KE Holdings Stock Rises
KE Holdings (BEKE) stock surged nearly 10% after the company reported strong Q2 earnings, increased its share-repurchase program, and announced a special dividend. Quarterly net revenue rose 41.4% YoY to $2.687 billion, with adjusted net income of $326 million. Beike credited the recovery in China's real estate market and cost reductions for its improved financial results. However, Q3 revenue is expected to decrease, contrary to analyst expectations.
Super Alice
Super Alice
Jan. 29, 2024 16:53
KE Holdings Stock Rises

Shares of KE Holdings (BEKE) -- also known as Beike -- closed up around 9.8% on Thursday after the China-based housing transaction and services platform announced strong second-quarter 2023 earnings, doubled its share-repurchase authorization, and announced a special dividend.

Quarterly net revenue climbed 41.4% year over year to $2.687 billion. That translated to adjusted (non-GAAP) net income of $326 million, or $0.27 per American depositary share (ADS), swinging from a loss of $0.07 per ADS in the same year-ago period. Analysts, on average, were expecting higher revenue of $2.73 billion but significantly lower adjusted earnings of $0.19 per ADS.

Digging deeper into its results, Beike saw a 7.6% increase in its number of active agents to 409,054 and an 11.6% increase in the number of mobile monthly active users to 48 million.

Beike Chairman and CEO Stanley Yongdong Peng credited the significant improvement in its financial results to a recovery of China's real estate and residential markets in the first half of the year, as well as cost reductions and the company's focus on retaining service providers during the correction.

"Consumer demand in the residential services sector has largely pivoted from 'home purchase' to 'better living,'" he added.

Looking to the current third quarter of 2023, Beike expects revenue of between $2.1 billion and $2.2 billion, or a decrease in the range of 9.1% to 11.9% year over year. In this case, most analysts were modeling growth of 3.4%.

At the same time, however, the company also doubled the size of its share-repurchase program to $2 billion and extended the authorization to be valid through Aug. 31, 2024. In addition, Beike's Board of Directors approved a modest special cash dividend of $0.171 per ADS, payable to ADS holders of record on or around Oct. 3, 2023.

In any case, though Wall Street obviously expected higher revenues both in Q2 and for Q3 guidance, it seems the market is celebrating the continued rebound in the Chinese housing market amid concerns over a broader macroslowdown in the country. Coupled with its boosted capital-returns initiatives, improved efficiency, and the fact shares were down around 10% over the past year leading into this report, it's not terribly surprising to see KE Holdings stock rebounding today.

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