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Affected by the overall sales decline in the real estate market, the performance of real estate brokerage service platform Beike Holdings (hereinafter referred to as "Beike") has also been affected.

On August 12, Beike released its interim results, with total transaction volume in the first half of the year being approximately 1.47 trillion yuan, a decrease of 16.2% from approximately 1.75 trillion yuan in the same period of 2023.

Although the increase in second-hand housing market transactions in hot cities in the second quarter led to a turnaround in Shell's performance, it still failed to reverse the overall decline in performance in the first half of the year. In the first half of 2024, Shell's net income was 39.7 billion yuan, basically the same as the same period last year; net profit was 2.333 billion yuan, compared with 4.049 billion yuan in the same period of 2023, a year-on-year decrease of 42.3%; adjusted net profit was 4.086 billion yuan, compared with 5.925 billion yuan in the same period of 2023.

In the first half of this year, against the backdrop of declining real estate transaction volumes, Beike is also cultivating the "second curve" of performance growth. Can Beike "overcome mountains and ridges" this time?

The performance in the first half of the year showed a "V-shaped" trend

Looking back at the first half of this year, under the situation of shrinking commercial housing sales nationwide, Shell did "suppress" and move forward. In fact, Shell's performance in the first quarter was even more sluggish, with revenue of 16.4 billion yuan, a year-on-year decrease of 19.2%; net profit of 432 million yuan, a year-on-year decrease of 84.29%; adjusted net profit of 1.392 billion yuan, a year-on-year decrease of 60.91%; total transaction volume of 629.9 billion yuan, a year-on-year decrease of 35.2%.

Entering the second quarter, various regions frequently introduced favorable real estate policies, especially the rapid increase in second-hand housing transactions in hot first- and second-tier cities after the "May 17" new real estate policy, which led to a "reversal" in Shell's second-quarter performance.

The second quarter financial report shows that in the second quarter of this year, Shell achieved a total transaction volume of 839 billion yuan, a year-on-year increase of 7.5%. Among them, the total transaction volume of existing housing transactions was 570.7 billion yuan, a year-on-year increase of 25.0%; the total transaction volume of new housing transactions was 235.3 billion yuan, a year-on-year decrease of 20.2%.

It can be seen that compared with the first quarter, in the second quarter, Shell's existing housing transaction volume has increased significantly. This is mainly due to the fact that with the frequent introduction of favorable policies, the activity of the second-hand housing market in various places has increased, the "price-for-volume" feature is obvious, and the transaction volume of second-hand housing has risen rapidly.

In a conference call on the evening of the day the financial report was released, Shell Executive Director and Chief Financial Officer Xu Tao said: "The second-hand housing market performed well in the second quarter, especially in first-tier cities and some core second-tier cities, where the activity of the second-hand housing market has increased significantly. The year-on-year decline in the new housing market has narrowed month by month since the second quarter, but it is still under pressure overall."

Based on the increase in revenue from existing housing business and non-real estate transaction business, Shell recorded a net income of 23.4 billion yuan in the second quarter, a year-on-year increase of 19.9%; net profit of 1.9 billion yuan, a year-on-year increase of 46.2%; adjusted net profit of 2.69 billion yuan, a year-on-year increase of 13.9%. Despite the impressive performance in the second quarter, Shell failed to reverse the decline in net profit in the first half of the year due to the "drag" of the first quarter's performance.

As total profits declined, Shell's gross profit margin also fell slightly. According to the company's interim results, Shell's gross profit in the first half of the year was about 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.

“One body, three wings” is ready to grow

In July last year, Peng Yongdong, chairman and CEO of Beike, issued an open letter titled "Climbing the Second Mountain, Sounding the Assembly Call", announcing that Beike had launched the "One Body and Three Wings" strategic upgrade and made corresponding organizational structure adjustments. Among them, the "one body" is still real estate brokerage, and the other "three wings" include whole decoration, Huiju and Beihaojia. In fact, whole decoration, Huiju and Beihaojia correspond to home decoration, leasing and residential development respectively.

As one of the "three wings", the home improvement business was the highlight of Shell's performance in the first half of the year. In the first half of this year, the company's home improvement and home furnishing business had a net income of 6.449 billion yuan, a year-on-year increase of 59.9%.

The pace of expansion of the home improvement business could have been faster, but Beike took the initiative to slow down. Peng Yongdong said in a telephone earnings conference: "In fact, this year is a year of slowing down for our home improvement business. Last year we chose to make a rapid scale breakthrough, because the first challenge of doing new business in a large organization is to make everyone confident. Last year we achieved a scale breakthrough while maintaining quality and reputation. Everyone knows that this thing can succeed, which is a very important threshold. But if you run too fast for confidence, the opposite risk is sacrificing customer quality and customer trust."

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

As for Beihaojia, on July 30, Beihaojia won two residential land plots in Xi'an, which was also its first successful land auction in the open market. This business has just started and has not yet contributed to revenue.

At present, the revenue from non-real estate transaction service business of Shell accounts for about 35%, and it has indeed made up for the impact of the decline in traditional brokerage business on revenue. However, from the overall perspective, although the non-real estate transaction service business has developed rapidly, it is still in the early stage of scale expansion and has not been able to reverse the decline in Shell's overall profits in the first half of the year.

For Beike, this company that is constantly making breakthroughs is climbing another "mountain". On the one hand, Beike needs to face the impact of the decline in real estate transaction volume; on the other hand, it also needs to continuously increase cost investment to cultivate emerging businesses and make them "growing stronger."

Beijing News reporter Xu Qian

Edited by Yang Juanjuan and proofread by Yang Li