Dedicated to making homes better place with one-stop living services on its platform, Beike will explore more opportunities in the home renovation and furnishing sector
BEIJING, Aug. 23, 2022 /PRNewswire/ -- KE Holdings Inc. ("Beike" or the "Company") (NYSE: BEKE and HKEX: 2423), a leading integrated online and offline housing platform empowered by property technology, today announced its unaudited financial results for the second quarter ended June 30, 2022.
With proactive easing policies for the industry and effective pandemic controls, China's real estate transaction market saw positive changes. As a result, Beike achieved a net revenue of RMB13.8 billion (US$2.1 billion), beating both the high-end of the company's guidance and the street consensus.
Mr. Stanley Yongdong Peng, Chairman of the Board and Chief Executive Officer of Beike, commented, "The existing home market, in particular, benefited from the easing on home purchase restrictions and effective pandemic prevention and control measures. We have focused on strengthening our unique products and services to empower our service providers and serve customers in broader and deeper ways, pivoting our growth trajectory for the long-term."
Beike's total gross transaction value (GTV) decreased by 47.6% year-over-year to RMB639.5 billion in the second quarter of 2022 while the company's existing home transaction services continued to outpace the broader market. According to data from the Beike Research Institute, nationwide GTV of existing home sales dropped 45% year-over-year in the second quarter whereas GTV of existing home transactions on Beike's platform was RMB393.5 billion, down 40% year-over-year, outperforming the market.
"We responded to the macro environment with comprehensive improvements to our operating efficiency and simultaneously stabilized the scale of agents and stores on our platform. For existing home sales, we continued to iterate our ACN's business leads allocation mechanism to strengthen our infrastructure and prioritize operating efficiency and profitability for Lianjia," Mr. Peng said during the earnings call.
For new home sales, Beike actively carried out corporate-to-corporate cooperation with selected developers and promoted commission-in-advance and other focused sales strategies to accelerate sell-through measures. Beike became both a promoter and benefactor of the rising brokerage concentration for new home transactions in the round of market adjustments.
According to data from the National Bureau of Statistics, in the second quarter, the GTV of new residential home sales was down 36% nationwide year-over-year. It expanded from the first quarter, it was the second largest single-quarter decline since 1999. The GTV of CRIC's top 100 real estate companies fell by 53.4% year-over-year. The new home market remained in a trough with weakness on both the supply and the demand side. Amidst the market headwinds, GTV of new home sales on our platform was RMB222.7 billion down 55% year-over-year and up 15.6% quarter-over-quarter.
"Two wings" Sets off By Strong Coordination with Core Businesses
Beike made its "One body, two wings" strategy public early this year, which concluded its core business of housing transactions and services as the One body while home renovation and furnishing services and rental services comprise the two wings.
Dedicated to fulfilling the mission of admirable services, Beike's emerging businesses delivered strong performances in the second quarter.
Home renovation and furnishing services once again bucked market trends and achieved robust growth owing to its full-service business model and the advantages of customer trust and traffic that Beike has built through its core businesses.
According to data from the China Building Decoration Association, the gross output value of leading home renovation and furnishing companies declined 21% year-over-year in the second quarter. Beike's home renovation and furnishing business generated pro forma revenue of RMB1.37 billion, rising more than 10% year-over-year and 58% quarter-over-quarter.
As of the end of the second quarter, the number of contracted rental units managed or co-managed by our rental services exceeded 42,000, an increase of nearly 22,000 units from the end of the first quarter.
In addition, Beike jointly launched the New Youth Initiative in June to provide fresh college graduates with favorable rental rates and commission reductions or exemptions to help them address the difficulty of renting houses at affordable prices. As of July 31, 2022, over 8,000 transactions were completed under the "New Youth Initiative" saving graduates approximately RMB12 million.
"Leveraging our inclusive infrastructure along with our network of community-based service providers and stores and with an unwavering and strengthened commitment to help service providers, we are well positioned to capture the upside of market recovery and serve the society as the one-stop platform for 'living services' that makes home a better place," concluded Mr. Peng.
Mr. Tao Xu, Executive Director and Chief Financial Officer of Beike, added, "Despite the rocky market recovery, we were able to take a series of cost-management measures and allocate resources more efficiency-oriented in order to enhance profitability. As a result, we've gained a larger operating leverage for our housing transaction services business against the challenging market environment. We believe our profitability for the housing transaction services will gradually recover in the second half of this year. We will also continue making the necessary investment in home renovation and furnishing services and Beike rental services. We'd like to highlight that with home prices stabilizing and the need for better living of the Chinese people continuing to increase, the demand for home upgrades will serve as a prominent driver, turbocharging a continued expansion of the market and resulting in higher derived demand for a range of services, including home renovation and furnishing, and rental services. We firmly believe our unique competencies and solid business layout in those sectors will support us to take the fast ride and achieve rapid growth in the long run."
