Q2 2021 Ke Holdings Inc Earnings Call
We will begin.
[music].
Hello, Ladies and gentlemen, thank you for standing by Bulky Holdings, Inc. Second quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode. Today's conference call is being recorded I would now turn the call over to your host Mr. Matthew Zhao IR director of the company. Please go ahead Matthew.
Good evening and good morning, everyone welcome to <unk> Holdings, Inc. All baked foods second quarter.
Earnings Conference call.
The company's financial and operating results were published in the press release earlier today and we are posted on the company's IR website, Www Dot Webster's Ducky Dot com.
On today's call we have Mr. Stanley you don't pump, our co founder Chairman and Chief Executive Officer.
And the meter tall shoot our executive director and the Chief Financial Officer.
Mr. Paul will provide an overview of our strategies and based on these developments and to meet her she will provide additional details on the company's financial results.
Before we continue I refer you to our Safe Harbor statement in our earnings press release, which applies to this call as we will make forward looking statements.
Please also note that Bakers earnings press release and this conference call include discussions of all of these GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to the company's press release, which contains a reconciliation of all non-GAAP measures to comparable GAAP measures.
Lastly, unless otherwise stated all figures mentioned during this conference call.
RMB.
With that I will now turn the call over to our chairman and CEO. Mr. <unk>. Please go ahead Sir.
Thank you Miss it.
Hello, everyone.
Thank you for joining us on our conference call today.
Our performance in the second quarter 2021.
This our first earning call since the passing of a missionary Thunder and permanent Chairman Andrew <unk> Mr. Joel.
Who was also referred to as knowledgeable throughout the industry.
<unk> has been the most significant event that took place in the second quarter.
We mourn his loss, although only because it has been the phone there with Santa mission for our company.
Also because he has sunshine as bar rationale leader.
Sure Blazer.
Onshore.
Please for the future and to create value for the housing industry.
<unk> has been an invaluable Ics to Baker and Elaine Geng.
The highest contribution and the influence you can see D wave.
Organization.
With a clear focus on promoting industry progression.
The decisive actions as the industry prove practitioner.
And he was a true leader, who urge us to record the more meaningful questions.
Like how we can change the industry.
How we create value for consumers and the society.
<unk> has inspired us to sale improve improve the visionary.
Positive changes.
<unk> value.
We do.
Always do the right things despite the difficulty in memory over loans will continue to make that dedicated efforts.
Fulfill our mission to providing <unk> service join for living.
We are deeply grateful for and motivated by their condolences on the support we received following molecules pricing.
We also appreciate it logos family for their trust to the management.
<unk>.
Bookable AUM.
Of the voting rights of their class B ordinary shares to the company a partnership for <unk>.
Which he can shine and myself.
So as the initial partners.
Lots of family together really is that two directors and the cole merger members.
Also agreed to a weighing your voluntary share lockup of Yahoo.
A lot of passion with fully understand our goal.
<unk> rise to face a challenger and we will continue to create value for our consumers so as providers employees and shareholders.
Turning to our business operations.
Let's first look at take a look at the macro policy and market environment.
In the past quarter.
Collateral authorities.
Miss their views and opinions various areas, such an antitrust and data security and issued a series of policies and a guidance opinions in multiple industries.
During this period, we have been one or two how much more opportunities to communicate directly with the relevant government authorities and have gained their recognition and respect for our efforts to improve the industry throughout interactions at.
At the same time, we have the opportunity to look internally and engaged in self reflection and introspection.
As a result, we have further solidified our ongoing belief.
Our business model.
Not be feasible without the benefits from being in such a great country.
Great era.
As we move forward, we will continue to reflect our thoughts on the two key questions mainly.
Natalie how we can change the industry.
And how we can take a more social responsibilities.
Regarding the housing industry.
Essentially many cities and regions have introduced the areas who are putting measures.
As loan quarters.
<unk> comps purchase restrictions and mortgage interest rate cuts.
All in an effort to have stabilized housing price landed price in them.
<unk> expectations.
These measures have begun to effectively to the rapid expansion of the housing market in various cities.
Half of existing home sales grew gross in many cities start to slowdown since may.
Similarly, the beginning of a market correction cycle.
<unk> stabilized gross period for the company.
The rapid development of China as economies over the past 30 years Super fast growth in new and existing home sales as well as demand for home renovation services with <unk> and <unk>.
Into Connecticut.
<unk> of the growth among segments.
One with more balanced housing demand and supply and a more stabilized market expectation for appropriate price, we expect three major structure.
And opportunities including.
The industry's focus on ships from houses to customers and from transactions to services.
Demand from consumer has moved from home purchases to high quality living in house housing industry relatively new efficiencies continue to persist.
With overall low user satisfaction and the link and the lingering problems such as lack of standardization the utilization and the internet penetration.
In light of this we do not expect short term market corrections to effect. The continue long term firm demand for housing consumers aspiration for more joyful living conditions.
Our journey over the past 20 years tell us that the market corrections create opportunities for quality upgrades strategic thinking and further development to improve competitive advantages in the future in.
