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>We expect KE Holdings (Beike) C4Q23 revenue to be in-line with consensus, with non-GAAP NI 15.6% higher than consensus, mainly due to better existing home sales.</li>
<li>Although overall home living demand remains lukewarm in 2023, the structural substitution from purchasing new home to existing home has accelerated, benefiting Beike, in our view.</li>
<li>We maintain the stock as BUY rating and trim down TP by US$0.5 to US$24.0/ADS to factor in the weak new home sales.</li>
</ul>


We expect KE Holdings (Beike) C4Q23 revenue to be in-line with consensus, with non-GAAP NI 15.6% higher than consensus, mainly due to better existing home sales.
Although overall home living demand remains lukewarm in 2023, the structural substitution from purchasing new home to existing home has accelerated, benefiting Beike, in our view.
We maintain the stock as BUY rating and trim down TP by US$0.5 to US$24.0/ADS to factor in the weak new home sales.


[KE Holdings (BEKE US, BUY, TP US$24) Target Price Change]: Benefiting from Structural Change

<ul>
<li>A new draft measure suggested Shenzhen is planning to accelerate its shantytown renovation and offer more Affordable Houses to meet demand of low-income groups, mimicking Singapore’s HDB flat policy.</li>
<li>As China’s property market gradually heading to the Singapore model, we expect the existing home market to enlarge and new home market to shrink.</li>
<li>We expect Beike existing home business and renovation business to benefit, while new home business hurts. We maintained the stock as BUY rating and TP at US$24.5/ADS.</li>
</ul>


A new draft measure suggested Shenzhen is planning to accelerate its shantytown renovation and offer more Affordable Houses to meet demand of low-income groups, mimicking Singapore’s HDB flat policy.
As China’s property market gradually heading to the Singapore model, we expect the existing home market to enlarge and new home market to shrink.
We expect Beike existing home business and renovation business to benefit, while new home business hurts. We maintained the stock as BUY rating and TP at US$24.5/ADS.


[KE Holdings(BEKE US, BUY, TP US$24.5) Update]: Singaporization of Real Estate Has LT Plus, ST Minus

China/Asia TMT

Shawn Yang

<ul>
<li>We expect BEKE C4Q22 revenue and non-GAAP NI to be 9% and 64% above consensus. The bottom line beat is a result of earning leverage;</li>
<li>We expect the market monthly EH/NH transaction volume to turn positive growth in C1H23, with resumed offline activities and continuing policy support as main drivers</li>
<li>We raise TP by US$1 to US$20: 1) dialling up GTV in 4Q22, 2) faster pace transaction recovery in 2023, and 3) rebase FX from 7.05 to 6.77 in valuation.</li>
</ul>


We expect BEKE C4Q22 revenue and non-GAAP NI to be 9% and 64% above consensus. The bottom line beat is a result of earning leverage;
We expect the market monthly EH/NH transaction volume to turn positive growth in C1H23, with resumed offline activities and continuing policy support as main drivers
We raise TP by US$1 to US$20: 1) dialling up GTV in 4Q22, 2) faster pace transaction recovery in 2023, and 3) rebase FX from 7.05 to 6.77 in valuation.


KE Holdings（BEKE.US) Preview:C4Q22 Marked the Beginning of 2023 Recovery

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

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.

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>


PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.
The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.
In this note, we'll talk about the latest developments, possible outcomes and implications.


China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

China

China Merchants Shekou Industrial Zone Holdings Co., Ltd. operates as a park integrated developer. The Company conducts land and real estate development and management, community development, and other services. China Merchants Shekou Industrial Zone Holdings provides services in China.

China Merchants Shekou Industr (001979 CH)

China Vanke Co., Ltd. operates real estate development businesses.  The Company provides housing renovation, housing loans, real estate brokerage, and other businesses. China Vanke also operates logistics, material supply, and other businesses.

Shanghai Lujiazui Finance & Trade Zone Development Co., Ltd. operates in land development, property management, and infrastructure facilities construction within the Lujiazui Finance and Trade Zone.  The Company also undertakes building and renovation projects.

Shanghai Lujiazui Finance & Trade Zone (600663 CH)

Seazen Holdings Co., Ltd. operates as a real estate development company. The Company develops residential buildings, office buildings, commercial buildings, infrastructure facilities, and more. Seazen Holdings also provides market research, information consulting, and other services.

Yuexiu Property Company Ltd., through its subsidiaries, develops, manages and invests in properties. The Company also invests in a Real Estate Investment Trusts.

Country Garden Services Holdings Company Limited provides real estate development services. The Company develops residential apartments, multi-functional complex buildings, government and public facilities, industrial parks, highway service stations, and schools. Country Garden Services Holdings serves clients in China.

Poly Property Services Co., Ltd. provides property services. The Company offers property management, property projects pre-consultation, post-delivery evaluation and analysis, professional equipment and facilities maintenance, housekeeping, and other services. Poly Property Services provides services in China.

Shoucheng Holdings Limited operates as an investment management company. The Company provides car parking asset operation and management and urban renewal oriented fund management services. Shoucheng Holdings mainly conducts businesses in Hong Kong.

Red Star Macalline Group Corporation Ltd. operates home decoration and furniture stores. The Company engages in leasing floor areas, providing consultation and management services, sales of merchandise, strategy consultation, home design consultation, and construction service. Red Star Macalline Group Corporation conducts businesses in China.

Midea Real Estate Holding Limited operates as a holding company. The Company, through its subsidiaries, provides property management, property sales, property development, and other services.

Fastighets AB Balder owns and manages commercial and residential properties in Sweden.  The Company maintains and rents apartments, offices, shops, banks, hotels and warehouses.  Balder manages the properties through regional offices.

Swire Pacific Limited operates as a holding company. The Company, through its subsidiaries, focuses on real estate, aviation, beverage, industrial, marine services, trading, and industrial businesses. Swire Pacific operates worldwide.

Wharf Real Estate Investment Company Limited provides real estate investment services. The Company develops, invests, and operates residential and commercial properties. Wharf Real Estate Investment operates business in Hong Kong.

Central Pattana Public Company Limited and its subsidiaries develop properties including shopping centers, condominiums, and office, for sale and rental.  The Company's projects include Central Plaza Lardprao, Central Plaza Ram-indra,  Central Plaza Pinklao, Central Festival Center Pattaya, and Central Plaza Ratchada.

Deutsche Wohnen SE operates as a holding company. The Company, through its subsidiaries, focuses on developing and managing residential and commercial properties. Deutsche Wohnen owns and manages residential and nursing facilities for elderly people. Deutsche Wohnen offers property and lease agreement management, ambulant nursing, and assisted living services in Germany.

Vinhomes Joint Stock Company offers real estate services. The Company provides sale and leasing of residential complexes and apartments, as well as professional and personalized services, community building activities, and other facilities. Vinhomes serves customers in Vietnam.

Sun Hung Kai Properties Limited develops and invests in properties. The Company operates and manages hotels, properties, car parking, and transportation infrastructures. Sun Hung Kai Properties serves customers in Hong Kong.

The Howard Hughes Corporation develops real estate. The Company manages master planned communities, shopping malls, and mixed-use developments throughout the United States.

CBRE Group, Inc. provides real estate services. The Company offers property management, valuation, real estate investment, and advisory services. CBRE Group operates offices, data centers, multi-family, hotels, gaming, and retail sectors. CBRE Group serves customers globally.

Aroundtown SA operates as a real estate company. The Company manages and invests in commercial and residential real estate assets from strong fundamentals and growth prospects. Aroundtown serves customers in Europe.

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)