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Zebra Consumption Yangzhe

Against the backdrop of a general downturn in the real estate industry, Beike, China's largest real estate transaction agency platform, has developed an independent trend.

After the market closed on August 12, the company simultaneously disclosed its 2024 interim results and unaudited second-quarter financial results, and timely announced an expansion and extension of its share repurchase plan. Yesterday, amid the cheers of small and medium-sized investors, the company's stock price soared as soon as it opened, with the highest intraday increase approaching 9%.

For now, the company is still in an important period of cultivating its internal strength. On the one hand, its profitability is facing severe tests. On the other hand, although the non-real estate transaction business it has cultivated has grown rapidly, it is difficult to support its performance for the time being.

The real estate industry has entered a period of deep adjustment, and tremendous changes are also taking place within Beike. The business model has shifted from direct operation to franchising, and the business structure is cultivating a second curve outside of real estate transaction business.

Since the beginning of this year, the company has frequently appeared in the land auction market in hot cities. At the end of July, it finally won two plots of land in Xi'an as it wished. This is definitely not a simple matter of acquiring land and building houses. Perhaps it is using its own big data and insights into users to try a reverse customization experiment.

You know, since the start of the Chinese real estate market in the 1990s, it has gradually solved the problem of "whether there is a property or not" and has now reached the stage of solving the problem of "how good is it". Perhaps this is the time for industry newcomers like Beike to take action.

Shell’s ambition is to “settle down” its home.

Revenue and net profit both fell

In the second quarter of this year, Beike-W (02423.HK) bucked the market trend and embarked on a path of growth, achieving operating income of 23.4 billion yuan and net profit of 1.9 billion yuan, up 19.9% ​​and 46.2% year-on-year respectively.

While disclosing its interim and quarterly results this year, the company also announced an expansion and extension of its share repurchase plan. With these favorable factors, the stock price surged in the market, with the highest intraday increase of 8.93% yesterday, and finally closed at HK$38.60, up 7.67%, with a total market value of HK$136.8 billion.

However, the situation of Shell is still not optimistic throughout the first half of the year. During the period, the company's net income was 39.748 billion yuan and net profit was 2.333 billion yuan, down 0.04% and 42.38% year-on-year respectively; the adjusted net profit was 4.086 billion yuan, down 31.04% year-on-year.

There has been no significant improvement in the real estate market in the first half of this year. Whether it is industry investment, newly started construction area, or commercial housing sales, there is still a clear downward trend.

The market changes are clearly reflected in Beike. In the first half of this year, the company achieved a total transaction volume of 1,468.9 billion yuan, a year-on-year decrease of 16.2%.

Among them, the total transaction volume of existing housing was 1023.8 billion yuan, the total transaction volume of new housing was 387.1 billion yuan, and the total transaction volume of emerging businesses and others was 50.3 billion yuan, down 8.7%, 32.4% and 3.9% year-on-year respectively. Only the total transaction volume of home improvement and home furnishing business increased by 24% year-on-year to 7.6 billion yuan.

Profitability is put to the test

According to the company's interim results, the company's gross profit was approximately 10.639 billion yuan, a year-on-year decrease of 9.0%; the gross profit margin was 26.77%, a decrease of 2.64 percentage points from the same period last year.

Against the backdrop of the overall weakness in the domestic real estate market, the company's traditional real estate transaction business has been greatly affected.

During the period, the net revenues of existing housing business and new housing business were RMB 13.062 billion and RMB 12.850 billion, respectively, down RMB 2.535 billion and RMB 4.249 billion year-on-year, down 16.25% and 24.85%, respectively.

During the same period, the commission income from existing housing was 10.6 billion yuan, a year-on-year decrease of 17.55%. This was mainly due to the decrease in the total transaction amount of existing housing transactions facilitated by Lianjia stores and the decrease in the commission rate charged by Lianjia stores in Beijing for existing housing business. In addition, there was a decrease in income from platform services and franchise services.

The same is true for the new home transaction business. The external commissions paid by the company to Beilian brokers and other channels accounted for an increased proportion of the profit margin contributed by the net income of the new home transaction business, and the net income of this business decreased, resulting in a decrease in the profit margin contributed by the business.

In addition, the sharp increase in sales and marketing expenses is also one of the factors affecting gross profit margin. In the first half of this year, the company's sales and marketing expenses were 3.505 billion yuan, a year-on-year increase of 19.10%. These expenses were mainly due to the increase in home furnishing business expenses.

As of the end of June this year, the company's adjusted operating profit was 3.8 billion yuan, a year-on-year decrease of 36.67%. The adjusted operating rate was 9.5%, far lower than 15.0% in the same period last year.

During the same period, the company's cash and cash equivalents were 9.409 billion yuan, a year-on-year decrease of 70.37%.

The rise of the second curve

The domestic real estate market is adjusting at an accelerated pace. The non-real estate transaction business that Shell has painstakingly cultivated - home improvement and home furnishing business, and house rental service business - has emerged in market tests and has become the company's second growth curve.

In the first half of this year, the company's home furnishing business had a net income of 6.449 billion yuan, a year-on-year increase of 59.9%. In addition to the order growth driven by the synergy between real estate transaction business and home furnishing business, there was also a growth in contributions from new retail channels (such as custom furniture, soft furnishings and electrical appliances).

The business could have grown faster, but the company chose to slow down. In a recent earnings call, Chairman and CEO Peng Yongdong said the reason for slowing down was to find a balance between business scale and quality.

In 2024, the company will focus on building the underlying capabilities of the home furnishing business, promoting digital construction, and especially promoting the realization of a unified national business model framework for the home furnishing business. Compared with the previous version, Home SaaS has been upgraded to version 2.5 and has been implemented in some cities.

This version can already issue standardized construction drawings and conduct automatic decoration quotation, which adds a lot of certainty to delivery. From the second quarter of this year, the construction period of basic decoration plus the main material construction period is about 100 days, which is about 11 days less than the same period last year.

The revenue of housing rental service business reached 5.813 billion yuan, a year-on-year increase of 176.7%. It mainly came from the increase of managed houses in the "Xinxinzu" model. As of the end of the second quarter of this year, Xinxinzu managed more than 300,000 houses, compared with more than 120,000 houses in the same period last year. At the same time, the company's long-term rental apartments achieved more than 14,000 managed houses, a year-on-year increase of 100%.

In addition, during the same period, emerging businesses and other businesses achieved net income of RMB 1.574 billion.

Driven by the above-mentioned business, the company's non-real estate transaction business revenue accounted for 34.8% in the first half of this year, an increase of 17 percentage points from the same period last year.

It is worth noting that in the non-real estate transaction business, the company continues to explore another business line. Against the backdrop of a general slowdown in land acquisition by real estate developers this year, Beike went against the market trend and participated in land auctions in Beijing and Guangzhou. It eventually won two residential plots in Xi'an for 134 million yuan at the end of July, entering the real estate development business. This may be an attempt by the company to rely on its own big data advantages to enter the real estate development field and create a new product system.