Citi Research noted in a report that KE Holdings (BEKE.US) achieved better-than-expected revenue and adjusted net profit for 1FQ24, benefiting from its second-hand property business and cost management. The broker also noted that while the company's commission rate reached a record high of 3.24%, total new home sales and profit margins remained weak.
Beike's adjusted profit for 1FQ24 crumpled 61% YoY, but was still 38% and 40% ahead of both market and broker estimates. Operating income fell 19% QoQ and YoY, exceeding consensus and broker expectations by 1-3% respectively. Net profit margin of 8.5% was lower than the 17.5% achieved in 1FQ23 and was flat QoQ. Gross margin was 25.2%, down from 25.5% in 4FQ23. Non-GAAP operating expenses of RMB3.2 billion were better than expected.
During the quarter, total second-hand property transactions fell by 32% YoY and 3% QoQ, compared to the broker's and the market's forecasts of a 37% and 36% YoY decline respectively. New home transactions dropped 45% YoY and 35% QoQ, while broker and consensus forecasts were YoY declines of 38% and 37% respectively. The number of transactions involving top 100 mainland developers plummeted 49% YoY.
Citi also added that Beike had completed 56% of its enlarged US$2 billion buyback programme by the end of March this year, meaning it had repurchased about US$1.1 billion of shares. Summing up the above factors, the broker gave Beike US shares a target price of US$21.1 and a Buy rating.
(Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)
