John Lam

John Lamb with UBS inquired about the reasons behind the diminishing alpha in KE Holdings' new home business and sought insights into its future growth potential, particularly regarding market outperformance.

Answer

Tao Xu, CFO of KE Holdings, explained that the narrowing year-over-year growth was due to existing homes being more attractive, a higher base in Q3 last year, and rapid growth from a lower base previously. He outlined future growth opportunities including expanding into more cities with B+ products, increasing brokerage channel penetration, and refining operations for high-end products.

John Lamb asked about the diminishing alpha in KE Holdings' new home business performance, seeking reasons for this trend and insights into the company's future growth potential in this segment.

Answer

CFO Tao Xu explained that the narrowing growth was due to existing home prices being more attractive, a higher base in Q3 2024, and rapid growth in brokerage penetration. He outlined future growth opportunities including expanding into lower-tier cities with B+ products, optimizing collaborative projects, and leveraging home upgrade projects with AI.

John Lam of UBS Group asked what actions management has taken to deliver market outperformance (alpha) amid the property sector downturn, focusing on market share, agent and store productivity, and future growth strategy.

Answer

Executive Director and CFO Tao Xu detailed a strategic shift from scale to efficiency. He stated the company will slow store and agent growth, focusing on consolidating lower-performing assets in Beijing and Shanghai while maintaining stability elsewhere. Tao Xu highlighted systematic scientific management and the long-term importance of AI, citing applications like AIGC marketing and AI-driven CRM tools (Likeu, Qianji) that are already boosting agent conversion rates and productivity.

John Lam from UBS Group AG inquired about the Beihaojia business, specifically its contribution to new home development and how its Customer-to-Manufacturer (C2M) business model is being implemented and reflected.

Answer

CFO Tao Xu explained that Beihaojia's C2M model uses Beike's massive database to provide developers with data-driven insights for project positioning and product design. He noted a total investment of about RMB 2.3 billion in related projects, with one project achieving a nearly 30% IRR, validating the model's ability to enhance sales certainty. Key advantages include a deep understanding of consumer needs and strong market pricing capabilities derived from Beike's core platform data.

John Lam requested an update on the progress and key highlights for KE Holdings' home decoration and furnishing business, as well as its home rental services business.

Answer

CFO Tao Xu reported strong Q1 growth in home renovation, with contracted sales of RMB 3.4 billion (+26% YoY) and revenue of RMB 2.4 billion (+71% YoY), driven by better service integration and delivery capabilities. For the rental business, Q1 revenue reached RMB 2.63 billion (+189% YoY), propelled by the 'Carefree Rent' model, which grew to manage over 240,000 units with an improved occupancy rate of 96.5%.