6. KE Holdings Inc. (NYSE:BEKE)
Number of Hedge Fund Holders: 42
Share Price as of June 12: $15.97
KE Holdings Inc. (NYSE:BEKE) is a China-based company that operates an integrated online and offline platform for housing transactions and services. The company offers its services through an integrated online and offline platform known as Beike, a real estate brokerage branded store Lianjia, an operating system Agent Cooperation Network, and more. In the first quarter, 42 hedge funds had stakes in KE Holdings Inc. (NYSE:BEKE), with total positions worth $1.35 billion. As of March 31, Hillhouse Capital Management is the most significant shareholder in the company with a stake worth $400.667 million.
KE Holdings Inc.’s (NYSE:BEKE) diversified revenue streams highlight its growth potential. The home renovation and furniture business surged by 71.1% year-over-year, with contracted sales reaching RMB 3.4 billion (1 RMB = US$0.1378) in Q1. This segment’s contribution to total revenue increased, reflecting the company’s ability to capitalize on cross-selling opportunities within its ecosystem. Additionally, the home rental services segment saw an 189.3% year-over-year revenue increase, driven by a significant rise in the number of managed rental units.
In 2023, KE Holdings Inc. (NYSE:BEKE) showed resilience and was one of the few companies that grew despite the challenging circumstances in the Chinese housing market. In spite of its challenges, the company still maintains its focus on shareholder returns. The company allocated around $790 million to share buybacks in 2023 and continued its repurchase program in 2024 with $344 million spent as of May.
On May 23, KE Holdings Inc. (NYSE:BEKE) reported first-quarter earnings. The non-GAAP EPADS was $0.16, which beat the market estimates by $0.05. The revenue generated during the quarter was $2.27 billion and topped the estimates by $60 million. On May 28, a few days after its earnings beat, Barclays analyst Jiong Shao raised KE Holdings Inc.’s (NYSE:BEKE) price target to $30 from $20. Shao highlighted the company’s Q1 earnings beat and guidance raise and noted strong progress in its new home renovation and rental businesses. Although existing and new homes saw expected year-over-year declines in gross transaction value, management reported that existing home transaction volume for April and the first three weeks of May increased by double digits compared to last year.
We think KE Holdings Inc. (NYSE:BEKE) might be an attractive idea to explore while it trades at a 52% discount to its sector median, at 15.5x its forward earnings (sector median = 32.7x). Analysts expect a 48% year-over-year growth in the company’s earnings by the end of this year.
