Beike’s second-quarter profit jumps 13.9% in surprise defiance of China’s property slump

KE Holdings, the operator of one of China’s largest real estate brokerage networks, posted a surprise growth in its second-quarter profit as its Beike chain of sales agents handled more rental property, home sales and non-housing transactions.

Adjusted net profit rose 13.9 per cent to 2.7 billion yuan (US$377 million) in the second quarter, beating the 1.8 billion yuan expected by analysts in a Bloomberg poll. Sales jumped by 20 per cent to a record 23.4 billion yuan, beating analysts’ expectations by 9 per cent.

The strong performance, due to increasing transactions in the secondary market of lived-in homes and rental property, offers a rare bit of positive news amid China’s years-long property slump. The gross value of all transactions handled by Beike’s agents rose 25 per cent during the April quarter to 839 billion yuan, where lived-in homes made up more than two-thirds of sales, or 570.7 billion yuan. The gross value of new homes sold shrank by 20.2 per cent to 235.3 billion yuan.

“The growth potential for our home transaction service remains significant, and the business model and capabilities of our home renovation and furnishing and home rental services have also been validated”, Beike’s chairman and chief executive Stanley Peng Yongdong said in a statement to the stock exchange. “Our core goal is to build an organisation that can continuously progress from one success to the next. Our next step is to achieve sustained growth by driving a positive cycle of scale, quality, and efficiency.”

The rapid growth for non-housing transactions also contributed to Beike’s strong performance. Net revenue from home rentals almost tripled to 3.2 billion yuan in the second quarter.