<unk>.
To some 2008.
We introduced comprehensive scientific and management for our organization.
In 2011, we spray head.
<unk> listing.
In 2014, we initially initiated our national wide expansion.
And in 2017, we launched the platform strategy.
The industry goes through a transformation phase.
We ask ourselves.
The industry would it be the same lease a result, Baker and make decisions from a long term value.
Clearly the industry will not be where it is today without this market corrections and the advancements that are followed.
During the during the industry cannot.
Action, we again looking in what like what do we have been doing over the past 20 years to seek strengths and explore opportunities to withstand market.
Well entities and create lasting future value.
We will prove to the market that we are building a capable sustainable and a social with responsible enterprise that upholds uplifting culture.
And to create value for consumers and our industry. Despite the relative market.
We landed.
Liquidity, we believe we can generate more and more values in the housing demand. We hope our long term commercial values that are built around coal will continue to bring one stop shop quality housing services for the 300 million pounds families in China.
Next.
Let's look at our business progress in the second quarter and the first half of 2021.
The number of stores.
<unk> increased.
<unk> to solve it.
868 second quarter representing.
Representing 25% year over year growth.
<unk>, 30%.
New stores opens.
Well from our current commodity store owners the number was strong with the onshoring.
Thanks.
CTV over RMB 50 million you can see the median.
Canadian solved in the 500.
Accounting for 37% of the total stores, an increase of 10% quarter over quarter.
First half.
2021, the two year Cocker OTT vision for store portfolio of stores and a third party come out of stores or 23% and 15, 1% respectively.
As we shifted our focus in the second quarter to tenant.
Tension of the peak recruiting season.
In first quarter, we grew the number of agent by 10, 8% year over year to file.
500 foot.
For the <unk>.
The agent attrition rate <unk> stores on the painful drops to April 1% in the first half of 2021.
From nine points.
6% in the first half.
Of 2018.
Hand store management and agent retention.
We have 45% of Canadian stores to fulfill more than 30 starboard stall assistant positions.
In the first half of 'twenty 'twenty, one we implemented agent small initiatives while agents on our platform.
Which has.
Improved agent satisfaction and retention.
Second quarter.
According to our survey the <unk>.
<unk> agents that are feel safe to walk on the painful with others and the compliance.
Two platform routes increased.
<unk> increased by 12% compare with that by the end of 2020.
Average AUM, including our EMEA you on platform.
And our reach in a medium programs reached $52.1 million in the second quarter.
It is 33, 5% from which time period last year.
As we continue to improve our brand recognition.
Turning to our existing home transaction services.
According to Baker Research Institute.
<unk> TV of existing home transaction market in the first half of 2020, when increased by 41% year over year and decreased 8% compared to a second half of 2020.
In comparison, CTV or existing home transaction and bakers platform rose to RMB $1.33 trillion.
First half of 2021, representing 17, 1% groups year over year.
<unk> TV of existing home transactions, Okay managed stores increased by 89, 6% year over year.
<unk>.
Resilience during the early stage of the market downturn.
In a fast growing market agents tend to focus on closing deals market downturn. However provides a better environment for us to refine management.
Hans quantity and the efficient at it.
End of June 2021, we opened 287 contracts service centers in certain major cities in China, So that more customers can enjoy enhanced ignorance and transaction security during the signing process we.
We continue to promote our agent specialization strategy.
As of June 32020, when our agents specialization strategy is cover over 61% of stores in 'twenty one after a certain coal cities we operate in.
Second quarter <unk>.
Actions completed collaboratively by specialized agents on our platform.
444% of total transactions in our stores that are implementing this strategy.
A seven 7% increase from the first quarter, which.
Yes.
More frequent collaborations among our agents.
Most notably in Chengdu.
21, 7% of transactions completed collaboratively among specialized agents install a sac efficiency increased an average of over 17% on annual or second quarter, comparing restores another implementing specialization strategy.
We also continue to develop new products to empower the engine to our platform.
For example, we.
We are testing a new application named base the impact facing.
Which we pilot in Shanghai in our second quarter Bassi in pad.
Is a digital interactive tool to have agents interact with contract customers present.
Presenting on structure and a visualized information at a glass on a large screen when they are communicating face to face.
<unk> impact.
Significantly promoted standout standardized agent operations and enhanced offline information and services.
Prolonging overall customer interaction, Tom, but 29% and accelerating the process of building mutual trust between agents and customers.
With this benefits by the end of seven corner, almost 30% of all agent adopt basically impact at the main offline service tool in Shanghai.
With respect to new home transactions According to National Bureau of.
Steady it sticks.
CTV on new home transaction market in the first half of 2020, AUM increased 39% year over year and was down 13% compared to the second half of 2020.
In this context CTV of new home transaction services, which RMB.
841 seven.
Seven billing in the first half of 2021 up 17, 7% year over year and <unk> TV of Conatus stores increased by 85, 4% year over year.
