintain BUY</li></ul><p><em>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.</em></p>

Beike reported (21 Nov) 3Q24 results: revenue increased 27% YoY to RMB22.6bn, 1.5%/4.7% below Bloomberg consensus/CMBI estimates, mainly due to the mixed performance where existing home GTV (EHT) was dragged by low home transaction sentiment and new home transactions (NHT) were benefited from market share gains.Non-GAAP net income was RMB1.8bn, representing a margin of 7.9%, in-line with both our estimates and consensus, thanks to fee controlling measures. We remain positive on Beike given its continuously increasing market share in EHT &amp; NHT businesses and smooth expansion of new business.Our SOTP-based target price is lifted to US$23.3 (was US$21.5), including US$22.3 for Beike Core and US$0.9 for Shengdu, translating into 21.4x 2025E PE (non-GAAP). Maintain 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) - To Ride on the Policy Tailwind in 4Q

Thematic (Sector/Industry)

<ul>
<li>300750 CH/1211 HK/ JKS US/601012 CH/688599 CH/002459 CH:China cancels and reduces export tax rebate for certain China's advantageous products, forcing production capacity to be rationalize and export prices to rise.(///////////)</li>
<li>1810 HK/LI US/NIO US/XPEV US: It is said that Geely Group is preparing to merge its hybrid and pure electric brands under Zeekr（///////）</li>
<li>BEKE US:Mid-November Home Transaction Growth Remains Strong in First-Tier Cities, While Growth in Second- and Third-Tier Cities Slows Down (+)</li>
</ul>


300750 CH/1211 HK/ JKS US/601012 CH/688599 CH/002459 CH:China cancels and reduces export tax rebate for certain China's advantageous products, forcing production capacity to be rationalize and export prices to rise.(///////////)
1810 HK/LI US/NIO US/XPEV US: It is said that Geely Group is preparing to merge its hybrid and pure electric brands under Zeekr（///////）
BEKE US:Mid-November Home Transaction Growth Remains Strong in First-Tier Cities, While Growth in Second- and Third-Tier Cities Slows Down (+)


[Blue Lotus Daily]:300750 CH/1211 HK/JKS US/601012 CH/688599 CH/002459CH/1810HK/LI/NIO/XPEV/BEKE/ZTO

<ul>
<li>BEKE US: Government cut property transaction related taxes, saving 2.5%-4.5% of transaction costs per unit(+)</li>
<li>1211 HK/TSLA US/1810 HK/XPEV US/NIO US/LI US: EV deliveries in the 45th week of 2024, Xiaomi rebounds, Tesla is strong, NIO and Xpeng are weak （///////////）</li>
<li>ATAT US: Atour Pillow's Double 11 Sales Exceed Expectations, Reaching RMB520mn（+）</li>
</ul>


BEKE US: Government cut property transaction related taxes, saving 2.5%-4.5% of transaction costs per unit(+)
1211 HK/TSLA US/1810 HK/XPEV US/NIO US/LI US: EV deliveries in the 45th week of 2024, Xiaomi rebounds, Tesla is strong, NIO and Xpeng are weak （///////////）
ATAT US: Atour Pillow's Double 11 Sales Exceed Expectations, Reaching RMB520mn（+）


[Blue Lotus Daily]:BEKE US/1211 HK/TSLA US/1810 HK/XPEV US/NIO US/LI US/ATAT US/BIDU US

Andy Fu

<ul>
<li>Minister of MOHURD (Ministry of Housing and Urban Development) said on October 16th that MOHURD planned to renovate 1mn more shanty houses via 100% cash exchange by year end;</li>
<li>We estimate this would inject Rmb0.5-1tn to the hands of shanty town residents. If all these money are putt into the property market, it can drive up transaction by 3-7%;</li>
<li>However, property transaction showed existing home sales growth slowed in September and new home sales remained in negative. The real estate market is in dire need of further stimulus.</li>
</ul>


Minister of MOHURD (Ministry of Housing and Urban Development) said on October 16th that MOHURD planned to renovate 1mn more shanty houses via 100% cash exchange by year end;
We estimate this would inject Rmb0.5-1tn to the hands of shanty town residents. If all these money are putt into the property market, it can drive up transaction by 3-7%;
However, property transaction showed existing home sales growth slowed in September and new home sales remained in negative. The real estate market is in dire need of further stimulus.


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)

[KE Holdings Inc. (BEKE US, BUY, TP US$25) TP Change]: C3Q24 Review: C4Q24 Rebound but What’s Next?

Beike (BEKE) reports in-line revenue but lower operating profit, with a strong rebound in home transaction volumes leading to increased revenue....

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