Only three months after listing, KE Holdings Inc. 's share price has soared from $20 to a peak of $79.4, nearly quadrupling in March. Even if the share price has plunged 20% recently due to the rights issue, KE Holdings Inc. still has a market capitalization of more than 400 billion yuan.

The market capitalization of a real estate agent has exceeded that of real estate giant Vanke + Country Garden Holdings combined.

Why does it have such a high market capitalization, and what is its distinctive moat?

Reshape the industry rules and change the ecology of real estate agents

KE Holdings Inc. mainly focuses on the real estate brokerage track and has become a well-deserved leader in the real estate brokerage business. Since its establishment in 2001, it has opened many precedents in the industry, including the first to launch the Sunshine Trading Model, the first to launch the "Real Estate Dictionary" project in China, the launch of "Real Housing", and the creation of ACN (agent cooperation network, broker collaboration Network).

At the same time of changing the market's view of the real estate brokerage industry and establishing industry rules. It has also helped itself achieve rapid development.

At the end of 2019, KE Holdings Inc. linked 37514 stores, up 137.3 percent from the same period last year, serving 357680 brokers, up 118.7 percent from the same period last year.

As of September 2020, the company's platform linked 44883 outlets, up 41.7% from the same period last year, serving 477810 brokers, an increase of 50.7% over the same period last year.

KE Holdings Inc. is already the second largest business platform in China after BABA.

In the third quarter of 2020, the company's GTV was 1.05 trillion yuan, an increase of 87.2% over the same period last year, including GTV5761 billion yuan for second-hand housing transactions, up 71.8% year-on-year, and GTV4207 billion yuan for new housing transactions, an increase of 105.7% over the same period last year. New business transactions GTV532 billion yuan, an increase of 151.5% over the same period last year.

The market of the industry is vast, and its market share is absolutely leading.

In the long run, the scale of second-hand housing transactions in China still has room to rise.

Mainly from: 1) the improvement of housing stock; 2) the improvement of the circulation rate of second-hand housing market.

According to Citic Research, the stock of housing in China is 37.3 billion square meters. If you add in the 6.2 billion square meters currently under construction (October 2020), the potential housing stock will reach 43.5 billion square meters. The scale of housing stock in our country is relatively large.

Although Citic Research does not think that China's stock housing circulation rate can be in line with the United States, it believes that there is still some room to improve the stock housing circulation rate.

In the long run, we expect the medium-and long-term GTV of the housing sales market to exceed 28 trillion / year, with new housing transactions accounting for nearly 30% and stock transactions accounting for slightly more than 70%.

Behind the huge market is KE Holdings Inc. 's absolute market share.

From the perspective of market shareKE Holdings Inc occupies the super C position in the industry. InUnder the background of the expanding overall size of the market, KE Holdings Inc. has a leading first-mover advantage.

Under the multi-dimensional competition of the real estate brokerage industry, KE Holdings Inc. took the lead.

KE Holdings Inc. 's competitors are actually very diverse, not only need to compete with brokerage companies, but also have to compete with vertical platforms and even property management companies.

From the practical experience of some enterprises trying to enter offline from online in 2015 and 2016, it takes a long time for new entrants to establish a profit model, but the operating costs of short-term stores are too high, which can easily have a huge impact on the corporate balance sheet. Real estate brokerage companies from online to offline have basically failed.

On the other hand, KE Holdings Inc. can rely on direct brands to establish a good industry pattern through his own development and mergers and acquisitions of front-line peers in core cities, and the gap between him and his competitors is obviously widened.

It can be said that through continuous management and control experience and strong technical capabilities, KE Holdings Inc. 's leading edge in the industry is very obvious.

Pay more attention to quantity than quality, both online and offline

KE Holdings Inc. is not just expanding the scale linearly, but gradually widening the moat.

Second-hand brokers have strong business barriers.Offline barrierThe grasp is the store, which shows the operation experience and the ability of management and control.Online barrierGrasping is technology, which is manifested by data accumulation and system construction.

• Rely on stores offline

The store is the enterprise front-line operation platform, the basic business unit, the management grasp. KE Holdings Inc. large-scale, strong control, long-term direct store operation precipitation operation experience and management and control ability, can promote the company platform.