During the past quarter, we continue to enrich online content for new homes.
In June we have enriched online content for all new home projects on our platform with a minimum.
<unk> hundred description foods completed for each new homeless genes.
As part of our commitment to providing authentic and comprehensive housing information. We also added a model describing on favorable factors, our new home projects facilitating more informed purchasing decisions. We are also making steady progress with.
Our new home business conduct improvement plan, we also endeavor to offer filed.
Commitment to developers, including no customer journey hijacking.
No customers, making no property.
Collection or consumer phones, those tech at the Western <unk>.
As of June 13.
97, 4%.
Our nurse developers and enter into a final commitment agreement with us.
Moving to our emerging services.
In early June.
Surreal to announce the acquisition of shampoo home renovation with first taps into the whole innovation industry in 2019.
So the lunch hour.
Our home renovation brand paywall.
We continue to deepen.
Deepening our understanding of this industry, we have developed an even stronger belief in the vast growth potential of China's homeland the Russian market.
Homeland, Russia industrial is.
Considerable size.
Natalie RMB seven trillion in total.
However, there is scarcity of high quality service providers and the lag of industry standardization.
Scientific management.
As a result.
It is difficult for the industry participants to actually scale and earn profit and they have to fight for survival in the industry and capable of meeting consumers' increasing high demand for quality.
As housing transactions shipped shipped on new homes to existing homes. The industrial customer base also changes from new homebuyers, who existing homebuyers and then received wisdom residents existing home.
Adding more complexity complexity and costs for conventional renovation companies to acquire.
Yes.
Despite the industry backdrop should do is bundle the very few high quality companies in this industry.
Founded in 2002 and headquarter.
In Hangzhou Chengdu has a long operating track record.
And a large customer base in eastern China, along with our experienced management team and a significant industry Knowhow. In addition, as one of the earlier tranches.
Practitioners of the full service module in the home renovation industry in China.
<unk> not only in marketing and our products, but also in supply chain management and the execution, we have strong management and a robust internal control.
To promote the core value of taking good care of customers with strongly resonates with ours.
The existing home market become more accurate.
Consumers demand for high quality product.
And the service increase and technology and the technical knowledge equally impoundment grows we believe that our industry is not at a critical is now at a critical turning point.
Seamlessly integrating the reach the galleries overshadows team in the industry with our customer acquisition capabilities.
<unk> developed stand on standardized data infrastructure and our belief in the practice to promote development, so vertical penetration and the horizontal es pension we're looking forward.
We are making a difference for our consumers and our service providers and home renovation industry at.
Some time.
Your house home renovation.
They were home renovations, which is been Polish as a minimum variable.
Product.
MVP maintain maintain robust growth in Beijing.
Were completed.
Andrew.
So say for home renovations in the second quarter increased AUM more than tenfold year over year. R&D is also a top priority and we continue to Mckee investment to upgrade our technology to further streamline.
Streamline our process and enhanced digital.
Digitalization for example in the second quarter, we launched home SUS system version, one that provide support.
We will file modules cells being design delivery supply chain and a middle office management.
Enhancing the end to Ana standard standardization and digitalization of our home renovation surface.
In summary.
It's a firmly upholding and supporting China's policy and a lot on the local regulations opinion holiday.
And for leaving <unk> speculation.
As we.
We are also cooperating with regulatory regulatory authorities.
This decent mentoring thought lifting and discouraging speculate you purchased.
Which helps stabilize the enterprise housing price and the market expectations and it promotes the <unk>.
Steady and healthy development on housing market.
According to Baker Research Institute.
Overall home sales.
<unk> to slow down further in the second half of 2021.
Over 20 years operating history has proven that our market with balanced supply and demand provides the best Foundation for our company's long term development.
With our mission of promoting and <unk>.
Joe for leaving.
Our founding principle.
To pursue a better industry structure, maybe we'll take a more social responsibilities.
Empower agents on the phone.
Our friends friendly environment for communities.
We are committed committed to having younger.
Generation with affordable living through rental and other.
Innovation solutions, which drive for fulfill more social responsibilities with our long term goal to have industry progress, thereby creating long term value for the for the broader communities.
Without noting we are approaching the first anniversary of Bakers UAS.
IPO.
I still remember the nature on raws to entire Baker family on the lifting day last year.
And in the letter that all institutions have their ups and downs.
Comer.
Institution behalf, Jordan Glorious moment.
Stronger and more capable.
Will become when weathering difficult difficult times looking back the capital market.
Have been.
But volatile in the past a year and the wins through ramps are fluctuation.
With the news.
All of these ups and downs.
We are more firmly believe believing.
Believing in the power of our mission.
At the mobile services John for leading.
We will continue to always looking inward.
A search for new areas all the improvements.
Create values for our society.
As our outputs and stays strong and optimistic all the time.
To you all very much with that.
I would like to turn the call over to our CFO Cheetal closer review on our second quarter financials. Thank you.
Thank you.
Thank you I have a follow up John Lewis.
To provide a brief overview for the second quarter and just under one initial results.
