China's Biggest Portal Company, KE Holdings Sees Yearly Loss of $82 Million as Market Stalls

KE Holdings, the parent company of the leading Chinese real estate marketplace and transaction platform Beike, has released its financial filings for the 2021 financial year. Significant numbers from the company's operations in 2021 include:

• Gross Transaction Volume (GTV) was up 10% on the year at $605 billion but was down 35% on a fourth-quarter year-on-year basis.
• Net revenues were up 14.6% on those of 2020 but again a weak fourth quarter saw revenues drop 21.5% on a year-on-year basis.
• Net loss for 2021 was $82 million, down significantly from the $426 million profit the company saw in 2020

KE Holdings is the largest specialist real estate portal operating company in the world by GTV and revenue and also operates one of the leading brokerages in the country (Lianjia) as well.

Since China's largest developer, Evergrande almost defaulted on its debts in October 2021 the country's property market has been suffering. In October new construction starts fell 7.7% year-on-year and the 0.2% drop in new home prices was the largest seen since 2015.

Commenting on the results in the context of the market situation, Mr. Tao Xu, Executive Director and Chief Financial Officer of Beike, said:

“We achieved topline growth of 14.6% for the full year 2021, demonstrating our resilience despite the sharp market downturn in the second half of last year. As the industry began shifting toward long-term, sustainable growth, we moved quickly in response to the unfolding changes, effectively turning obstacles into opportunities through initiatives to optimize operations and advance our strategies."

While the market as a whole suffered during Q4, so did Beike's non-financial metrics. Traffic, agent numbers and the number of stores operated by Lianjia all declined during the period as Chinese home hunters shelved their plans.

KE Holdings has been deploying resources and manpower to its burgeoning homes redevelopment and decorations business as it looks to mitigate the impact of a market downturn, diversify revenues and ultimately be a party in every transaction Chinese consumers make around their homes.

In July KE splashed out $1.2 billion for Shengdu Home Renovation Co and the company is leaning heavily into its RealseeVR experience, with a reported 70% of listings now captured on the technology. The company's new strategy revolves heavily around this new business as explained by Mr. Stanley Yongdong Peng, Chairman of the Board and Chief Executive Officer of Beike:

“Embracing the significant changes in 2021, we endeavored to look inward for answers and transform our organization, in response to the higher requirements put forward to us by consumers’ fast evolving demand, as well as our country and society in this era. At the end of 2021, we officially launched Beike’s ‘one body, two wings’ strategic upgrade. ‘One body’ refers to our core, which is our existing and new home transaction services business, while ‘two wings’ refers to our home renovation and furnishing offering, and our inclusive housing services.”

“We are resolute in our enduring mission and will strive forward in 2022 to become a one-stop housing related services provider that makes home a better place, simultaneously creating commercial value and contributing to the betterment of society.”