20260210-招银国际-Cost_reduction_and_new_business_profitability_improvement_to_drive_earnings_recovery_5页_782kb

Ke Holdings (BEKE US) Summary

Core Content

Ke Holdings (BEKE US) is expected to see a recovery in earnings driven by cost reduction and profitability improvements in its new business segments. The company's 4Q25 results are anticipated to show a revenue of RMB22.2bn, a decrease of 28.5% YoY due to a high base in the previous year, and a non-GAAP net profit of RMB427mn, translating into a non-GAAP net margin of 1.9%. These figures align with the Bloomberg consensus when excluding the impact of one-off cost reduction measures.

For 2026E, the company is projected to benefit from cost optimization initiatives in its core housing transaction business and profitability improvements in new businesses, leading to a non-GAAP net profit of RMB7.0bn, representing a 42% YoY growth from 2025E. The target price (TP) has been revised upward to US$21.8 per ADS from US$20.7, based on an SOTP valuation model that incorporates a better long-term operating cash flow outlook. This results in a 25.9x and 21.6x non-GAAP PE for 2026E and 2027E, respectively.

Main Points

• Earnings Recovery: The company is positioned to recover earnings through cost optimization and profitability improvement in new businesses.
• 4Q25 Forecast: Revenue is expected to decline by 28.5% YoY to RMB22.2bn, while non-GAAP net profit is projected at RMB427mn, or 1.9% NPM.
• Target Price: The TP is raised to US$21.8 per ADS, a 16.5% increase from the current price of US$18.71.
• Market Position: Beike is expected to expand its market share in the home transaction business due to strong technological capabilities, superior service quality, and a well-established agent cooperation network (ACN).
• GTV Projections: For FY26E, new home sales GTV is forecast to decline by 6% YoY to RMB7.1tn, while secondary home sales GTV is expected to fall by 11% YoY to RMB6.5tn.
• Profitability Trends: Non-GAAP net margin is expected to improve from 5.2% in 2025E to 7.7% in 2026E and 8.5% in 2027E.

Key Information

• Stock Performance: Over the past 12 months, the stock has delivered an absolute return of 18.4% and a relative return of 18.5%.
• Valuation Metrics:
  • P/E (2026E): 29.4x
  • P/E (2027E): 22.5x
  • P/B (2026E): 1.9x
  • P/CFPS (2026E): 45.6x
• Shareholding Structure:
  • Propitious Global: 25.4%
  • Tencent Mobility: 7.3%
• Market Cap: US$21,766.2 million
• Key Risks:
  • Slower-than-expected GTV growth for new homes and secondary homes
  • Slower-than-expected margin recovery due to more aggressive investment plans

Financial Summary Highlights

Earnings Forecast

Analyst Ratings

• BUY: Stock with potential return of over 15% over next 12 months.
• HOLD: Stock with potential return of +15% to -10% over next 12 months.
• SELL: Stock with potential loss of over 10% over next 12 months.

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• The information is not tailored to individual investors.
• Past performance does not guarantee future results.
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Conclusion

Ke Holdings is expected to recover earnings through strategic cost reduction and profitability improvements in its new business segments. The company has a strong market position and is well-positioned for growth. The TP has been increased to reflect improved long-term cash flow expectations, and the company is rated as a BUY. However, there are risks associated with the industry environment and the company's investment plans.