Before I discuss financial results.
Actually what we're less than that in the last few for cooperating coal.
Since our business operation has been seriously negatively impact by Covid 19 operated in Q1 of last year, but a meaningful portion of the transaction has been shipped to Q2 of last year with <unk>.
Investor to look at it.
Initial performance.
For the first half of the transition to one <unk>.
Both pop up to the 20 to better reflect our business program I will discuss both Q2 and the first half initial performance here.
Net revenue increased by two different sides to RMB $24.2 billion in future because eight 1 billion with the same care of last year.
In both higher dollar guidance and the street consensus.
Growth was driven by total ATV growth opportunity two 2% to RMB, one point to trade. It in Q2 from RMB 133 in the same material for last year.
Forethoughtful statistic, because you won or lost revenue increased by four 6% to RMB $44.9 billion from RMB 27, 330 is a city pair of last year driven by total GT REIT gross off with 72, 3% to RMB two trillion AUM RMB one three trillion.
In Europe last year.
In particular, all net revenue from new home construction services.
By four 9% to RMB 9 billion income to bottom RV Biopharm two days the same period last year.
Primarily a Q4 to 11 southern HGTV of existing home production to RMB 652 pilot in Q2 from RMB $583.5 billion in the same period last year.
For the first half of 'twenty twos, you'll walk on less revenue promising home services increased by 57, 9% to RMB 19 billion from RMB followed by the.
That takes care of last year, driven by a 71% increase in CTV.
New home construction to RMB, one three trillion following RMB 707 in line with the same period of last year.
Our net revenue, while new home construction services increased by 31, 9% to RMB 13, 9 billion in Q2 from RMB 10, 5 billion in the same period of last year.
Attributable to an increase of 32, 3% of new home transaction to RMB $498.3 billion in Q2, Bob.
Bob RMB $376.6 billion same period last year.
Our pump opportunities in tier one on less revenue from new home construction services increased by 17, 4% to RMB 23 billion.
While a RMB 14, but with the same period last year, driven by a 17, 7% increase HGTV of new home transaction to RMB $841.7 billion from RMB $493.1 billion in the same period of last year.
I'll, let Glenn we will probably breakout other services increased by 56% to RMB Daryl Sunbury in Q2 from RMB zero.
0.4 billion in the same period of last year.
Increase was primarily attributable to the increase of penetration level, it's a confidence financial services lots of Halloween.
<unk>.
The increased number of haul reservation will need a comparable profit pool.
For the first half opportunities gives me a lot of that.
No problem with merchant services increased by 68, 9% to RMB, one 2 billion from RMB <unk> in the same period of last year.
Cost of revenue.
<unk> by 38, 6% year over year to RMB $18.8 billion in Q2 fall RMB 13.
With the same period of last year.
Gross profit was RMB five <unk>, so we've been in Q2 compared to RMB.
Billings I think Europe last year.
Gross margin was 22, 1% in Q2 compared to 32, 5% in the same period of last year.
The decrease in gross margin was mainly to call one market in Q2 of 2021 at the mall ultimately performance compared to the same period last year, a significant portion of transaction, especially.
Assertion.
Q1, Q2 last year.
Covid 19 epidemic, resulting a higher pace of gross margin period.
In Q2 opt into 'twenty, one theres, a new home sales market was affected by a series of market including measures.
Led to a relatively low contribution profit the whole transaction revenue to total net revenue of the company.
Resulting in a lower total contribution margin.
The same period last year, sorry proposal new home construction.
For agents and others are trying to increase in Q2 compared to the same period last year, resulting in lower new home health gross margin in Q2.
But first half will continue to go up gross profit increased by 43, 9% to RMB 10, 1 billion from RMB seven 1 billion in the same period of last year.
Operating expenses were RMB or two better than Q2, but therefore, RMB three 3 billion.
Last year didn't Robert Mitch <unk> expenses were RMB, two 2 billion in Q2 compared to RMB Cool Places Europe is the same Europe last year, mainly due to an increase in share based compensation expenses.
Sales in the medical expenses were RMB, one 2 billion in Q2 compared to RMB 788 million in the same period last year, mainly due to increased unless an awful lot of our pipeline.
As well we quote.
Hi, Collyn.
Research and development expenses were RMB $775 million.
Compared to RMB 524 million in the same period last year.
Due to the increase of HEICO experienced R&D personnel.
Share based compensation expenses.
Total sharply competition since day, one and 430.
Two minutes in Q2 compared to non interest in Europe last year.
Income from operation was RMB, one 1 billion.
In Q3 compared to RMB, three 3 billion in the same period of last year.
Operating market was a $4 six.
In Q2 compared to 16, 3% in the same period of last year, primarily due to the relatively higher gross profit margin in the second quarter of last year, that's what used car gross profit.
Operating expenses incurred in the period due to travel on offline.
Fiction.
For the first half opportunity to July income from operation increased by 28, 6% to RMB two 1 billion from <unk>, one 7 billion.
In the same period.
Last year.
