20260520-招银国际-Embracing_the_profit_release_cycle_6页_1mb

Ke Holdings (BEKE US) Summary

Core Content

Ke Holdings (BEKE US) reported its 1Q26 financial results, showing a revenue decline of 19.0% YoY to RMB18.9bn, which was inline with Bloomberg's consensus and the firm's forecast. However, non-GAAP net profit rose by 15.7% YoY to RMB1.6bn, significantly beating expectations. The non-GAAP net profit margin reached 8.5%, a 7-quarter high, highlighting the company's efficiency-driven transformation.

Looking ahead, management guided for strong 2Q26 revenue with a non-GAAP OPM of ~12% and NPM of ~9-10%. This guidance implies a non-GAAP NP of ~RMB2.2-2.4bn. For 3Q/4Q26E, the company expects a non-GAAP NPM of 7-8%, leading to an estimated FY26 non-GAAP NP of ~RMB7.0-7.7bn and a margin of 7.9-8.7%, indicating a meaningful upward revision from the previous forecast of 7.0%.

Main Points

• Revenue Performance:

  • 1Q26 revenue declined 19.0% YoY to RMB18.9bn.
  • 2Q26E revenue is expected to be ~RMB24bn, with a strong growth trajectory for the full year.
  • FY26E revenue is projected to reach 7.9-8.7% non-GAAP margin, which is higher than the previous forecast.

• Profitability Improvements:

  • Non-GAAP net profit margin hit a 7-quarter high of 8.5% in 1Q26.
  • Operating expenses declined 22.3% YoY to RMB3.29bn, reaching a 3-year low.
  • The company achieved cost optimization through AI-enabled marketing, staff streamlining, and increased designer efficiency.

• New Business Contributions:

  • Home rental business managed ~750k units (+50% YoY), with CM rising to 14.8%.
  • Home renovation business achieved a CM of 36.2% despite a 20.6% revenue decline, with management aiming for breakeven in FY26.
  • Both new businesses are becoming significant contributors to profitability.

• Valuation and Investment Outlook:

  • The target price was raised to US$24.0, reflecting a stronger-than-expected profitability trajectory.
  • This translates into a 25.6x 2026E non-GAAP PE.
  • The firm maintains a BUY rating, citing strong growth and margin improvements.

Key Information

• Earnings Summary:

  • Revenue for FY24A to FY28E shows a fluctuating trend with a notable increase in FY26E.
  • Adjusted net profit is expected to grow significantly, reaching RMB10,564mn in FY28E.
  • The company's profitability has shown consistent improvement, especially in non-GAAP net profit margin.

• Valuation Metrics:

  • The current P/E ratio is 23.9, while the diluted P/E is 24.9.
  • The target price is US$24.0, with a potential upside of 22.9% from the current price of US$18.72.
  • The SOTP valuation is US$27,267mn, with a valuation per ADS of US$24.0.

• Financial Highlights:

  • The company's net cash from operations has improved significantly in recent years.
  • The net debt-to-equity ratio is negative, indicating strong liquidity.
  • The current ratio is above 1.5, reflecting good short-term liquidity.

Forecast Revision

• The company revised its FY26E forecast upwards, with non-GAAP net profit expected to reach RMB7.5bn, compared to the previous forecast of RMB7.0bn.
• The growth in revenue and profit is expected to continue, with non-GAAP net profit margin projected to increase in subsequent years.

Analyst Information

• The report was prepared by Saiyi HE, Ye TAO, Miao ZHANG, and Wentao LU, with Shuyin GUO as a supporting analyst.
• The firm maintains a BUY rating on BEKE US, based on the improved profitability and growth prospects.

Risk and Disclaimer

• The report contains forward-looking statements and is subject to market risks.
• CMBIGM does not provide individually tailored investment advice and recommends consulting a financial advisor.
• The report is for informational purposes only and should not be construed as an offer or solicitation to buy or sell securities.