Intensive real estate policies will help the main business stabilize, and the home improvement and leasing business will drive secondary growth
Considering the growth pressure of the real estate transaction business, we lowered the company's 2024-2026 non-GAAP net profit forecast to 79.2/99.2/11.27 billion yuan (previous value: 87.3/105.4/12.43 billion yuan), corresponding to a year-on-year growth rate of -19.3%/+25.3%/+13.7%, corresponding to the diluted EPS of 2.2/2.8/3.1 yuan. The intensive introduction of real estate policies has driven the stabilization of the domestic real estate industry. The company's platform-based advantages and store expansion drive share continue to increase, waiting for the home improvement and rental business to drive a second increase. The current stock price of 43.9 HKD corresponds to 18.1/14.5/12.7 times PE in 2024-2026, maintaining the “gain” rating.
The 2024Q1 real estate exchange market is under pressure, with cost reduction and efficiency driving profit exceeding expectations of 2024Q1 Shell revenue of 16.4 billion yuan (slightly higher than Bloomberg's agreed estimate of 16.3 billion yuan), due to the fact that the scale of stock housing transactions slightly exceeded expectations; non-GAAP net profit of 1.39 billion yuan (higher than Bloomberg's agreed estimate of 1.03 billion yuan), mainly due to the fact that the cost side was better than expected. (1) Stock housing: 2024Q1 Shell Stock House GTV fell 35.8% year on year, and revenue fell 37.6% year on year. Mainly due to the increase in the share of Beilian stores and the base effect of Chainjia's rate adjustments, Chainjia GTV fell 37.9% year on year, and non-Chainjia GTV fell 27% year on year. (2) New housing: The scale has been impacted to a certain extent, but the rate has reached a record high, and the channel value is prominent. 2024Q1 GTV for new homes fell 45% year over year, and the monetization rate reached 3.24%. (3) Home improvement: Revenue of 2.4 billion yuan, an increase of 71% over the previous year. In 2023, the proportion of first-track diversion contracts reached 43%, and 11 cities achieved profits at the operational level. (4) Housing leasing business: Revenue of 2.6 billion yuan, an increase of 189% over the previous year, and the number of housing units managed by worry-free leasing exceeded 240,000 units.
During the downturn of the industry, store expansion drove share growth. As new businesses drive secondary growth, companies actively expand their store network and join brands to drive share growth. The home improvement and home furnishing business continued to optimize and iterate as scale grew, and the leasing business expanded rapidly. (1) Real estate transactions: In the short term, the second-hand housing market transaction volume is growing steadily. The volume of second-hand housing transactions on the Shell platform increased 14% year on year in April 2024. The new housing market may face challenges. Residents' expectations are expected to improve with the strength of both supply and demand policies, and pursue share growth and ecosystem development under medium- to long-term stock trends; (2) New business: the home improvement business continues to improve service quality with improving basic capabilities, and the loss rate is expected to narrow with scale; the long-term rental business operation scale is expected to continue to expand rapidly.
Risk warning: Real estate and economic recovery falls short of expectations, new business expansion falls short of expectations, changes in regulatory policies.