FAST NEWS: KE Holdings swings back to black on real estate rebound
The latest: Residential real estate broker KE Holdings Inc. (BEKE.US; 2423.HK) on Thursday reported a 61.5% year-on-year jump in revenue to 20.28 billion yuan ($2.93 billion) in the first quarter, as it swung back to the black with a 2.75 billion yuan profit for the period.
Looking up: Chairman and CEO Stanley Peng said the Chinese real estate market has rebounded significantly with an improving economy, fueling gains in the company’s gross transaction value (GTV) for its existing and new home businesses by 77.6% and 44.2%, respectively, in the first quarter.
Take Note: The company’s total operating costs for the period increased by 34.9%, mainly due to a 58.5% year-over-year increase in external commissions and a 14.9% year-over-year increase in internal commissions and compensation.
Digging Deeper: China’s curbs on housing speculation, coupled with its economic slowdown, have caused debt-ridden developers to teeter on the brink of bankruptcy and many housing projects to go unfinished, depressing activity in China’s overbuilt real estate market. KE Holdings, which operates a network of well-known green Lianjia property brokerage shops, has also suffered in the resulting slowdown due to its dependence on transactions to drive revenue. Responding to its predicament, the company unveiled a “one body, two wings” strategy last December, whereby it would enter the home renovation and rental services businesses to completement its mainstay as a residential property broker. The new strategy has achieved initial success, with the company’s home renovation and furnishing revenue up 24.4 times last year to 5 billion yuan, offsetting revenue losses for its home transaction services.
Market Reaction: KE Holdings shares fell on Friday, closing down 6% at HK$39.25 by the midday break. The stock now trades in the middle of its 52-week range.
Translation by Jony Ho
To subscribe to Bamboo Works free weekly newsletter, click here
