Ke Holdings' New Businesses Demonstrate Success Amid Decline in Gross Transaction Value

Barclays's Jiong Shao raised their price target on Ke Holdings (NYSE: BEKE) by 7.1% from $28 to $30 on 2024/05/29. The analyst maintained their Strong Buy rating on the stock.

After reviewing Ke Holdings' Q1 2024 earnings, Shao focused on the company's two new businesses, home remodeling and rental, which "once again demonstrated solid success." Despite a year-over-year decline in gross transaction value (GTV) of existing and new homes, management highlighted that the volume of existing home sales in April 2024 and the first three weeks of May 2024 was already up double digits compared to last year.

For Q1 2024, Ke Holdings reported earnings per share (EPS) of $0.16, beating the consensus estimate of $0.12 but missing Q1 2023's EPS of RMB 2.92 by 59.6%. Revenue came in at $2.27 billion, exceeding the consensus estimate of $2.21 billion, but falling 19.2% short of Q1 2023's RMB 20.3 billion. GTV for the quarter stood at $87.2 billion, down 35.2% year-over-year.

Chairman and CEO Stanley Yongdong Peng highlighted the company's focus on quality and efficiency, as well as its efforts to enhance its online and offline service capabilities in housing transactions and new initiatives. Peng emphasized the importance of customer experience and the company's determination to achieve sustained growth in the transformation era.

CFO Tao Xu noted that the housing market saw a year-over-year decline in Q1 2024 due to the high performance seen in the same period last year as a result of pent-up demands from the pandemic. However, compared to the typical Q1 market performance, Xu stated that the existing home market was fairly stable in Q1 2024.

According to top-rated analysts, 100% of them currently rate BEKE as a Strong Buy or Buy, with none recommending a Hold or selling the stock. The consensus forecast among analysts is that BEKE's upcoming year will deliver an EPS of $0.58, representing a 36.7% increase on a year-over-year basis.

Since the release of Ke Holdings' Q1 2024 earnings report on May 23, 2024, the stock price has declined by 0.6%. However, on a year-over-year basis, the stock is up by 17.2%. During this period, BEKE has trailed behind the S&P 500, which has seen a 25.2% increase.

Barclays analyst Jiong Shao, who raised the price target on Ke Holdings, is ranked in the top 20% of Wall Street analysts by WallStreetZen. With an average return of 5.7% and a win rate of 41.8%, Shao specializes in the Consumer Cyclical and Communication Services sectors, among others.

Ke Holdings Inc., headquartered in Beijing, China, operates an integrated online and offline platform for housing transactions and services in the People's Republic of China. The company facilitates various housing transactions, including existing and new home sales, home rentals, and home renovation. Additionally, it provides real estate financial solutions and other related services. Ke Holdings also owns and operates Lianjia, a real estate brokerage branded store. Founded in 2001, the company continues to prioritize quality and efficiency while establishing itself as a one-stop residential services platform.

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