KE's second-quarter revenue was 23.4 billion yuan, with a year-on-year net profit increase of 46%. Pre-market trading on the US stock market surged 6% | Financial Report Insights

Thanks to the strong expansion of second-hand housing transactions, housing rental, and home decoration businesses, KE's second-quarter profits doubled.

On Monday, August 12th, before the U.S. stock market opened, the real estate transaction and service platform KE announced its second-quarter financial report for 2024.

1) Key Financial Data

Revenue: Net revenue in Q2 was RMB 23.4 billion, a year-on-year increase of 19.9%. Total transaction volume increased from RMB 780.6 billion to RMB 839 billion, up by 7.5%.

Profit: Net profit in Q2 was RMB 1.9 billion, a year-on-year increase of 46.2%.

Gross Profit Margin: Gross profit in Q2 was RMB 6.5 billion, a year-on-year increase of 22%. The gross profit margin was 27.9%, up by 0.5 percentage points year-on-year.

Operating Costs: Total operating costs in Q2 were RMB 16.9 billion, a year-on-year increase of 19.2%.

2) Business Revenue Data

Second-hand Housing: Net revenue in Q2 increased by 14.3% to RMB 7.3 billion from RMB 6.4 billion in the same period last year, and the transaction volume increased by 25% to RMB 570.7 billion from RMB 456.5 billion in the same period last year.

New Housing: Net revenue decreased by 8.8% from RMB 8.7 billion in the same period last year to RMB 7.9 billion, and the transaction volume decreased by 20.2% from RMB 29.5 billion in the same period last year to RMB 23.5 billion.

Home Decoration and Furnishings: Net revenue surged by 53.9% to RMB 4 billion, and the transaction volume decreased by 20.2% to RMB 23.5 billion from RMB 29.5 billion in the same period last year.

Housing Rental: Net revenue skyrocketed by 167.1% to RMB 3.2 billion.

New Businesses and Others: Net revenue was RMB 0.9 billion in Q2, showing growth compared to RMB 0.6 billion last year.

3) Shareholder Returns

Expansion of Stock Repurchase: As of the announcement date of the second-quarter financial report, KE has spent USD 480 million on stock repurchases, representing approximately 2.75% of the total shares issued at the end of 2023. The company plans to increase the repurchase authorization from USD 20 billion to USD 30 billion and extend the repurchase plan until August 31, 2025.

Strong Second-hand Housing Transactions, Decline in New Housing Transactions, Rental Revenue Surges by 160%

The financial report shows that KE's total transaction volume in the second quarter was RMB 839 billion, a year-on-year increase of 7.5%. The report explains that due to the national policy support in the second quarter of this year, the second-hand housing transaction market has significantly recovered, although some of the gains have been offset by the sluggish new housing transaction market.

In the second quarter, KE's total transaction volume for second-hand housing was RMB 570.7 billion, a year-on-year increase of 25%; the total transaction volume for new housing was RMB 235.3 billion, a year-on-year decrease of 20.2%.

Net revenue from new housing decreased by 8.8% to RMB 7.9 billion, but it remains the main source of revenue; driven by strong transaction volume, net revenue from second-hand housing business increased by 14.3% to RMB 7.3 billion, and commission income also increased by 17.1% to RMB 6 billion Revenue from home decoration and furnishing business increased significantly by 53.9%, the report stated that this was mainly due to the synergistic effects of customer acquisition and conversion between real estate transactions and home decoration and furnishing, the increased contribution of new retail, and the shortened delivery cycle driven by improved delivery capabilities.

In addition, benefiting from the increase in rental properties under the worry-free rental model, KE's revenue from housing leasing business increased by 167% compared to the previous value, reaching 3.2 billion RMB.

In the second quarter, KE's overall gross profit margin was 27.9%, a slight increase of 0.5 percentage points from last year's 27.4%. KE's management stated that this was mainly due to the improvement in supply chain capabilities, continuous refinement of management, increased operational efficiency, and a decrease in store costs as a proportion of net revenue.

After the financial report was released, KE's stock price rose nearly 6% in pre-market trading, but has since narrowed to a 3% increase.