KE Holdings Inc. (BEKE): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/BEKE

Headline

Field	Value
Ticker	BEKE
Company	KE Holdings Inc.
Sector / Industry	Real Estate
Current price	$16.64/sh
Composition	Existing home transaction services 26% / New home transaction services 32% / Home renovation and furnishing 16% / Home rental services 23% / Emerging and other services 2%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Must persist for	12.5y
Multiple paid	69x operating income

Solve inputs: computed at a 9.4% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.3 years.

How unusual the bet is: elevated (limited comparison data)

Reference	Value
sustained it ~10 years at this level	14%
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	6.30x	5	expensive
Earnings	3.14x	1	expensive
Relative	1.87x	4	expensive
Growth	1.35x	1	expensive

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=11)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$0.00	—	no	Negative/zero FCF — equity value floored at $0
DCF Exit Multiple	Growth	$0.00	—	no	Negative/zero FCF or EBITDA — equity value floored at $0
Relative Valuation	Relative	$12.40	1.34x	yes	P/E 35x (static sector reference · 2026-04), scenarios: 29.5x / 35.0x / 40.5x (bear / base = reference held flat / bull), EV/EBITDA 28.26x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$4.00	4.16x	yes	BV/sh $8.21, ROE (TTM) 4.5%, ke 9.3%
Two-Stage Excess Return	Asset	$2.64	6.30x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$12.34	1.35x	yes	Rev $13.5B, growth 4% (input: historical growth; tapered), Terminal P/S: 1.2x / 1.4x / 1.6x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/E	Relative	—	—	no	—
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$0.55	30.25x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.26B × (1−36%) / WACC 8.2% → EPV (no growth) (excluded from median)
Residual Income	Asset	$2.34	7.11x	yes	BV $8.21 + 5yr PV of (ROE (TTM) 4.5% − Kₑ 9.3%) × BV; BV grows 2.9%/yr
Graham Number	Asset	$9.51	1.75x	yes	√(22.5 × FFO/share $0.49 × BVPS $8.21) — Graham's conservative floor
EV/EBITDA Relative	Relative	$6.29	2.65x	yes	EBITDA $0.44B × sector EV/EBITDA 20.0x
FCF Yield	Earnings	—	—	no	—
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$0.41	40.59x	yes	FFO/share $0.49 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/B	Asset	$1.77	9.40x	yes	BV $8.21 × (ROIC 1.8% / WACC 8.2%)
P/Sales Sector	Relative	$70.12	0.24x	yes	Revenue $13.52B × sector P/S 6.0x
PEG Fair Value	Relative	—	—	no	—
Earnings Yield	Earnings	$5.30	3.14x	yes	FFO/share $0.49 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	$6.96	2.39x	yes	FFO/share $0.49 × 14.3x P/FFO (route cohort median, n=85); FFO $0.56B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 1157M
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$6.7b
Net debt / NOPAT (after-tax)	-34.93x (net cash)
Net debt / operating income (pre-tax)	-22.33x (net cash)
Interest coverage	303.4x
Share count CAGR (buyback)	-0.5%
Burning cash	yes

Bullet Takeaways

• KE Holdings runs China's largest housing transaction platform through an agent cooperation network that standardises listings and splits commissions between the agent who lists a home and the agent who sells it, and the FY2025 20-F describes authentic property listing as the foundation of that cooperation.
• The core is shrinking rather than compounding: commission revenue fell 13.5% to RMB20.0 billion in 2025 from RMB23.1 billion in 2024 per the 20-F, and gross transaction value in the first quarter of 2026 was down 15.6% from a year earlier, with new home transactions down 37.2%.
• Watch the newer service lines rather than the headline, because home rental now sits at 23% of revenue and home renovation and furnishing at 16%, and those two are the only pieces growing into the space the transaction business is vacating.

Bull Case

Start where the bear starts, because the bear has the recent numbers. Chinese housing volumes are falling, and this company sits directly on top of them. Gross transaction value in the first quarter of 2026 came in at RMB711.7 billion, down 15.6% from a year earlier, with new home transactions down 37.2%. Revenue for that quarter fell 19.0%. On a pure read of the transaction business, this is a company in contraction.