Excluding non-GAAP items are.
Income from operations was RMB.
One 7 billion in future.
Compared to $3.4 billion in the same period of last year.
The operating market was.
9% in Q2.
$17 one in the <unk>.
Same period of last year.
Adjusted EBITDA was RMB proof points that they did in Q2.
$3.8 billion to take care of last year for the first half of 'twenty two tier one adjusted income from operations increased by 54, 6% to RMB three 2 billion while market to operate in the same period last year.
Lastly income was RMB, one 1 billion compared.
Compared to RMB, two 8 billion in the same period of last year.
<unk> non-GAAP items, our GAAP net income was RMB, one 6 billion compared to RMB three <unk>.
Billings in the same period of last year.
The fourth harmful constituents here, what I thought.
<unk> income increased by eight 8% to RMB three 1 billion.
RMB, one 5 billion in the same period last year.
Net income attributable to <unk> Holdings, Inc. Open the shareholders.
It's by five 6% to RMB, one 1 billion in Q2, while RMB one <unk> in the same period last year.
Net income attributable to <unk> Holdings, Inc.
RMB, one 6 billion in Q2 compared to adjusted net income attributable to pay your holding gain of RMB, two 9 billion with the same period last year.
For the first half of strategic Joel.
The net income attributable to Covid holding Inc. Increased by eight 7% to RMB three 1 billion from RMB, One 9 billion in the same period of last year.
Diluted net income per ACI attributable to occur Holdings, Inc. Shareholder.
Shareholders was RMB Daryl nicely.
Compared to RMB 212 in the same period last year.
Diluted net income GAAP.
It goes both to pay the holding Inc. Ordinary shareholders was RMB 137.
Compared to RMB two two street in the same period last year.
As of June 32020.
What.
The combined balances of our cash cash equivalents.
Cash and short term investments amounted to RMB, $59.2 billion or USD nine 2 billion.
Additionally, as of June 30 tended to do well.
And so far we're lowington tie side, mainly.
And they include in long term investments amounted to RMB, $8.8 billion or USD, one 4 billion.
During the second quarter, both Luo specific policies and the severe market putting metrics were locked out in order to effectively stabilize the land priced homes on the.
Market expectations.
Flat the second half of this year will be one of the most stringent peer rate in part because income salt.
Precedented addition, such as it will transpire or lumpy.
The variety of to supply at.
The number of regulated renewables.
While the supply slabs.
Street wire lines to developers too.
<unk> realized through financial institution Hudson.
Concentrated land option between two stated underwriters price for home.
Impact, both new home new home production.
Alongside that.
Like any off mortgage profit on the last needs approval period.
Italy is tender contract cycle.
Insurance of reference price in the purchases this accretion led to accrued income of consumers' expectations.
Thanks Meyer.
<unk> promote stable and healthy environment on the rail market along the way.
So we're also clean default losses.
As a result waste by the road to the market, where our crude down moderately in the second half of this year.
In the face of this challenge, we formulate our holding both parties that measure and support government crackdown on housing speculation, we thought that the <unk>.
To stabilize the market.
Politically, allowing for the joy for EV and better housing credit default about sponsor customers.
<unk> has experienced several tons of market off the balance sheet.
Nevertheless, the account, we always become better and a stronger well is possible with those cycles. This is also the good call wildfire conjugate giacobbe, Nevada, so well today.
Until Baker Recessionista coach Nike towards GTO, VLCC home sales market.
Twofold over 40% year over year in the third quarter.
He will advance our agents specialization strategy.
New homes that sell sectors to ensure more business opportunities offsets to our agents.
<unk> supports the owners to introduce multiple benefits in an effort to smooth out the marketing cycle Disruptors to agency income.
Third within the investment.
Meanwhile, nationwide CTV or new home transaction market business by two 5% year over year in the third quarter with a quality piping under purchase curve that's why.
While continuing to invest under the Basel professionals, new home agents, improving business conduct on the reaching online content for new home sales sector.
We believe this market discipline is it stabilized the roms of metros as well increasing sales towards the market evolve.
The traditional peak season.
Tim.
In sufficient detail, so new wholesale set us apart in the second half of this year.
Based on the above ratios look.
Going forward third quarter opportunities in Hawaii, we expect net revenue to be between RMB 14, 5 billion as the RMB 15.
5 billion, representing a decrease of approximately 34, 6% to 29, 4% from the same quarter of 2010.
Forecast considers the potential <unk> recent real estate related policies and measures.
It's a conflict cottons on preliminary GAAP.
Solution on the market condition.
Which is subject to change.
Nevertheless, although our topline growth guidance has been growing mainly due to its relatively steady.
We are confident that our strong moat in the collaborative dialogue with alcohol.
In corporate services on the input efficiency, while houseboats to continuously outperformed the market.
The foundation to postpone the bounce it depends on the face of 13, westar weighted anyway have ability potential cold weather with it is does it behave to our professionalism while inventory detail.
The waste debate the icebreaker alcohol cloudburst.
This kind of pace.
