This article comes from the official account of Wechat.CITICResearch, by Chen Cong, Zhang Guoguo, Xu Yingbo, Li Jinzhe.
After a long runKE Holdings Inc. (BEKE.US)The offline (store) and online (system) barriers of the brokerage industry have been consolidated, ACN (broker collaboration Network) has become an important infrastructure in the industry, the company has entered the harvest period on the brokerage track, and post-transaction services have further opened up the space for new business development. We give a target price of $78.9 / ADS, covering the "buy" rating for the first time.
Establish the rules of the game in the larger track, and ACN lays the core competitiveness of the company.
China has a vast market for new and second-hand housing, and the business development model of channels and marketing agency activities is also changing.
KE Holdings Inc. guides the industry from "transaction-oriented" to "service-oriented", empowers brokers, improves the level of specialization, establishes industry standards for services, and invests in the infrastructure of real estate transactions. The moat of the company in the field of brokerage business is shown not only in its high share in the core city (nearly 50% in a single city), but also in that its share does not come from the price war, and the company's commission rate is in a high position in the market.
KE Holdings Inc. has changed the face of the brokerage industry with strong control in the fields of flow entrance, broker management, store management, post-transaction service and so on. We believe that the market share of the company's new housing business is expected to increase from 5.4% in 2019 to 19.0% in 2022, the market share of the stock housing business is expected to increase from 19.2% in 2019 to 26.7%, and the company's GTV (total transaction volume) is expected to reach 5.5 trillion yuan in 2022.
The company's traditional business has a considerable scale of moat, commission rate and profitability are expected to remain stable.
We believe that the moat of brokerage business promoted by the company's large capital investment to strengthen rules and control is already very broad, and it is very difficult for other competitors to approach KE Holdings Inc. 's level in the short term, whether it is offline deployment or online system investment. Therefore, we believe that the company's brokerage business will usher in a harvest period, which will continue to contribute to the company's rich profits. We expect the company's commission rate to remain at 2.48%, 2.51% and 2.57% respectively over the next three years, and the company's core net profit margin to reach 8.0%, 9.3% and 10.4% respectively over the next three years.
The company has the advantage of new business development and may usher in a new growth point.
We believe that decoration and other business is highly non-standardized, consumers have obvious pain points, and KE Holdings Inc. 's existing customer demand accumulation and flow advantages match, but also KE Holdings Inc. is good at strong control, high satisfaction track. We believe that KE Holdings Inc. may usher in new business growth opportunities in decoration, community and other areas, while IPO and new share issuance provide further financial guarantee for the company's progress in this field.
Risk Tips:
New home sales are not a growth track, and there is no room for a significant increase in second-hand housing sales in a non-speculation environment, and the rapid growth of the company cannot rely on the growing cake in traditional areas. The risk of talent reserve that the company may face in the process of new business development.
Profit forecast and investment rating.
We believe that with the broad moat of traditional business, the company is expected to grow rapidly in the next few years, even without considering the possibility of breakthroughs in new business. We give the company a net profit forecast of 55.3max 85.0 / 11.79 billion yuan 2021 / 2022. Combined with P/GTV, PE and other valuation methods, we cover for the first time and give the company a target market capitalization of $93.47 billion, or a target price of $78.9 / ADS, with a "buy" investment rating.
(editor: Zhang Jinliang)