Now look at what happened to profit in the same quarter. Net income rose 46.7% to RMB1,255 million while revenue was falling by almost a fifth. That combination is unusual enough to be worth pausing on, and it is the whole of the bull argument. Revenue at this company is not one thing. A transaction handled by the Lianjia brand books the gross commission; a transaction handled by a connected brokerage books only the platform and franchise fee. So when the mix shifts toward the network and away from the owned brand, revenue falls faster than economics do. Shrinking headline revenue can coexist with a business that is keeping more of what it earns.

The structural asset underneath is the network itself, and it is not something a rival replicates by spending money. The 20-F describes an agent cooperation network in which the store nearest a listing holds the right to manage it and act as sell-side agent, while buy-side agents earn a portion of the commission by referring customers to agents in other regions. That rule set is why competing brokerages cooperate rather than hoard, and it only functions if listings are trustworthy. The filing is direct about the dependency: authentic property listing is described as the foundation of agent cooperation, because effective collaboration among agents requires valid and reliable listing information. A platform whose central product is verified information has a moat that deepens with participation and cannot be bought in a quarter.

That network is also a distribution channel for things other than transactions. Home rental services has grown to 23% of revenue, and the 20-F notes the segment reached sufficient scale and business importance to be reported separately. Home renovation and furnishing adds another 16%. The 20-F frames both as answers to fragmented service quality and a lack of transparency, which is the same problem the brokerage network was built to solve, addressed one step further into the home. Agents who have already met the customer at the point of purchase are the cheapest possible lead source for the renovation that follows.

Finally, the balance sheet gives management the freedom to act on its own view of the price. Measured on funded debt alone, the company holds roughly 6.7 billion dollars more in liquid assets than borrowings, against borrowings that are close to a rounding error. It repurchased about US$195 million of stock in the first quarter of 2026 under a programme authorising up to US$5 billion through 31 August 2028, and declared a final cash dividend of US$0.3 billion in aggregate. Buying stock into a volume downturn is a specific statement about where management thinks the cycle is.

Bear Case

Today's price is a claim about which part of this business the future belongs to, and the claim is aggressive. The market is paying roughly 66 times the operating profit reported in the company's most recent annual accounts, and the only way that arithmetic closes is if profit grows at about the fastest pace the business could fund out of its own cash for something like twelve years running. Twelve years is not a forecast horizon. It is most of a career. Historically only about 14% of comparably fast-growing companies held that kind of pace even ten years, and the figures behind this particular read carry real uncertainty, so treat the whole thing as a direction rather than a measurement.

The most fragile assumption inside that claim is which segment carries it. New home transaction services is the largest revenue line at 32% of the total, and it is the one falling fastest: the 20-F shows net revenue from that business at RMB30.6 billion in 2025, back to exactly where it stood in 2023 after reaching RMB33.7 billion in 2024. In the first quarter of 2026, new home gross transaction value fell 37.2% year on year. Nearly a third of the company's revenue mix is tied to Chinese developers selling new inventory, which is the single most policy-sensitive activity in the Chinese economy.

The 20-F does not soften this. It warns that the company cannot assure investors that existing restrictive policies and measures will be eased or lifted, nor that the PRC government will not adopt additional and more stringent industry policies, regulations and measures. It separately flags possible heightened regulatory scrutiny and additional restrictions on business practices in real estate brokerage, naming pricing strategies, brand and store management, and platform operation. When the regulator can reset your pricing, your take rate is not really yours.

There is also a working-capital thread worth pulling. Accounts receivable turnover days for new home transaction services stood at 56 days in 2025 against 52 days in 2024. That is a small move, and in a normal industry it would not merit a sentence. In an industry where the counterparties are property developers under financial strain, the direction matters more than the magnitude, because the receivable is a claim on a builder, not on a homebuyer.

Set all of that against what the methods say and the picture sharpens. Only the forward-growth approach reaches today's price. The asset-value and earnings-power methods land at a small fraction of it, and the price sits roughly 78% above where the peer-multiple methods land. The whole valuation therefore rests on durable compounding that the static frames structurally cannot capture. That is a coherent bet, and it is also a bet with no second line of defence: if the compounding does not arrive, there is no book value or earnings-power floor anywhere near the current price to catch it. Against the comparable set, CBRE runs a 4.7% operating margin on $42.17 billion of revenue while growing 14.9%, and JLL runs 4.4% on $26.76 billion while growing 11.2%. Real estate services is a thin-margin business almost everywhere it is practised, which is the context in which a premium of this size has to be justified.