What really matters in difficult times.
Meanwhile.
As al mentioned the marketplace.
Dk solvents, Gareth according to several market downturns.
So a strong sense of mission to take almost total reservoir.
The second half of this year, where well continue put our efforts into a company's infrastructure on the merchant business.
We will increase our support agents to eco person standing out in the industry and the gold equal time spasm.
We're also cognizant of the mobile.
Starting by speeding up all these provision resolution on the furniture business.
<unk>, our hyper run total housing services.
People are the drivers.
Therefore, we recently reported that the one well can meet in a mobile device and 12 of our new business development with the second half of this year.
In summary, although our performance panel the Golar guidance the market General momentum we installed two were still strong.
I'll also mention our post papers.
Where folks are important factors in the <unk>.
<unk> and <unk>.
Market volatility.
<unk> been able to keep our fundamental whether robertson internal systems, but that is the key to successful vehicle.
The bar chart in yards and financial performance with you with you both to mobile efforts and developing and investing in our long term capabilities.
So it might take time to achieve.
Financial returns out of <unk>.
<unk> <unk>.
In fact, the longer it takes the more difficult to hit it.
The mobile devices that will be comp.
That concludes our prepared remarks, we would like now to open the call for questions.
Operator, let's go ahead.
Thank you.
We will now begin the question and answer question to ask a question you will need to press star one on your telephone.
Your question. Please press the pound key.
The benefit of all participants on today's call. Please limit yourself to one question and if you have any additional questions you can re enter the queue. If you.
Im going to ask the question in Chinese Please Hello English translation.
Please standby, while we compile the Q&A.
First question comes from the line of Repaying Chow.
ICC. Please go ahead.
Thanks, Danny Telco huh.
So I guess I wanted to learn how well Jim Allen tissue Guangzhou.
Thank you Tien tsin from Cheyenne Yao Chow Joe go ahead.
The pathogen.
Thank you Pat.
Yeah Harlan.
Got it.
Quarter, It had a dilutive deal.
What is the outlook.
Now let me quickly.
Good morning.
My question is related to the collection rate.
There were some rumors circling around market.
That there might be some limits on the agent Commission rate so.
How should we expect the new power management, and how should we expect definition rate in coming quarters. Thank you.
Central European tissue Tal.
Cutting too risky numerous tariff.
And lots of humor about.
Home sales commission rate risk today.
Specialty retail moments screenshot, which was wildly spot many social network group there was a so called.
The Zuma was signed by a cleaner person by month parasitic brokerage company, which is doing is keeping all the in Shanghai, which was both news with ulterior motives.
Meanwhile, we have been in close communication with the relevant authority on actively REIT reporting related issue.
The clear response.
The Ministry of housing urban Rural development is that so far Dr. Valone Suction Foundation, new restricting housing transaction Commission fee.
I hope makes it clear.
So although we also don't think the roads the market. This is a very different with taste.
K 12 education sector with a different intention from the regulator being.
Being a fair and the public service is the key to advocate the sector, while the housing for leaving not for speculation is a key for the housing sectors. Therefore, reducing to building a long term <unk> housing market. Two continued housing price from excessive height Z cycle, rather than continue halting transaction on Vega.
Related services.
All right.
So still additional housing price aiming to surprise and so while it's five seven.
<unk> empower people's livelihoods Consumptions.
Recent policy.
Aimed at supporting long term healthy growth of the population and the importance of this project.
On a stable housing price longton surprising about the balanced market with enable a wider range of consumers will do better and continuously improves out even conditions, which is a solid foundation of sustainable at the healthy growth of population. So therefore, we believe a market environment, which is benefit for bakers.
London Department remains unchanged.
In summary.
As I mentioned is that <unk> four cell type I want to make sure they are.
The commission rate reflective of its policy production efficiency on the service could be imminent.
Our reasonable rates, it's our policy to limit the whole compensation slide water results soften the tree with sell throughs going forward faithful will continuously but our infrastructure and agents professional training offer more subsidy to support recognized store development on the aegis as a patient.
Order to bring more value to the industry. We believe the overall commission rates on our platform will remain relatively stable pulp this clarifies.
Okay.
Thank you next question comes from the line Piyush <unk> from Goldman Sachs. Please ask your question.
Thank you for taking my question.
<unk> been through 'twenty is in the real estate market in China and been through multiple cycles, we would be grateful if you could take us through some of the past cycles that you've been through and how long. It has taken you to come out of those cycles from a negative growth rate to a positive growth rate and if you could spell that through on a quarter by quarter basis, how long in the quarter.
How many quarters can be negative growth rate be before you come out based on let's say the last two or three cycles.
That would be that would be very useful for us to better understand and while we completely understand that you are in sync with the government objective full pricing and price stability in the market. If you could just go through where the vulnerable clients obtained where the volumes have declined very sharply and where those points will start to stabilize how should we start to see.
No more no further declines coming true.
And if you could take us through where you are in shenzen in the last quarter or next quarter that would be correct. Thank you.
