China's Biggest Portal Company KE Holdings (Beike) Returns to Profitability in Q3 as Secondary Market Picks Back Up

November 30, 2022
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Leading Chinese real estate brokerage and portal company KE Holdings (aka Beike) has released its numbers for the third quarter of the 2022 financial year. Highlights of a quarter that saw the company's "operating efficiency and profitability improved significantly" included:

  • Gross Transaction Volume decreased 11% year-on-year to $103.6 billion.
  • Net Revenue decreased 2.8% year-on-year to stand at $2.5 billion for the quarter.
  • Net Income was $101 million - compared to a net loss of $274 million in the comparison period.

The market conditions in China remain adverse. The impact of covid restrictions, the drying demand for investment-class real estate, the end of cheap capital and the impact of the Evergrande crisis saw the GTV of Beike's new home segment drop 36% year-on-year.

The company's secondary segment performed well in the quarter however with CEO & Chairman Stanley Yongdong Peng saying:

“In the third quarter, our existing home sales outperformed the market, fueled by our strength in ACN as well as benefitting from our efforts to accelerate the development of this business through optimized empowerment of service provider and platform operations.

Our new home sales maintained a healthy momentum as we further promoted our commission-in-advance model and collaborated with selected developers. At the same time, we assisted customers to identify and minimize risks associated with construction delays and contributed to healthy industry governance."

KE Holding moved into the renovations business last year with the $1.2 billion acquisition of Shengdu Home Renovations Co in 2021 as part of its strategy to be a one-stop shop for every home-based consumer purchase in China. The segment saw an uptick in the third quarter with revenues at RMB2.0 billion (US$0.3 billion), compared to RMB66 million in the same period of 2021.

"Our home renovation and furnishing services are progressing on track and continuing to outpace the rest of the industry, with rapidly growing orders and improving average selling price supported by the traffic referrals from our core businesses and our full-service business model which includes home furnishing,” said Yongdong Peng

The turnaround in KE Holdings' bottom line was attributed to decreased operating expenses with spending on general and administrative costs down 26% against the comparison period and R&D dropping more than 50%. The company's press release also pointed to a higher gross profit margin, personnel severance and optimised operational efficiency in the quarter.

In terms of operational metrics, the 42.6 million monthly active users represented an 8% drop in traffic year-on-year for the Chinese portal. There was a slight uptick compared to the previous quarter in terms of agent numbers.

November 30, 2022
Edmund got to know the world of portals and marketplaces working at Mitula Group (which became Lifull Connect after the buyout in 2018). He worked directly with hundreds of portals across the world in his role in the content department for three and a half years before transferring to the SEO department to understand the inner workings of listings sites. He joined Online Marketplaces as Head of Content in March 2020.

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