If you want to bypass the step of offline direct operation to exercise your ability, and directly engage in the alliance of stores, it will be very difficult to form a set of store cooperation model that has been tested in practice, and there will be no better consumer experience.

Because store construction requires investment period, cultivating a mature and stable profitable store takes a long period of time and patience. So KE Holdings Inc. in the early days not only need to run through stores, but also need to build a system, it can be said that he is engaged in a difficult and correct career.

• Rely on technology online

Citic research believes that long-term data accumulation, continuous iterative construction of the central Taiwan system and hardware innovation are online barriers to second-hand brokerage business and an important moat for the business.

The continuous iterative system construction, especially the front desk and middle platform system construction, provides a better consumer experience for consumers and a more efficient working environment for brokers.

Scientific and technological barriers are reflected not only in the software level, but also in the hardware level.

In the first three quarters of 2020, KE Holdings Inc. 's R & D expenses exceeded 1.8 billion, increasing for several years in a row.

To sum up, it is highly unlikely that the industry will give birth to a company with both store operation experience and huge investment in the incubated online system.

The construction of the talent system is complete, and a complete training system has been established.

The importance of talents to an enterprise is self-evident.

As early as in the era of Lianjia, the company raised the service standard of brokers by recruiting high standards, training high investment and high management requirements. Introduce high-quality talents with high basic salary from the recruitment process. As of June 2020, 39.2 per cent of Lianjia's brokers had undergraduate degrees, compared with 48.9 per cent in Beijing and 56.4 per cent in Shanghai.

KE Holdings Inc. trains stock brokers by establishing a complete training system. The company continuously trains and assesses the professional ability and level of brokers through Huaqiao School (covering an area of 33000 square meters and can train 1000 students at the same time), KE Holdings Inc. erudite examination and other forms.

Through this, we can not only improve the quality of the overall brokerage industry, but also get more trust from the industry and customers, and consolidate our own advantages.

Attach importance to after-sales service and tap the huge dividend

The end point of a real estate transaction is not the signing and transfer of ownership.

Paying attention to the post-service market is an important step for the brokerage industry from "transaction-oriented" to "service-oriented", and it is also an important way to improve the recommendation rate and further enhance customer stickiness and premium ability.

Due to the complexity of the real estate transaction, after signing the contract, it is also necessary to submit net visa, tax payment, ownership transfer, loan application, housing, water, electricity, gas, television network and other fees, which generally take 1-3 months to complete the final property delivery.

KE Holdings Inc. enhances the consumer service experience through the setting of an offline trading center and an online NTS (N-Trading System) system. By June 2020, KE Holdings Inc. had opened 98 trading centers, in which banks, guarantee agencies, valuers and even government agencies were stationed to complete each process after the transaction, which greatly improved the service experience and transaction efficiency of consumers.

This not only improves the efficiency of the transaction itself, but also lays the foundation for the birth of a new growth track. Citic research believes that KE Holdings Inc. has become the entrance to the residential field, with the existing technical architecture, data accumulation, traffic advantages and the successful experience of the real estate brokerage industry through the industrial Internet transformation, can achieve breakthroughs in many service areas.

KE Holdings Inc. is constantly tapping the demand.

• Demand Mining after Housing transaction

After the housing transaction, consumers also have a large number of housing-based demand, such as decoration demand after buying and selling houses (including second-hand houses, new houses), moving decoration demand after renting houses, and so on.

• Demand Mining of Community Life

KE Holdings Inc. linked stores deep into the community, deep ploughing the community.

• The financial demand of real estate is tapped.
  

As a large class of assets with the most accumulated wealth of residents, real estate has a natural relationship with finance. Of course, at present, real estate finance is still under strict supervision, re-mortgage, re-loan and other business can not be carried out. In the long run, KE Holdings Inc., as a capital gathering place in the process of real estate transactions, has the possibility of financial business development.

Summary

KE Holdings Inc. promotes its development through online and offline linkage.

1. Increase the size of the resource entrance as much as possible (stores)

2. Improve the conversion efficiency as much as possible in the sales transformation process (online technology)

3. Improve the overall transaction satisfaction with high-quality after-transaction service (after-sale)

The increase of market share does not come from the low-price strategy, but depends on the perfect service to become the company with the highest rate in the industry. The company's traditional business has a considerable scale of moat, commission rate and profitability are expected to remain stable. And the company has the advantage of new business development, may usher in a new growth point.