Guosheng Securities has initiated coverage on BEKE-W (02423) with a Buy rating, recognizing KE Holdings Inc. as China's leading integrated residential service platform. The company has built formidable competitive moats through its unique Agent Cooperation Network (ACN) and the extensive "Housing Dictionary" database. Despite industry headwinds, BEKE continues to demonstrate above-market growth, driven by its dominant market share expansion in existing-home and new-home transactions. The firm's robust platform ecosystem and operational efficiency solidify its leadership in real estate transaction services.

**Key Highlights:** 1. **Market Leader in Residential Services:** BEKE operates as China's top integrated online-offline property transaction and service platform, with diversified revenue streams including existing-home sales (30% of 2024 revenue), new-home sales (36%), home renovation (16%), rentals (15%), and emerging businesses (3%). Since its inception as Lianjia in Beijing in 2001, the company has accumulated over 24 years of industry expertise. In 2024, BEKE recorded a total transaction volume (GTV) of RMB 3.3 trillion, generating revenue of RMB 93.5 billion, with a three-year CAGR of 24%. Adjusted net profit attributable to shareholders stood at RMB 2.9 billion, RMB 9.8 billion, and RMB 7.2 billion for 2022–2024, respectively.

2. **Unrivaled Competitive Advantages:** - **ACN Network:** BEKE’s ACN model dismantles traditional brokerage inefficiencies by dividing transactions into collaborative roles across brands and stores, fostering cooperation over competition and improving agent professionalism. - **Housing Dictionary:** Launched in 2008, this proprietary database now covers 289 million verified property listings, serving as an industry benchmark and underpinning BEKE’s platform scalability. These moats—requiring significant time and capital to replicate—ensure long-term defensibility.

3. **Market Share Gains Amid Industry Downturn:** - **Existing-Home Sales:** GTV for 2023/2024/2025H1 reached RMB 2.0/2.2/1.2 trillion, growing 28.6%/10.8%/13.7% YoY, with market share rising to 31.1% in 2024 (+2.5 ppts). Growth is fueled by China’s shift toward a secondary-market-driven housing sector and BEKE’s expanding agent network. - **New-Home Sales:** Despite a sluggish market, BEKE’s GTV outperformed national residential sales growth by 18.4/14.3/31.8 ppts in 2023/2024/2025H1, lifting its market share to 9.7%/11.4%/12.6%. Developers’ reliance on channel distribution amid inventory pressures has bolstered BEKE’s role.

4. **Home Renovation Expansion:** The segment’s GTV surged 27%/16.5% YoY in 2024/2025H1 to RMB 16.9/7.5 billion, with contribution margins rising to 30.7%/32.3%. Synergies with brokerage services lower customer acquisition costs, while scale-driven procurement efficiencies enhance profitability.

5. **Valuation & Outlook:** Guosheng forecasts 2025–2027 revenue of RMB 94.6/95.3/100.5 billion (+1.2%/0.8%/5.5% YoY) and net profit of RMB 3.71/5.28/6.1 billion (-8.7%/+42.4%/+15.5% YoY). Applying a DCF model, the target price of RMB 61.3/share implies 54.5% upside, based on 40.7x 2026E P/E.

**Risks:** Macro policy uncertainty, slower-than-expected intermediary penetration in new-home sales, commission rate regulations, and potential model inaccuracies.