Core ideas:

1. On the whole, this is a very bright and satisfactory annual report, and KE Holdings Inc. 's financial data performance slightly exceeded our previous expectations.

two。 The highlight of the financial report is that KE Holdings Inc. 's revenue, net profit, adjusted EBITDA, adjusted net profit and net cash flow of operating activities have all maintained rapid growth.

3. The deficiency is that the growth rate of KE Holdings Inc. 's core business indicators (such as the number of monthly active users on mobile, the number of brokers, and the number of offline stores) is obviously weak, and these indicators are the key drivers for KE Holdings Inc. 's performance to maintain high growth in the future.

Foreword:

$KE Holdings Inc. (BEKE.US) $Calculated at the issue price of US $20 / ADS, it has increased by nearly 200% since it was listed on August 13, 2020! It can be said that KE Holdings Inc. is an out-and-out Daniel stock, and the market is also very hot, so it is worth keeping a long-term tracking and research on it.

The Futu research team completed its first coverage of KE Holdings Inc. long before it went public. For more information, see "I just want to know, KE Holdings Inc (BEKE), what is the value of ADS per share?》、《BABA + VS Tencent + KE Holdings Inc., fighting again in the giant industry in 20 trillion》、《Ten thousand words long text | Why are the giants such as Hillhouse, Tencent, BABA, JD.com and byte beating optimistic about the real estate brokerage industry?》。

In addition, KE Holdings Inc. 's changes and the three quarterly reports also tracked and provided professional opinions at the first time. For more information, see "Rich way exclusive | KE Holdings Inc. skyrocketed again, what happened behind it?》、《KE Holdings Inc., who has brilliant financial results and holds 60 billion yuan, why does he want to raise 20 billion yuan?》。

Therefore, after KE Holdings Inc. disclosed its 2020 results KuaiBao today, the Futu research team also checked its latest performance announcement in time and attached comments, hoping to be helpful to investors.

This paper is mainly divided into the following three parts:

• First: the bright spot analysis of KE Holdings Inc. 's performance in 2020.

• Second: a summary of hidden dangers outside the highlights of KE Holdings Inc. 's performance.

• Third: investment conclusion.

See below for details.

First, performance slightly exceeded expectations

First, let's take a look at KE Holdings Inc. 's performance in 2020.

RevenueIn terms of income, KE Holdings Inc. 's total income in 2020 was 70.481 billion yuan, compared with 46.015 billion yuan in 2019, an increase of 53% over the same period last year.

Operating profit和Net profitOn the other hand, KE Holdings Inc. 's amount in 2020 was 2.842 billion yuan and 2.778 billion yuan respectively, while KE Holdings Inc. was in a state of loss in 2019, with an operating loss and a net loss of 1.786 billion yuan and 2.18 billion yuan respectively.

And it can better reflect KE Holdings Inc. 's actual business performance.Adjusted profit before net interest tax depreciation and amortization(adjusted EBITDA) andAdjusted net profitIn terms of adjusted net income, KE Holdings Inc. 's amount in 2020 was 7.738 billion yuan and 5.729 billion yuan respectively, compared with 2.917 billion yuan and 1.656 billion yuan in 2019, with year-on-year growth rates of 165% and 246% respectively!

As for those that reflect the quality of earnings and the hematopoiesis of the company's operation.Net cash flow from operating activitiesOn the other hand, KE Holdings Inc. made even more amazing achievements in 2020, with the specific amount reaching 9.362 billion yuan, compared with 113 million yuan in the same period in 2019, an increase of 81.85 times over the same period last year.

To sum up, it is not difficult to see that KE Holdings Inc. 's performance in 2020 is indeed very bright, specifically manifested as the rapid growth of revenue and net profit, the very high gold content of profits, the abundant cash flow of the company's operating activities, cash and cash equivalents up to 65 billion yuan at the end of the period, and so on.

In addition, it is worth mentioning that, as the key to KE Holdings Inc. 's follow-up high growth, emerging business also achieved rapid growth of 69% in 2020, but the current revenue scale of emerging business is only 1.979 billion yuan, accounting for less than 3% of total revenue. By contrast, new housing business and stock housing business account for 54% and 43% of total revenue respectively, and then in the next 3-5 years. The driving force for KE Holdings Inc. 's rapid growth still comes mainly from new housing business and stock housing business.

