20260317-招银国际-Profitability_improvement_on_track_7页_728kb

Ke Holdings (BEKE US) Summary

Core Content

Ke Holdings (BEKE US) reported its 4Q25 financial results, showing a revenue decline of 28.7% YoY to RMB22.2bn, in line with the Bloomberg consensus. Non-GAAP net profit reached RMB0.5bn, a 61.5% YoY decline, which was better than the previously forecasted RMB0.4bn. For the full year of 2025, total revenue grew 1% YoY, while non-GAAP net profit declined 30% YoY due to industry headwinds. The company expects earnings recovery in 2026E, driven by cost optimization in the core housing transaction business and profitability improvements in new businesses.

Key Financial Highlights

• Revenue (RMB mn):

  • FY24A: 93,457
  • FY25A: 94,580
  • FY26E: 89,976
  • FY27E: 97,844
  • FY28E: 105,327

• YoY Growth (%):

  • FY24A: 20.2
  • FY25A: 1.2
  • FY26E: -4.9
  • FY27E: 8.7
  • FY28E: 7.6

• Non-GAAP Net Profit (RMB mn):

  • FY24A: 7,211.1
  • FY25A: 5,016.9
  • FY26E: 6,988.8
  • FY27E: 8,468.1
  • FY28E: 10,348.9

• YoY Growth (%):

  • FY24A: -26.4
  • FY25A: -30.4
  • FY26E: 39.3
  • FY27E: 21.2
  • FY28E: 22.2

• Non-GAAP Net Profit Margin (%):

  • FY24A: 7.7
  • FY25A: 8.5
  • FY26E: 7.8
  • FY27E: 8.7
  • FY28E: 9.8

• EPS (Adjusted) (RMB):

  • FY24A: 6.44
  • FY25A: 4.59
  • FY26E: 6.40
  • FY27E: 7.83
  • FY28E: 9.63

• P/E (x):

  • FY24A: 32.1
  • FY25A: 42.6
  • FY26E: 24.5
  • FY27E: 18.8
  • FY28E: 14.6

• Target Price (US$): 23.00 (Previous: US$21.80)

• Up/Downside: 36.1%

• Current Price (US$): 16.90

4Q25 Performance

• Core Housing Transaction Business:

  • Existing Home Transactions (EHT): GTV declined 35% YoY, revenue declined 39% YoV.
  • New Home Transactions (NHT): GTV declined 42% YoY, revenue declined 44% YoY.
  • Despite revenue declines, the company noted sustained market share gains in EHT.

• New Businesses:

  • Home Renovation and Furnishing (HR&F): Revenue RMB3.6bn, down 12% YoY.
  • Home Rental Services: Revenue RMB5.4bn, up 18% YoY.
  • Emerging & Other Services: Revenue RMB459mn, up 5% YoY.
  • Combined contribution to total revenue: 43% (up from 29% in 4Q24).

• Profitability:

  • HR&F contribution margin: 31.4%, up 0.7ppts YoY.
  • Home Rental Services contribution margin: 8.6%, up 3.6ppts YoY.
  • Total non-GAAP operating expenses: RMB4.5bn in 4Q25, down from RMB5.6bn in 4Q24.
  • For 2026E, non-GAAP operating expenses are expected to decline to RMB14.0bn, a 14% YoY decrease.

1Q26 Outlook

• Revenue Forecast: RMB18.7bn, down 20% YoY, attributed to industry headwinds and accounting changes.
• Non-GAAP Operating Profit: RMB1.1bn, down 2% YoY.
• Non-GAAP OPM: 6.0%, up from 4.9% in 1Q25.
• GTV Decline: EHT down 10% YoY, NHT down 39% YoY.

Industry View

• Sales Trends:

  • New home sales volume in 30 cities: -22% YoY growth YTD.
  • Secondary home sales volume in 14 cities: -10% YoY growth YTD.
  • Secondary market shows stronger momentum than new homes, with policy packages activating liquidity in core cities.

• Challenges:

  • Demand remains weak due to income uncertainty, price concerns, and delivery risks.
  • High unsold inventory (438 mn sqm) and developer caution impact supply.

• FY2026E Forecast:

  • New home sales: decline 6% YoY to RMB7.1tn.
  • Secondary home sales: decline 11% YoY to RMB6.5tn.

Valuation and Forecast Revisions

• SOTP-based TP: US$23.0, up from US$21.8.
• Valuation Components:
  • Beike Core: US$22.0/ADS.
  • Shengdu: US$1.0/ADS.
• Non-GAAP PE: 26.3x for 2026E.
• Forecast Revisions:
  • Revenue for 2026E: RMB90.0bn, unchanged from previous estimate.
  • Non-GAAP net profit for 2026E: RMB7.0bn, unchanged.
  • The forecast implies a 39% YoY growth in non-GAAP net profit.

Financial Summary

• Income Statement:

  • Revenue: RMB89,976bn for 2026E.
  • Gross profit: RMB20.8bn.
  • Operating profit: RMB5.2bn.
  • Non-GAAP net profit: RMB7.0bn.
  • Adjusted net profit: RMB6.989bn.

• Balance Sheet:

  • Total assets: RMB122.810bn for 2026E.
  • Total liabilities: RMB51.196bn.
  • Total shareholders equity: RMB71.528bn.
  • Total equity and liabilities: RMB122.810bn.

• Cash Flow:

  • Net cash from operations: RMB8.155bn for 2026E.
  • Net cash from investing: RMB-820mn.
  • Net cash from financing: RMB-442mn.

Key Figures and Notes

• Shareholding Structure:

  • Propitious Global: 25.4%.
  • Tencent Mobility: 7.3%.

• Stock Data:

  • Market Cap: US$19,234.0mn.
  • 52-week High/Low: US$23.27/US$15.60.
  • Total Issued Shares: 1,138.1mn.

• Performance:

  • 12-mth Price Performance: -17.0% absolute, -17.4% relative.

Valuation Models

• Core DCF Valuation:

  • NPV of FCF: RMB41,788mn.
  • Discounted terminal value: RMB80,195mn.
  • Enterprise value: RMB121,983mn.
  • Equity value: RMB175,613mn.
  • Valuation per ADS (USD): US$22.0.

• SOTP Valuation:

  • Beike Core: RMB175,613mn.
  • Shengdu: RMB8,000mn.
  • Total valuation: RMB183,613mn.
  • Valuation per ADS (USD): US$23.0.

Conclusion

Despite challenges in the housing transaction industry, Ke Holdings is on track for profitability improvement, with cost optimization and new business growth expected to drive earnings recovery in 2026E. The company's SOTP-based target price is lifted to US$23.0, maintaining a BUY rating.