Summary: KE Holdings Inc. will release its second-quarter 2025 financial results before the market opens on August 26. The company continues to improve the efficiency of its stores and brokers, coupled with the implementation of its AI strategy. It expects its market share to increase in the second quarter and its adjusted operating profit margin to increase sequentially.

Business and Financial Highlights for the First Quarter 2025

• Gross transaction value (GTV)1 was RMB843.7 billion (US$116.3 billion), an increase of 34.0% year-over-year. GTV of existing home transactions was RMB580.3 billion (US$80.0 billion), an increase of 28.1% year-over-year. GTV of new home transactions was RMB232.2 billion (US$32.0 billion), an increase of 53.0% year-over-year.

• Net revenues were RMB23.3 billion (US$3.2 billion), an increase of 42.4% year-over-year.

• Net income was RMB855 million (US$118 million), an increase of 97.9% year-over-year. Adjusted net income2 was RMB1,393 million (US$192 million), relatively flat year-over-year.

• Number of stores was 56,849 as of March 31, 2025, a 28.6% increase from one year ago. Number of active stores3 was 55,210 as of March 31, 2025, a 29.6% increase from one year ago.

• Number of agents was 550,290 as of March 31, 2025, a 24.3% increase from one year ago. Number of active agents4 was 490,862 as of March 31, 2025, a 23.0% increase from one year ago.

Second Quarter Outlook

According to Bloomberg data, analysts generally expect KE Holdings to report comparable sales of 26.006 billion yuan, adjusted comparable net profit of 1.715 billion yuan, and adjusted earnings per share of 1.49 yuan in the second quarter.

Key Highlights

Despite marginal weakening real estate prices and volume in the second quarter, Beike's brokerage business market share could still increase.

We expect Beike's new and existing home GTV to continue outperforming the broader market in the second quarter, with projected year-on-year growth of +10% and +3% respectively. National Bureau of Statistics data shows that the year-on-year decline in national sales area widened from -2.1% to -5.5% in the April-June period. Price declines accelerated, with the month-on-month decline in new and pre-owned home prices in 70 large and medium-sized cities gradually widening from April to June. Under these circumstances, changes in Beike's brokerage business market share warrant close attention.

Beijing's relaxation of home purchase restrictions outside the Fifth Ring Road has a positive impact on Beike.

On August 8, Beijing relaxed home purchase restrictions outside the Fifth Ring Road, which is expected to temporarily improve transaction activity and boost expectations for policy optimization in Shanghai and Shenzhen. According to data from the China Index Academy, new and pre-owned home transactions outside the Fifth Ring Road in Beijing accounted for 82% and 51% of all transactions from January to July this year. We will continue to monitor the follow-up in other cities and changes in Beike's related businesses.

The home improvement business is expected to break even in the second quarter.

KeKe's home improvement revenue is expected to grow 14% year-on-year in the second quarter. The brokerage business has significantly diverted traffic, driving both hard and soft furnishing orders higher. With continued economies of scale (centralized procurement costs are reduced), KeKe is expected to achieve a break-even quarter.

Full-chain AI engine implementation drives employee efficiency improvements.

KeKe's AI tools are being rapidly implemented and are expected to continue to improve employee efficiency. On the front-end property search side, the AI property search assistant "Pudding" and community MR technology are deeply embedded in the process.

① On the brokerage side, the "Laike" product matrix covers over 200,000 brokers, and the AI contract signing assistant and AI listing assistant are integrated into the transaction process.

② On the home improvement side, this has penetrated into the operational level. For example, "Sheniu" offers style recognition and AI-generated design services, significantly shortening customer decision cycles and increasing conversion rates.

③ On the delivery side, "Beike Cloud Vision" conducts AI video inspections of construction sites, enhancing transparency and standardization. "Beike Smart Construction Site" helps shorten the entire construction acceptance cycle and improve delivery control.

Institutional Views

CCB International: Initially assigned an "Outperform" rating to KE Holdings' Hong Kong shares, with a target price of HK$60.6.

Huatai Securities: Lowered KE Holdings' US target price to US$22.15, maintaining a "Buy" rating.