To The Moon

$KE Holdings Inc.(BEKE)$ is expected to report its quarterly earnings for period ending 31 Dec 2024 on 18 March 2025 before the market open.

BEKE is expected to show a rise in quarterly revenue of 37.1% increase to CNY27.693 billion from CNY20.2 billion a year ago.

The consensus EPS estimate is expected for KE Holdings to come in at CNY1.77 per share or 24 cents.

KE Holdings (BEKE) Last Positive Earnings Call Gave Investors 20.56% Change

KE Holdings gave a positive earnings call on 21 Nov 2024 and investors have enjoyed a 20.56% change.

The earnings call was largely positive, with significant growth in revenue, existing and new home transactions, and home rental services. However, there were challenges in gross margin decline and non-GAAP net income decrease, as well as labor cost increases.

KE Holdings (BEKE) Guidance

During KE Holdings, Inc.'s Q3 2024 earnings call, the company provided detailed guidance across various metrics, reflecting its continued growth in the real estate market. The Gross Transaction Value (GTV) for existing home transactions reached RMB 477.8 billion, marking an 8.8% year-over-year increase, while the GTV for new home transactions rose by 18% to RMB 227.6 billion. The company also reported a 33% and 118% year-over-year growth in revenue from home renovation and furnishing, and home rental services, respectively. Additionally, the number of active stores on the platform increased by 14.6% year-over-year, totaling over 46,800, and the active agent count grew by 24,000 to surpass 420,000. KE Holdings highlighted strategic collaborations with top-tier developers, which accounted for 26% of total new home transactions, and emphasized its commitment to integrity and creativity as core principles guiding its long-term strategy.

Key Considerations for BEKE’s Earnings and Future Performance

Market Context

Real Estate Policy: China’s property sector remains sensitive to government policies. Recent measures to stabilize the market (e.g., easing home-purchase restrictions, lowering mortgage rates) could buoy demand by 2024.

Economic Recovery: A rebound in consumer confidence and economic growth would drive transaction volumes, critical for BEKE’s revenue.

Company-Specific Factors

Business Segments

Existing Home Sales: Likely to benefit from urbanization and upgrade demand. Net revenue reached RMB 22.6 billion, representing a year-over-year increase of 26.8%. GTV for existing home transactions reached RMB 477.8 billion, up 8.8% year-over-year.

Gross margin decreased by 4.7 percentage points year-over-year to 22.7%. Non-GAAP net income decreased by 17.5% year-over-year.

New Home Sales: Dependent on developer liquidity and policy support. GTV for new home transactions increased by 18% year-over-year to RMB 227.6 billion.

Despite growth, the new home market faced a bottoming out stage with weak supply and demand.

Emerging Services (e.g., home renovation, financial services): A growth area diversifying revenue streams. Revenue grew year-over-year by 33%, with contracted sales reaching RMB 4.1 billion. Revenue from home rental services increased by 118% year-over-year, with over 360,000 units managed.

Operational Efficiency: BEKE’s tech-driven platform and cost controls could improve margins. Active stores on the platform increased by 14.6% year-over-year, with a net addition of nearly 6,000 stores.

Risks:

Prolonged property market weakness, regulatory tightening, or macroeconomic headwinds (e.g., high youth unemployment).

Competition from rivals like Anjuke or digital platforms expanding into real estate. Contribution margin for existing home transactions declined due to increased fixed labor costs.

KE Holdings (BEKE) Price Target

Based on 1 Wall Street analysts offering 12 month price targets for KE Holdings Inc. Sponsored ADR Class A in the last 3 months. The average price target is $24.93 with a high forecast of $24.93 and a low forecast of $24.93. The average price target represents a 2.21% change from the last price of $24.39.

From the recent Chinese ADRs recovery, we might be able to see a stronger performance from BEKE if it can show an increased buyer sentiment with policy stimulus, this could help to lead BEKE to strong GTV growth. BEKE’s emerging services gain traction, boosting profitability.

There is also a worry of stagnant demand and price declines pressure transaction volumes, squeezing commissions.

But I am expecting BEKE to have a gradual recovery with low-to-mid single-digit revenue growth, supported by market stabilization.

Technical Analysis - Exponential Moving Average (EMA)

With the recent performance of Chinese ADRs stock and the policy stimulus expectation to boost consumer demand, BEKE have enjoy a nice gap up in its share price after trying for a daily uptrend last week, it managed to close at its previous highs on Friday (14 Mar).

We are also seeing RSI picked up and it is also forming a potential crossover with the RSI MA, this could mean a bullish reversal could be coming from BEKE, but we need to see increased buyer sentiment with policy stimulus which can show a better GTV growth.

Summary

For Q4 2024, BEKE’s performance will hinge on China’s economic trajectory and property market policies. While the company is well-positioned as a market leader, we as investors should monitor policy shifts and macroeconomic data.

If BEKE could show an increased buyer sentiment, I would think its GTV growth should be significant. I will be watching these metrics closely.

• Gross Transaction Value (GTV): Core indicator of market activity.

• Net Income Margin: Reflects cost management amid revenue pressures.

• Guidance: Management’s outlook on policy impacts and strategic initiatives.

Appreciate if you could share your thoughts in the comment section whether you think BEKE net income margin could provide a significant improvement.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.