UBS Group released a research report stating that it expects KE Holdings (BEKE.US) third-quarter revenue for the 2024 fiscal year to increase by 29% year-on-year, reaching the upper limit of guidance; adjusted net profit is expected to decrease by 9% year-on-year, implying a net profit margin of 8.5%; second-tier Gross Transaction Value (GTV) is expected to increase by 10% year-on-year, but decrease by 15% quarter-on-quarter; first-tier GTV is expected to increase by 15% quarter-on-quarter, outperforming top 100 developers in contract sales performance. In addition, based on the revival of the Mainland real estate market in October, it is expected that KE Holdings' net profit for the fourth quarter of this year will increase by 114% year-on-year.

The bank stated that considering the narrowing of losses in house renovation and house rental business, as well as the expected improvement in operational leverage from fiscal year 2024 to 2026, it has raised its forecast for KE Holdings' adjusted net profit for the fiscal years 2024 to 2026 by 7% to 13%. In addition, the bank also believes that KE Holdings may be included in the Shanghai-Hong Kong Stock Connect in March next year.

UBS Group pointed out that KE Holdings remains their top choice in the real estate industry. Considering the above factors, the bank has raised KE Holdings' U.S. stock target price from $20.5 to $25, giving it a 'buy' rating. (js/k)

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