Valuation

The methods do not disagree here so much as split into two camps of very different size. Only the forward-growth approach reaches today's price of $15.89. The asset-value methods and the earnings-power methods land at a small fraction of it, and the price stands roughly 78% above where the peer-multiple methods land. That is the signature of a durability premium: the market is paying for compounding that a book-value or trailing-earnings frame has no way to express, which is a legitimate thing to pay for and an uncomfortable thing to be wrong about, because nothing underneath supports the price if the compounding does not happen.

Working backwards gives the requirement a shape. At today's price the market is paying about 66 times the operating profit reported in the last annual accounts, which implies profit growing at roughly the fastest rate the business could fund from its own cash, held for about twelve years. The horizon is sensitive to assumptions in a way worth stating plainly: a single percentage point of change in the assumed cost of capital moves that span by more than two years. And the comparison base is thin, so the label attached to it deserves to be read directionally rather than as a precise ranking. What is not in doubt is the direction, which is demanding. Only around 14% of comparable fast growers sustained that kind of pace for a decade.

Composition is what makes the requirement interesting rather than merely large. New home transaction services is the biggest line at 32% of revenue, existing home transactions 26%, home rental 23%, home renovation and furnishing 16%, and everything else 2%. Two of those five are contracting and two are growing, and they carry different economics: the 20-F notes that for transaction services, variable costs include direct compensation to internal agents and split commissions to connected agents and other channels. A single company-wide growth requirement flattens a business that is really a shrinking transaction franchise funding a growing services franchise, and the reader should weigh the requirement against the growing half, not the whole.

The cohort comparison is imperfect and worth naming as such. These are whole-company real estate services comparables rather than pure-play residential platforms, and they operate in different markets under different rules. Still, the level tells you something: CBRE earns a 4.7% operating margin on $42.17 billion of revenue, JLL 4.4% on $26.76 billion, and NMRK 8.0% on $3.48 billion. Property services is structurally a low-margin trade, and the premium in BEKE's price is a claim that the platform model breaks that pattern in China specifically.

The downside boundary is genuinely unusual for a company priced this way. On a funded-debt basis the company holds roughly 6.7 billion dollars more liquid assets than borrowings, with borrowings small enough that interest is barely a line item, against a market value of $18.4 billion. Share count has been roughly flat, down about 0.5% a year over the four years to December 2025, with buybacks offsetting share-based compensation rather than shrinking the base. So more than a third of the market value is sitting in liquid assets that carry no operating risk at all. What the buyer is paying a premium for is the other portion, and that portion is being asked to compound through a housing downturn the company's own filings describe as policy-driven and outside its control.

Catalysts

The most recent hard data point is the first quarter of 2026, reported on 19 May 2026. Gross transaction value was RMB711.7 billion, down 15.6% year on year, split between existing home transactions of RMB534.4 billion, down 7.9%, and new home transactions of RMB145.9 billion, down 37.2%. Net revenues were RMB18.9 billion, a 19.0% decline, while net income rose 46.7% to RMB1,255 million. The divergence between those last two figures is the thing to track through the rest of the year, because it is either evidence of a genuine mix shift toward higher-retention platform economics or a one-off that reverses.

Capital return is the second live thread. The company repurchased roughly US$195 million of its shares during the first quarter of 2026 under a programme authorising up to US$5 billion of Class A ordinary shares and ADSs through 31 August 2028, and separately declared a final cash dividend of US$0.3 billion in aggregate. With a share count that has been essentially flat over four years, the useful question at the next print is whether repurchases start outrunning share-based compensation rather than merely matching it.

