According to IPO, on the evening of August 13, Beijing time, KE Holdings Inc., the largest real estate trading and service platform in China (hereinafter referred to as "KE Holdings Inc."), listed on the New York Stock Exchange under the symbol "BEKE" and officially became the "first share of China's residential service platform."

KE Holdings Inc. opened sharply higher after starting trading last night. As of this morning Beijing time, US stocks closed, KE Holdings Inc. quoted at US $37.44 per share, up 87% from the issue price, with a market capitalization of US $42.2 billion. Among all Chinese companies, KE Holdings Inc. 's market capitalization ranks behind Alibaba Group Holding Ltd, Pinduoduo, JD.com Inc, NetEase Inc and Baidu Inc. Baidu Inc, who ranks fifth among them, currently has a market capitalization of 42.9 billion US dollars.

Existing shareholders and international long-term funds participate in subscription and issuance

KE Holdings Inc. issued a total of 106 million American depositary shares (ADS) in this IPO. It is worth noting that, in view of the popularity of investors in the subscription process, KE Holdings Inc. concluded the offering one day early, and the final offering price of $20 per share was also higher than the upper limit of the earlier proposed offering range ($17 to $19).

Based on the issue price, KE Holdings Inc. raised a total of 2.12 billion US dollars in this IPO.After iQIYI, Inc., who listed on NASDAQ on March 29th, 2018, it is the largest new economy enterprise listed in the United States in the past two and a half years.。

Goldman Sachs Group, Morgan Stanley, China Renaissance Capital Investment, JPMorgan Chase & Co, China International Capital Corporation and other well-known investment banks at home and abroad are included in the underwriting syndicate, and the underwriters have a total oversubscription right of 15.9 million shares of ADS. The fund-raising scale after the implementation of the "green shoe mechanism" can reach up to 2.438 billion US dollars.

As existing shareholders of KE Holdings Inc., Tencent, Hillhouse Capital and Sequoia Capital China Fund participated in the subscription offering to show their long-term preference for KE Holdings Inc., while international top long-term fund Fidelity Management & Research Company LLC and its affiliated entities subscribed up to $400m, becoming KE Holdings Inc. 's new investors.

After IPO, Zuo Hui, founder and chairman of KE Holdings Inc., will continue to own 26.2% of the shares. In addition, because some shareholders will grant the voting rights of class A common shares to Zuohui agents, the proportion of Zuohui voting shares will be 42.4%, and the cumulative voting rights will reach 82.8%.

Tencent, Softbank Corp. and Hillhouse Capital will continue to hold 11.1 per cent, 9.3 per cent and 4.8 per cent, while Huaxing New Economic Fund also holds 3.4 per cent.

The second largest business platform in China after Alibaba Group Holding Ltd

As the largest real estate transaction and service platform in China, KE Holdings Inc. 's predecessor can be traced back to the real estate brokerage brand "Lianjia" established in 2001. After its successful establishment of industry infrastructure and standards, in order to solve the pain points of real estate transactions and low service efficiency in the industry, KE Holdings Inc. chose to reshape the search and transaction process of service providers and home buyers. At present, it has covered second-hand housing, new housing sales, housing rental, housing decoration, real estate financial solutions and other services and other areas.

In 2019, KE Holdings Inc. completed more than 2.2 million transactions, generating a total transaction volume of 2.128 trillion yuan (RMB, the same below) (GTV), making it the largest real estate transaction and service platform in China and the second largest business platform across all industries.。

From the business model point of view, KE Holdings Inc. 's two biggest innovations are the ACN broker cooperation network and the "real housing standard" industry standard.

The former, as the most important underlying operating system of the platform, enables housing customers, including buyers, sellers, landlords and tenants, to successfully conduct housing transactions with real estate brokerage brands, stores and intermediaries.

In other words, KE Holdings Inc. 's ACN mainly plays three roles: 1, to enable the sharing of information and resources among service providers, to break the isolated island of information; 2, to distribute the cooperative relationship between intermediary brokers to achieve cross-storefront and cross-brand cooperation; 3, to create a professional network for brokers, storefronts, brands and other service providers so that they can interact with each other on the platform.

After taking the lead in launching the "Real Housing Standard" industry standard, KE Holdings Inc. has been building and enriching the "Real Estate Dictionary" since 2008, which contains real and unique housing information. As of June 30, 2020, KE Holdings Inc. 's Real Estate Dictionary covers about 226 million houses, which is the most comprehensive housing database in China.

As of June 30, 2020, KE Holdings Inc. platform has been stationed in 103 cities across the country, connecting more than 456000 brokers and 42000 brokerage stores of 265 new brokerage brands.

How to recognize the Capital Market

In view of the innovation of KE Holdings Inc. 's business model, there is no direct target company at home and abroad.

Throughout all the companies listed in US stocks at present, the business of AOL real estate brokerage and agency website Redfin and American real estate information inquiry website Zillow is similar to that of AOL; but by comparison, KE Holdings Inc. has more obvious advantages.

Among them, Redfin mainly collects income from the transaction commission of house sales, that is, the so-called "commission-driven" real estate agency service, the biggest selling point of this part of the business is the lower commission ratio; in addition, Redfin also provides value-added services such as cleaning for sellers, financial services for buyers and virtual house viewing.

Redfin7's results for the first half of 2020, released at the end of the month, showed that revenue rose 31.42 per cent year-on-year to $405 million, while net loss rose 14.78 per cent year-on-year to $68.01 million, still unprofitable.

by contrast,KE Holdings Inc. 's operating income in the first half of 2020 increased by 39.0% over the same period last year to 27.2 billion yuan, while its net profit was 1.61 billion yuan, an increase of 188.6% over the same period last year.。

Obviously, no matter from the business volume or profitability to consider, Redfin and KE Holdings Inc. can not be compared. In fact, Redfin has risen 108% so far this year, which is favored by investors.

Like Redfin, Zillow has also risen more than 65% since 2020, but the company, which started with a real estate information query site, only started cutting into brokerage services in 2018.

In the early days of the transition, Zillow was criticized, and the main concern of analysts and investors was that Zillow used to earn high-margin advertising revenue, while buying and selling real estate was undoubtedly a capital-intensive business with significantly lower profits.

Two years have passedThe market capitalization of Zillow has increased from less than $7 billion to $17 billion.Even though its net profit for 2019 is still negative.

Therefore, from the perspective of market education, KE Holdings Inc. 's business model, especially the brokerage business, is already quite familiar to investors and analysts.

This is not difficult to explain why in 2020, when offline real estate transactions are quite difficult, KE Holdings Inc. is still being "grabbed" by investors in the issuance process.

As for the future, with the increasing financial data, the blessing of the international top long-term funds, and the continuous amplification of the leading effect, KE Holdings Inc., who has been "exposed" in the secondary market, may be able to create a bigger surprise.

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