KE Holdings (2423.HK, HK$44.04, HK$149bn) 4Q25 Earnings Missed Expectations

KE Holdings is a leading omni-channel property agent and services in China. It reported 4Q25 revenue of RMB5.4bn (-37% YoY /-9% QoQ), while net profit dropped to RMB100mnbn (-86% YoY). Both revenue and earnings missed market expectations.  A final dividend of 9.2 US cents per share was declared.

Weak Property Market Demand Weighs on Segment Revenue
1). Existing home business (secondary market) net revenue in 4Q25 stood at RMB5.4bn (-39% YoY, -9% QoQ), with its revenue share declining from 45% in Q1 2023 to 25%. The decrease was driven by a high base from 2024 property easing policies (purchase restrictions relaxation, down payment and mortgage rate cuts) and a lower take rate of 1.13%. Total existing home GTV fell 35.3% YoY to RMB482bn. Direct commission revenue dropped 42.9% YoY to RMB4.2bn with direct GTV down 43.0% YoY to RMB178bn, while platform, franchise and value-added services revenue fell 19.9% YoY to RMB1.2 bn with platform GTV down 29.7% YoY to RMB305bn, reflecting stronger platform resilience.

2). New home business net revenue in 4Q25 amounted to RMB7.3bn (-44.5% YoY, +9% QoQ), representing 33% of total revenue. The decline was due to weaker industry demand and a high base, while the new home take rate edged up QoQ to 3.5%. Total new home GTV decreased 41.7% YoY to RMB207bn, of which Beike platform channels GTV fell 41.3% YoY to RMB 169bn and Lianjia owned channels GTV dropped 43.5% YoY to RMB38.3bn.

3). Home renovation and furnishing offers one-stop decoration and furnishing solutions.  The segment’s revenue share rose from 7% in Q1 2023 to 16%. Net revenue in 4Q25 came to RMB3.6bn (-12% YoY, -16% QoQ), mainly due to proactive channel mix optimization and slower non-agent channel growth.

4). Rental services net revenue in 4Q25 reached RMB5.4bn (+18.1% YoY, -6% QoQ). As an important growth engine, its revenue share increased from 4% in Q1 2023 to 24%. Growth was supported by more properties under the Worry-Free Rental model, partially offset by a higher proportion of the new asset-light service model, under which owners retain property control and the company earns net commissions and management fees.

5). Emerging businesses and others’ net revenue were RMB459mn in 4Q25, relatively flat vs RMB439mn in 4Q24.

4Q25 Profitability Declined Sharply: Core operating profit swung to a loss of RMB100mn in 4Q25. Although OPEX fell 20% YoY to RMB4.9bn, a deeper revenue decline raised the OPEX ratio to 22% from 18% the rest of FY25. Net profit plunged 86% YoY to RMB82mn, and adjusted net profit declined 61.5% YoY to RMB 517mn.

Our views: 4Q25 revenue was dragged lower by a sharp drop in core brokerage revenue amid weak demand. Although rental and home furnishing businesses grew, their low margins constrained profitability and weighed on net income. The company has scaled back operations and optimized costs to reduce OPEX and improve efficiency. The existing housing market in major cities showed  support in March. However, without new stimulus and high new-home inventory, industry weakness will continue to pressure the company GMV and take rate.

KE Holdings enjoys robust and sustainable long-term competitive advantages. Its proprietary Property Dictionary, ACN (Agency Cooperation Network), and 3D+VR viewing technology underpin standardized high-quality listings, efficient cross-agent collaboration, and superior online user experience. Supported by its extensive agent and store network, the company maintains abundant housing supply and a clear leadership position among peers.

The company has repurchased over RMB900mn of shares in 2025, meanwhile, net cash remained ample at RMB51.6bn.  The counter is trading at 20.3x FY26E P/E. (Research Department)