In view of the fierce competition in the second-hand housing brokerage industry, and KE Holdings Inc. 's market share has ranked first in the industry, far exceeding other competitors in the industry, KE Holdings Inc. 's stock housing business is difficult to maintain high growth in the future, so in the next three years, the key to driving KE Holdings Inc. 's future performance growth lies in its new housing business.

Overall, KE Holdings Inc. 's performance in 2020 slightly exceeded our previous expectations (actual revenue growth 53%VS forecast revenue growth rate 50%, actual adjusted EBITDA rate 11%VS forecast adjusted EBIDAT rate 10%). However, under the bright financial performance, KE Holdings Inc. also has some hidden dangers and deficiencies, which can be found in the second part of the analysis.

Second, the growth rate of business indicators has slowed down.

Although KE Holdings Inc. 's financial data are very bright, this is only the result.What really determines KE Holdings Inc. 's future performance is the changing trend of its core business indicators, such as the growth rate of monthly active users on the mobile end, changes in the number of brokers, changes in the number of offline stores, and so on. Judging from the latest Q4 data, the growth rate of KE Holdings Inc. 's core business indicators shows an obvious slowing trend.。

For example, the number of monthly active users on mobile is 47.9 million disclosed by KE Holdings Inc. in the 2020Q3 financial report, while by the end of 2020, the latest figure is 48.18 million, with a month-on-month growth rate of only 0.58%. In other words, KE Holdings Inc. 's monthly active users increased by only 280000 in the fourth quarter of 2020, which makes people worry about whether the number of monthly active users has reached the ceiling. We will keep a close track of this.

In addition, the growth rate of the two key business indicators, the number of brokers supporting KE Holdings Inc. 's business expansion and the number of offline stores, is also significantly weak in 2020Q4. In terms of the number of offline stores, KE Holdings Inc. increased by 2636 and 2063 in 2020Q3 and Q4 respectively; in terms of the number of brokers, KE Holdings Inc. increased by 21763 in 2020Q3 and 15278 in Q4.

Obviously, the core business indicators that drive KE Holdings Inc. 's future performance growth show a significant slowing trend in Q4, which is a hidden danger for KE Holdings Inc.. After all, the current capital market is in accordance with Internet companies, not traditional real estate brokerage companies to price KE Holdings Inc.. Once the follow-up KE Holdings Inc. 's key business indicators fall short of expectations, it will face greater downward pressure on valuation.

In addition to the hidden dangers in the changing trend of core business indicators, the quality of KE Holdings Inc. 's accounts receivable also shows a deteriorating trend.The specific results are as follows: 1) by the end of 2020, KE Holdings Inc. 's net accounts receivable was 13.184 billion yuan, compared with 8.093 billion yuan at the end of 2019, an increase of 63% over the same period last year, and even more than the total revenue growth rate of 53% in 2020. this is mainly because the new house commission income collected by real estate enterprises surpasses the stock housing business in 2020 and becomes the largest business, while the accounting period of real estate enterprises is relatively long. 2) KE Holdings Inc. 's provision for bad debts in 2020 was as high as 1.122 billion yuan, compared with 461 million yuan in 2019, an increase of 143% over the same period last year. Although this reflects KE Holdings Inc. 's prudent attitude in finance, it also reflects a significant decline in the quality of accounts receivable.

III. Core conclusions

After the above analysis, it is believed that investors have some understanding of KE Holdings Inc. 's performance highlights and hidden dangers in 2020.

Overall, even though KE Holdings Inc. 's Q1 revenue declined in the first quarter of 2020 due to the epidemic, KE Holdings Inc. still handed in a very bright and satisfactory answer for the whole year, and the core financial data also exceeded our previous expectations.

The only drawback is that KE Holdings Inc. 's core business indicators, such as the number of monthly active users on the mobile side, may be about to face the ceiling, and the growth trend in the number of brokers and offline stores is also weak. these core business indicators are the key forces driving KE Holdings Inc. 's follow-up performance, so it is necessary for investors to keep a close track of the above core business indicators.

Finally, the competition and moat thinking faced by KE Holdings Inc., as well as the valuation issues that investors are most concerned about, will be issued in a separate research report in the near future.