BEKE: The leader of the industrial Internet platform, the recovery at the turning point of the cycle can be expected

In just 9 days in June, 41 places in China issued various policies to stabilize the property market, which is far more intensive than in April and May. Industry insiders believe that the previous package of policies has formed a superposition effect, and the current national real estate chain data shows signs of improvement, indicating that the overall market trend is improving.

The company creatively set up the ACN model, which made it possible for cross-brand cooperation and the franchise of the brand promoted the rapid increase of the company's scale. At the same time, ACN effectively promotes healthy competition and improves broker retention rate and operational efficiency. ACN motivates brokers to provide high-quality services, which is conducive to improving customers' trading experience and satisfaction and enhancing customer stickiness.

In addition, the company has established a real estate dictionary to implement the real housing standard. By the end of 2021, it has included comprehensive information on 257 million houses and can provide multi-dimensional information with the highest granularity, which is the data foundation for the company's ACN model to cooperate and win-win. The company insists on investment in science and technology, the R&D expense rate increases year by year, and continues to output new scientific and technological achievements to improve customer experience and platform operation efficiency.

2. Home decor is expected to create the second growth curve

Facing the blue ocean of the trillion-dollar home decor market, KE Holdings took advantage of the industrial Internet platform to improve the layout of the industrial chain through the acquisition of Shengdu Home Improvement, creating the second curve of growth. The home decor industry has a large market space and the current competition is relatively fragmented. KE Holdings has a huge traffic base and leading scientific and technological strength, and has a strong ability to effectively solve the needs and pain points of the home decor industry.

Zheshang Securities believes that the consumer groups of real estate trading business and home decor business are highly integrated,and KE Holdings , as the largest real estate trading platform in China, has a natural traffic advantage. Through the diversion and synergy of the traditional brokerage business, KE Holdings’ home decor business is expected to expand further increase.

The company has carried out three equity incentive plans since 2018. The annual accrual of equity incentive expenses resulted in continuous losses in the book. After adding back the non-cash expenses and tax effects, the company's adjusted net profit was positive. If the equity incentive expenses are excluded from the operating costs and period expenses, the situation that the company's gross profit margin is lower than the period expense rate for a long time will be reversed.

On May 31, 2022, the company announced in its first quarterly report for 2022 that it proposed a share repurchase program to repurchase up to $1 billion in ADS over the next 12 months. Zheshang Securities believes that the company's current cash flow is abundant, and the equity repurchase shows the company's management's confidence in the company's long-term and sustainable growth potential.