Shell (minutes): If the property market worsens in Q3, there may be more supportive policies
Below is$KE(BEKE.US) FY25 Q1 earnings call summary. For earnings review, please refer to《As Long as It Survives the 'Roller Coaster' of the Property Market, Top Player Shell Has No Issues》
1. Key Earnings Highlights
2. Detailed Earnings Call Content
2.1 Core Information from Management
1. Strategic Focus Areas
Home Renovation Business: Enhanced product design and project management capabilities, with project managers' average monthly orders up 156% YoY.
Leasing Services: Managed over 500,000 rental properties, improving delinquency management and renewal rates.
2. AI Technology Applications
1) Launched AI-driven property search systems in 2 cities, covering 40% of homepage traffic.
2) Agent service tools enabled over 200,000 agents to manage more than 2.5 million clients, boosting efficiency metrics.
3) AI property maintenance systems adopted by 110,000 agents, serving 400,000 homeowners.
4) Tested post-lease AI support systems in 30 cities, achieving a 125% resolution rate per tenant request.
2.2 Q&A Session
Q: Given the latest macro dynamics and U.S. tariff impacts, what’s the outlook for the property market this quarter and beyond?
A: In Q1, the secondary market rebounded strongly post-Lunar New Year, while the primary market remained stable. Per Shell Research Institute data, nationwide secondary market transactions grew 16% YoY, driven by policy tailwinds that lowered purchase thresholds and costs, stimulating demand. Rising volumes balanced short-term supply-demand, narrowing YoY price declines and luring cautious buyers back.
In March, tier-1 cities like Beijing/Shanghai and tier-2 cities with net population inflows (e.g., Hangzhou, Chengdu) saw flat or slightly rising secondary home prices MoM.
The primary market was also steady in Q1. National Bureau of Statistics data shows primary sales dipped 0.4% YoY, with top 200 developers’ sales down 7%, though post-holiday sales area rose over 15% YoY. Seasonal trends held: secondary transactions peaked in early March, then eased in April (-1.3% MoM price decline).
From a supply-demand lens, Shell’s platform listings rose in Q1, aligning with year-end destocking and new-year restocking cycles, plus freed-up supply from policy easing.
April’s average viewing-to-deal ratio hit 1.8 (historically high at 1.6–1.9), signaling strong buyer interest but slower conversion due to softened price expectations from geopolitical tensions. Outlook hinges on two factors: global trade friction’s property market impact and domestic policy responses.
Neutral scenario: Q2 may see seasonal slowing but secondary volumes could still rise slightly YoY, albeit slower than Q1. If Q3 pressures intensify, prices/transactions/developer investments may weaken, prompting more supportive policies in H2 to stabilize the market.
Shell notes stable listings without panic selling; viewings rose YoY. Trade-reliant cities saw weaker post-tariff metrics, but no broad divergence. Recent U.S.-China trade thaw aids short-term sentiment.
Long-term, cautious optimism prevails. Ongoing policy support and bilateral talks may further bolster confidence, easing trade risks’ market impact.
Q: Can management detail this year’s agent/store expansion plans and efficiency-boosting measures?
A: Healthy store network growth continues, prioritizing cost efficiency. Q1 saw key brands join, validating platform value. Agent productivity gains offset average price declines. High-performance stores rose to 18.4% of total (16.7% in Q4 2024), with 2.5x productivity vs. peers.
Efficiency tools: digital workshops, AR tools, incentive programs. New store retention improved—Q1 churn fell to 2.9% (down 6% QoQ, 38% YoY); 2024 H1 new stores had 94% 6-month retention. Active stores may grow modestly in key regions.
Future focus: targeted support for stores, scaling high-performance large stores (>10 agents). AI is transformative—existing tools already aid service providers. Goal: raise per-agent transactions to stabilize commissions. In 2–3 years, target 20% agent efficiency gain.
Q: How did home renovation perform in Q1, and what’s the margin outlook?
A: Standout Q1: revenue hit ¥2.9B (+22.3% YoY), with Beijing/Guangzhou/Chengdu up >50%. Contribution margin hit record 32.6% (+2pp YoY).
Q: What’s Shell’s broader AI strategy and investment plan for coming quarters?
A: AI accelerates design-to-contract timelines (e.g., 10→6 days in one case). Smart construction systems enable real-time checks via cameras, lifting acceptance rates by ~2pp. Internal AI "employees" handle tasks like report summaries (saving 18,000+ hours semi-annually). Future focus: deeper customer insights, efficient design.
Q: How does Shell Haojia contribute to new home development?
A: Shell Haojia offers data-driven product solutions. Patent algorithms predict buyer preferences, guiding developer positioning/pricing. Involved in 9 projects—7 with ~¥2.3B total investment (¥500M recouped by Q1). One IFT project sold out on launch day, delivering ~30% returns.
Q: How does Shell Haojia’s C2M model work?
A: Two edges: 1) deep consumer demand insights for developer decisions; 2) pricing prowess via transaction/upstream data algorithms. Innovates outreach—e.g., Shanghai app lets users co-design units. Earned fees in Xi’an project for full-cycle solutions (e.g., cost/floorplan optimizations).
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