The third factor is policy, and it arrives without a schedule. The FY2025 20-F states that the company cannot assure investors that existing restrictive housing policies will be eased or lifted, or that additional and more stringent measures will not be adopted. Chinese property policy tends to move in packages rather than increments, and because the new home business carries the largest share of revenue and the steepest recent decline, a meaningful easing would show up in this company's volumes faster than in almost any other listed name tied to the sector. The same is true in reverse.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• JLL (Jones Lang LaSalle Incorporated)
• FY2025 10-K: , monitoring and compliance reporting. As sustainability becomes increasingly central to real estate decision-making, our capabilities allow us to help clients navigate this evolving landscape, create meaningful career opportunities for our employees, and generate value for our shareholders. COMPETITION We operate…
• FY2025 10-K: …vendors and subcontractors and are directly or indirectly reimbursed through the fees we receive. These costs are presented on a gross basis in Operating expenses (with the corresponding fees in Revenue). Year Ended December 31, 2025 compared with Year Ended December 31, 2024 Year Ended December 31, Change in %…
• NMRK (NEWMARK GROUP, INC.)
• FY2025 10-K: …Real Estate Services Industry We operate in a highly competitive industry with numerous competitors, some of which may have greater financial and operational resources than we do. We compete to provide a variety of services within the commercial real estate industry. Each of these business disciplines is highly…
• FY2025 10-K: …than we are at growing through merger and acquisition activity. See the heading "Competition" under Part I, Item 1, Business for more information. In general, there can be no assurance that we will be able to continue to compete effectively with respect to any of our commercial real estate business lines or on an…
• CBRE (CBRE GROUP, INC.)
• FY2025 10-K: …and global competitors across all of our business lines and the geographies that we serve, and further industry consolidation, fragmentation or innovation could lead to significant future competition. We compete across a variety of business disciplines within the commercial real estate services and investment…
• FY2025 10-K: …and loan origination), loan servicing, and valuation. BOE provides a broad suite of integrated, contractually based outsourcing services to occupiers and owners of real estate, including facilities management and property management. Our Project Management business delivers program management, project management and…
• CIGI (Colliers International Group Inc.)
• FY2025 40-F: Revenue The Company generates revenue through its provision of commercial real estate services, which are comprised of leasing, capital markets and outsourcing as well as engineering services and investment management, as described below. (a) Leasing Leasing includes landlord and tenant representation brokerage…
• FY2025 40-F: …real estate properties. Such services may involve appraisals of single properties or portfolios of properties. These appraisals may be utilized for a variety of customer needs including acquisitions, dispositions, financing, financial reporting, litigation or for tax purposes. Loan servicing fees consist of revenues…
• CWK (CUSHMAN & WAKEFIELD LTD.)
• FY2025 10-K: …service lines. Depending on the geography or service, we face competition from other commercial real estate services providers, outsourcing companies, in-house corporate real estate departments, institutional lenders, insurance companies, investment banking firms, investment managers, accounting firms and consulting…
• FY2025 10-K: …client relationships while moving up the value chain and capture market share in high-growth asset classes, such as data centers. We aim to bring data-driven insights to clients, providing the most insightful and forward-thinking solutions. In addition, we intend to continue investing in high-caliber talent, creating…
• FSV (FirstService Corporation)
• FY2025 40-F: …The loan amounts are measured based on the formula price of the underlying non-controlling interests, and interest rates are determined based on market rates plus a spread. The loans generally have terms of 5 to 10 years, but are open for repayment without penalty at any time. Page 26 of 28 19. Segmented information…
• FY2025 40-F: 2,857,489 FirstService Brands franchisor 226,883 216,558 FirstService Brands franchise fee 10,076 8,378 The Company disaggregates revenue by segment. Within the FirstService Brands segment, the Company further disaggregates its company-owned operations revenue; these businesses primarily recognize revenue over time as…
• OPEN (Opendoor Technologies Inc.)
• FY2025 10-K: …and (ii) amortization of debt issuance costs and debt discounts and interest expense related to our convertible senior notes. (12) Consists mainly of interest earned on cash, cash equivalents, restricted cash and marketable securities. Components of Our Results of Operations Revenue We generate the majority of our…
• FY2025 10-K: …model. We may encounter unanticipated problems as we continue to refine our business model and may be forced to make significant 15 TABLE OF CONTENTS OPENDOOR TECHNOLOGIES INC. changes to our anticipated sales and revenue models to compete with our competitors' offerings, which may adversely affect our results of…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

KE Holdings Q1 2026 results, 19 May 2026 · KE Holdings Q1 2026 results and dividend announcement, 2026