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>KE Holdings (BEKE) reported C1Q24 revenue/non-GAAP NI in-line/35% above consensus and guided a modest revenue growth of 10% YoY in C2Q24</li>
<li>We maintain our view that C1Q24 would be the trough as subsequent improvement, albeit at slower magnitude, should happen from C2Q24</li>
<li>We maintain the stock as BUY rating but lower TP to US$21 to reflect a postponed recovery schedule.</li>
</ul>


KE Holdings (BEKE) reported C1Q24 revenue/non-GAAP NI in-line/35% above consensus and guided a modest revenue growth of 10% YoY in C2Q24
We maintain our view that C1Q24 would be the trough as subsequent improvement, albeit at slower magnitude, should happen from C2Q24
We maintain the stock as BUY rating but lower TP to US$21 to reflect a postponed recovery schedule.


[KE Holdings (BEKE US, BUY, TP US$21) TP Change]: New Stimulus Might Be Needed to Spur the Market

<ul>
<li>KE Holdings’ (BEKE) reported C4Q23 revenue 6.2%/7.5% above our est./cons.. Its non-GAAP net income miss our est. by 8.3%, due to bad debt write-off and year-end bonus</li>
<li>Although recovery in new home market remains muddy, we view Beike’s commitment to deliver 5% yield through dividend and stock buyback as investor friendly. </li>
<li>We reiterate BUY rating and maintain TP at US$24/ADS . </li>
</ul>


KE Holdings’ (BEKE) reported C4Q23 revenue 6.2%/7.5% above our est./cons.. Its non-GAAP net income miss our est. by 8.3%, due to bad debt write-off and year-end bonus
Although recovery in new home market remains muddy, we view Beike’s commitment to deliver 5% yield through dividend and stock buyback as investor friendly. 
We reiterate BUY rating and maintain TP at US$24/ADS . 


[KE Holdings (BEKE US, BUY, TP US$24) Review]: Investor Friendly & Best-In-Class…Reiterate BUY

<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

China

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KE Holdings (BEKE US)