Okay.
Yes.
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Because this first half is a very booming seaton intended to tier one soft the overall meaningful quarter quite.
Quietly starts to tighten in the second quarter and dominion's regulator policy, what you're introducing some 56 election.
Which has led to a start of a market downturn.
For the second half of this year.
That's the overall market to continue putting the tons that were recently foresees a property market it will be under more pressure in Q3 compared to Q2 and the last Q4.
Income so quite a supply response of recreation to remain tight into second half of this year, resulting continuously rising mortgage REIT photo extend the long approval and the lending cycle.
<unk> is seeking home sales market, which will be largely flat in Q3 by quite a bit tightened and other regulation such as that referenced price cut taking fact, causing overall existing home sales month GTP into second half to slow down.
And then in terms of the new home soft market with Q3 that the traditional season pass holder weighs in platform Malone restrictions on the use sufficient new home supply, we believe the new home sales pick up.
A slowdown cultural overhaul that you've just Q3, but we did recover in this Q4 support by the seasonal strength, we spot second half CTV for the new home sales market.
By 10% year over year for the market.
Developers will be more reliance on China in the second half of this year, given the slowing down of eating home transaction, which ICU difficulties.
Customer acquisition.
For PE cognitive <unk> history, we have on the call at least seven times market cycles. The aten pumps. So I want to invite our chairman will sports Danny to give some color on this for the elaboration.
I know what you're thinking.
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To assure we will see the one gamma.
Yeah. This is Danny that led me to answer your question in terms of the.
As a cyclical trend and haul we view those kind of secondary cost impact to our business.
Stephanie.
The EMEA charters.
Sure Anthony Yes, well Yamaha.
Just your relationship with dosing in hernia to Bob for additional robust from an easy comp because we've kind of been since we did the overall EMEA.
But in general the dominant E. Daniela doesn't it just kind of a table initial humble young.
Generate income, we're flowing our way up and down.
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Yeah.
We actually I has been discussed a lot with investors in terms of how we view our business cycle REIT, whether we should look at that in a quarterly basis.
Annually basis.
Even like a three year spaces, which we do you believe the three years, it's pretty much like a secondary call, which small represents of our business cycle.
We offer <unk> to their.
Finish about hotels that are in Canadian dollars.
European data.
So in a diesel engine launch.
We didn't see any but caution that were taken out of the center.
But don't get some attention.
Just any thoughts initially the hanmi elektron or how that would kind of linger.
The routine.
What do you believe.
You will need to ensure we lia.
Beijing, Shanghai, Hanmi definition or totally attributable to Aneel you between total.
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And those types of lease up I E. The shipowner European dealerships.
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It sounds like you think that that turned out.
Two of our top of usual audio went home. So there's just one or two of funding between on a gamma tushar.
Phone clients, which under the <unk> constructor.
One challenge human health from GAAP would have a pause which under turnaround on you. So it sounds like the all the attrition you've got legal and illustrate how much income.
I think in terms of our business momentum so a lot of say.
The analyst and investors.
Not quite.
Understand that and that is why when we are facing the first cycle. After our IPO, so that people feel safe on that.
So for me I can expand that multi it helps in terms of those kind of wallet alright. So when we look at each of the.
No magic BCD, all which industry. They all have their own growth paths right. So we look at the units.
The materiality.
In a more macro of the models for our business for example in Beijing <unk>.
There are roughly like a median two 9 million of the existing homes and if we look at that.
Tell we're right it's around like 1% normally rather that is a low level in the industry and 4% nominally revenue it's more like a.
Highly traded up the market so that actually also to be matched with a star.
<unk>, we think that kind of market for the normal conditions normally we think for the Beijing, It's about 25 solid sense of the <unk>.
Transplants transactional volume per months will be a more normalized level.
Look at a certain period, which is significantly some parts of those 25 <unk> volumes.
The housing price actually will hack very quickly and.
And then followed by that transaction volume will also will be smaller.
So we're kind of unfortunate answer answering any man our powertrains in the R&M annuity tier gesture.
So you've got some insurers will leave on similar to ensure it though but deemed the cellular laid out I think it's only down pension of the Shanghai Pudong ruble Italian element withheld for Joseph Medina.
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So they've made at Shandong.
I'm glad you asked that Orange bar when GDP is showing that once you finish up on the chocolate Sandoval with deep deep sand in the D.
Steve.
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So it will shut down and only chocolate was down for some time now with Allergan grocery company, which income before so that still is your hormones yoplait China children. So we're hanging.
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Jonker Liana drove non-GAAP nonrecurring, China, Jim now Youll pension funding.
Yes.
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<unk>, John or Uva DSO.
So in summary, seeing each of the cities we have some cause it's very.
Normalized of their transaction volumes.
And if the transaction volume significantly.
It's been surpassed are lower than those kind of.
The market normal condition surprise will has a real followed by that to have a significant changes when we look at a three year cycle normally the first year in the second year.
So transaction volumes were relatively stable, but if there is a certain curated suddenly we see some of the transfer transaction volume increased followed by the price increase then.
