The adjusted net profit of 2024Q2 was 2.69 billion yuan, up 13.9% year on year and 93.5% month on month:

2024Q2's total transaction volume was 839 billion yuan, up 7.5% year over year. Net revenue of $23.4 billion was recorded during the period, up 19.9% year-on-year. The gross margin for the period was 27.9%, up 0.5 percentage points from the previous year, mainly due to an increase in the profit margin contributed by home improvement and rental services and a decrease in store costs as a share of net revenue.

Adjusted net profit for the period was 2.69 billion yuan, up 13.9% year on year and 93.5% month on month. The company's profitability improved in the second quarter, reflecting the fact that the high base impact of last year's Q1 was basically eliminated.

The operating quality of the first track business continues to improve: 2024Q2's stock housing transaction volume was 570.7 billion yuan, up 25% year on year, achieving net revenue of 6.4 billion yuan, up 14.3% year on year. The revenue growth rate was lower than the transaction volume growth rate mainly because the commission rate charged by Beijing Chainjia stores decreased, and the contribution profit margin returned to 47.5%, reflecting the good operating leverage brought about by the restoration of transaction scale. The transaction volume of new housing was 235.3 billion yuan, down 20.2% year on year, achieving net revenue of 7.9 billion yuan, down 8.8% year on year. The decline in revenue growth was less than the decline in transaction volume, mainly due to an increase in monetization rates. During the period, the transaction rate for the new housing business was 3.37%, another record high, and the proportion of quick commissions remained at around 50%. Among them, the share of commission revenue for developers of central enterprises increased to 55% compared to the first quarter, and fast commissions accounted for 40%. The number of receivables turnover days for the new housing business returned to its historical position of 45 days, which shows the company's good risk management and control.

Revenue from the home improvement and rental service business increased dramatically, and gross margin improved: the company's home improvement and home furnishing business transaction volume during the period was 3.4 billion yuan, an increase of 22.3% over the previous year. Achieved revenue of 4 billion yuan, an increase of 53.9% over the previous year, mainly due to increased orders, increased contributions to the new retail business, and shortened delivery cycles due to customer acquisition and conversion effects of a racetrack. The revenue from the housing rental business was 3.2 billion yuan, an increase of 167.1% over the previous year. Among them, the affordable rental business doubled to 0.3 million units. The revenue share of the company's non-real estate transaction business increased sharply by 21 percentage points to 35%, and the revenue share of the home improvement business and leasing business increased by 19 percentage points to 31%. Diversified business supports the long-term stable development of the company's revenue. The contributing profit margins of the home improvement and home rental business were 31.3% and 5.8%, respectively, up 0.7 percentage points and 0.3 percentage points from month to month, respectively.

The target price is HK$58.3/$22.4, maintaining the purchase rating: As a leader in the residential services market, the company maintains strong operational resilience and financial resilience despite fluctuations in the real estate market, and continues to provide the company with market-surpassing performance. At the same time, the company has solid cash reserves and actively gives back to shareholders. Since the launch of the repurchase project in September '22, the company's cumulative repurchase amount is about 1.39 billion US dollars, and the number of repurchased shares accounts for about 7.5% of the total share capital issued before the repurchase project began. Recently, the company also increased the repurchase authorization from $2 billion to $3 billion, extending the repurchase program period until August 31, 2025. We are optimistic about the steady development of the company's “integrated” business and the increase in industry penetration rate, and the “tri-wing” business to consolidate the company's resilience through the post-real estate cycle. The adjusted net profit for the next three years is expected to be 7.7 billion, 8.5 billion and 9.5 billion dollars, respectively, giving the company 15 times PE in 2024, plus the target price of HK$58.3/$22.4 after holding generalized cash, maintaining the purchase rating.