The scale of real estate transactions exceeded expectations, the rapid growth of new business, and the implementation of short-term policies to maintain “buy” ratings led to a month-on-month improvement in the scale of real estate transactions. The home improvement and long-term rental business remained high. Combined cost reduction and efficiency results showed. We raised the company's 2023 non-GAAP net profit forecast to 9.19 billion yuan (previous value: 8.63 billion yuan); considering the impact of the Beijing chain's commission rate and investment in new business, the 2024-2025 non-GAAP net profit forecast was slightly lowered to 105.9/12.24 billion yuan (previous value: 108.1/ 12.49 billion yuan), corresponding to a year-on-year growth rate of 223.2%/15.3%/15.5%, corresponding to diluted EPS of 2.6/2.9/3.4 yuan. Considering the month-on-month recovery of real estate transactions driven by policy, platformization driven share increases under stock trends, and refined operations to improve quality and efficiency to release profit margins, the home improvement business continues to prove to be the second growth curve. The current stock price of 39.5 HKD corresponds to 14.8/12.9/11.1 times PE in 2023-2025, maintaining a “buy” rating.
The 2023Q3 policy pushed the scale of real estate transactions to exceed expectations and improve gross margin. Revenue and profit all exceeded expectations by 2023Q3, shell revenue of 17.8 billion yuan, which greatly exceeded the upper limit of performance guidelines (16 billion), due to the scale of stock housing transactions and new housing rates exceeding expectations; GAAP net profit of 1.16 billion yuan, far exceeding Bloomberg's unanimous expectations (190 million), due to revenue exceeding expectations and showing results in cost reduction and efficiency. (1) Stock housing: 2023Q3 shell stock house GTV fell 2.2% year on year. Among them, Chainjia GTV fell 13.0% year on year, due to the influence of the high tier city base during the same period; ACN Network actively expanded, and nearly 1,300 new networked stores were added to 2023Q3 in the north. (2) New housing: The scale has been affected to a certain extent, but the rate is still resilient. 2023Q3 GTV for new homes fell 26.5% year on year, and the monetization rate reached 3.07%, up 0.9 pct year on year. (3) Home improvement: 2023Q3 revenue was 3.18 billion yuan, an increase of 72% over the previous year. Among them, the proportion of one-track diversion contracts reached 45%, and 7 of the top ten cities with contract value achieved city-level profits.
The short-term real estate market is recovering along with the demand released by policies. The medium- to long-term home improvement drives the second growth curve. The implementation of short-term real estate policies has driven a moderate recovery in demand for real estate transactions, and the home improvement and home improvement business continues to be optimized and iterated along with scale growth. (1) Real estate transactions: Affected by early market fundamentals and housing price expectations, there are differences in the extent to which policy implementation affects different cities. Shell benefits from high-tier cities and platformization advantages and is more resilient; (2) New business:
With the improvement of basic capabilities and scale expansion, the home improvement business is expected to replicate the real estate brokerage business path and become the second growth curve, and the long-term rental business is growing steadily.
Risk warning: Real estate and economic recovery falls short of expectations, new business development falls short of expectations, and changes in regulatory policies.