Price will significantly.
The increase compared with the first two of the years normally it will be much higher than the 8% of the level, which is pretty much in line with the GTP GDP growth right. So well we normally monitor is approaching to the 30 year of every cycle the price we will.
Significantly increased.
And then the transaction volume also will be impacted by that so as the authorities will be normally will have start to kind of measures came out with those kind of situations and the entire alder.
Alder to cooling off of the price hike so.
When we look at the.
The overall trend in the three year cycle normally it will be more like a very stable of the overall transaction volume and it winds up.
Normalized the price conditions in the market.
So we're kind of all of our merger on an inbound yeah on EMEA on east Linea <unk> pressure no.
No doubt.
So it's really a good <unk>.
And how do you kind of Iot, but the only thing you should be on fiber genco tissue and put our <unk> passionate <unk> Feng Zhang Li Zhang with Luna Lindeen Yoshida, Shandong <unk> CFO, Don Dion I'm wondering you guys finished the tutto dual Stefan going beyond Europe.
What your thoughts are.
We are going to Italy.
The overall <unk>.
EMEA the unnecessary knowledgeably nila pseudo shutdown potential kind of draw the final year of an audio with Honeywell your ear hydrogel, but don't tell me, but looking at the moment depending on each.
<unk> hundred procurement, none with how do we get a higher churn for the B Anja This is Don.
<unk> Europe and ensure that would tell you that don't know sure hi, Jonathan deep.
Clean energy industry, the timing of tissue, so you're taking a senior support on the pad drilling.
So that is why in the past decades. We look has the same kind of pattern either Europe 2008, 2011, 2014, 2017, and now into 'twenty to 'twenty, one so approaching to those kind of year end we will.
Featuring like secondly, co ops that challenge, but there has to offset characteristics I want to mention here as well right. So firstly.
Housing price normally will remain relatively.
Relatively stable.
A relatively long time horizon, but we will continue goes up more.
Utterly pacer.
Based on those kind of demands and secondly, the mature REIT and those kind of Cts all areas also will be changing followed by the maturity of the market for example, like AR.
Maybe in the posture of the cycle, 1% what would be the stable level, but now may change to the 2% to argue about higher in Europe. This year, we look at the three 5% to 4% of the <unk> rate, but it's I mean, the surprise still relatively stable so that will be a very strong symbol for the mature.
You are rightly of this kind of industry.
Okay. So you're telling me I know you thought they needed to check on how youre.
I'm going to <unk>.
Teachers Accordingly.
Gentlemen, just a phone call.
Yeah, we are a fashion clients food.
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Jim.
So it won't be kind of Europe, Arnie senior new children Lydia.
Somebody do well on a union and nonunion industrial vision, yet EMEA chandon or passenger Lucia.
Shanghai on easily.
She valuation international about Hulu.
Dr <unk>, Dr. John that behind Kona joke, which was on the jump.
C J.
Hi, Tahira.
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So is there anything you to Honeywell dena shifted on the other side.
Truly hernia, so hitachi of deep challenges with chocolate the pension the deep team, we should grow Chocobo, John Yes, Hi, Michel.
I have really challenged the Java deal Joshi, the Kingwood, some GAAP general jewelry Eva.
Hi, Jim.
Yes, sure C J P collateral and a well known pension, yes, sure particular Tianjin machining.
Later, we'll miss you on a higher cumulative project, John Mahanadi too good a teeny tiny.
Neither.
Yes, so I want to ambulatory, it's what we have been mentioned in the prepared remarks. So.
We think in the end we truly believe in the housing industry are the biggest.
Key role farther from the comments perspective, it remains a housing it's fallen leaving no false speculation right. So the purpose behind that is definitely.
Related to the stable price.
But the staple price doesn't mean it won't be.
Not increasing its more rapid downfall stable increasing right. So it's not implied and the impact of other and bring other social matters. So we have the example in the in the history for example, like in Beijing, the last cycles bring.
Bringing the very serious matters is because of Beijing.
Housing price actually has been up <unk>, 2% 16.
16, Mt Pi and for Shanghai, you also the seamless kind of trying to is the housing prices up to 65%. We think 18 miles types. So behalf. So after that it's all bring the brought by the various theories of the management from the regulators. So that's also very good.
Good Testament right.
We truly BD for this industry.
The biggest political and the biggest thing is how we intend to remain the whole industry, especially as the housing price stable.
And we are not abide if we're not against that that's kind of.
Trend definitely we believe we can take a benefit on that and those kind of supply and demand are balanced market also will be the best operating environment for the Bakers further department.
So.
Again, nothing tangible wasn't until you summer do you able to hear challenging huh.
You'll do it all at <unk>.
Germania anti fraud.
Turning to the chart anemia to earn in Banja anemia in <unk> when the Chinese you plan to wait until you hit the young but can you just kind of anecdotal if you don't know Antonio This Sean Hannan impounding Usha <unk> on behalf of England.
You're welcome.
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