Q1 2022 Ke Holdings Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for <unk> Holdings, Inc. 's first quarter 2022 earnings conference call.
At this time, all participants are in listen only mode today.
Today's conference call is being recorded.
I will now turn the call over to your host Mr. Matthew Zhao IR director of the company. Please go ahead Matthew.
Thank you operator.
Good evening and good morning, everyone. Welcome to <unk> Holdings, Inc. I think that's what's called her tenure tending to earnings conference call.
The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website, your western doctors they'll call.
On today's call, we have Mr. Paul <unk>, our chairman and Chief Executive Officer.
Let me talk to you all.
<unk> director and Chief Financial Officer.
Mr. Paul will provide an overview of our strategy.
Problems and it meets our shoot will provide additional details.
And I shall read out.
Before we continue I refer you to our Safe Harbor statement in our earnings press release, which apply to these call. That's what we will make forward looking statements.
Please also know that Hey, Chris earnings Press release, and this conference call include discussions of all of these GAAP financial information as well as all of these non-GAAP financial matters.
Please refer to our press release, which contains a reconciliation of all non-GAAP measures to comparable GAAP measures.
Las Vegas and I.
Otherwise stated all figures mentioned during this conference call.
Is that I will now turn the call over to Albert <unk>, Chairman and CEO Mr. Stanley Paul. Please go ahead.
Thank you Matthew.
Hello, everyone. Thank you for joining paper's fourth quarter.
Today's conference call.
Looking back on the first quarter.
Confronted with tremendous changers, mostly from short term uncertainties.
But there's uncertainties are not shake out.
Yes.
We are now more convinced.
However, the positive long term market.
Gross DUC well, achieving our goals in the past to get there.
We believe macchiato customer.
Providers.
Customers.
At the center of it seem to do well.
We are resolved to choose the difficulty year lighthouse wont based on multiple opportunities.
Yeah.
But when I tell you when that TD Ts.
I believe my view most of them have used.
All right.
Oh I'm sorry.
And then more importantly.
Okay.
The penalty to serve God doing a poodle.
Winter.
While we must stay optimistic in the long term.
Target addressable market.
New home sales will continue to groom Stanford and Umbro.
A leading center.
With Oscar Gruss.
Opportunistic opportunities.
Jamie upstream I'm straight only that we used to see.
Recent wrong massive industry reactions.
And our truly embrace changers.
Okay.
We will survive.
And amazing pending capabilities.
We're now ready to proceed.
Strong nice Oh Pumpkin Ridge cool Louie.
So we balance we have all it takes to win when the market recovers.
This year.
The market finally gets bought them.
Upon recovery.
One body housing transaction services.
Need to overcome.
The mountain categories.
And.
And our focus on resolving problems for customers and some of the providers.
As well as improving efficiency.
<unk> home renovation and inflammation in a home rental services.
To take root.
<unk> is the primary thing integration.
The government.
I think it's especially true.
Now that we have completed.
Or shouldn't do acquisition.
I'm pleased that we have already realized strong synergies.
Deliberate unusual jumps up until we announced a one body to lean strategy.
Last year.
The powerful growth hormone innovation Felicia.
Sensors in a home rental sources against a weak market trends further strengthening our belief that it would be had it in the right direction right executing on our strategy.
Let's move to the details on progress with our housing transaction services in the fourth quarter 2022.
Oh housing transaction. So it is still undergoing a challenging time during.
During the first quarter renewal home market remain.
Sneakers.
Due to the strain on private developers.
This is the lagging impacts from goldman's.
Oh, its policies and low consumer confidence. Meanwhile, the sign of bottoming out when a recovery.
<unk> home market.
Interrupt you.
Ami chrome outbreaks of course various regions toward the end of the first quarter.
Faced with.
With the turbulence of this tunnel environments.
We must.
In the market.
<unk> and his faithful.
Non smokers.
Our business and organizational planning.
Scaling is telling us.
There are some strategy.
We concentrate on the most fundamental issue.
Improving.
The efficiency of our agents.
It can be our citizens more professional.
They might improve.
Improving customer.
Donors by protecting them against the risks and uncertainties.
I said already receivable collections leveraging on data.
So I'll begin my on our services to developers.
So bitter understanding all the end users.
By streamlining our operations and reducing is Queen Creek is accretionary you bought them is we aim to boost our efficiency and the profitability.
Zero market correction.
The impact everyone in the industry.
And it also changed the overly competitive landscape.
And the battlefields becomes less crowded.
We are not standing with a war a war chest, who returned to our original foundations we have built.
Taking the time and the passion to further refine customer buildings and some of the providers capability.
And are building upon our strengths to achieve sustainable development.
And it was the first quarter the number we'll pay comes from that as doors with Uber cornea Firestone.
Hello, Andrew.
Down 10% quarter over quarter, the number of actual stores alone.
So there's three solvent.
5%.
La Quinta.
As the market continue to fund each one of them. We added a few new stores, all pencil and strengthen existing stores why mergers.
The number of industry.
Private practitioners continue to fall rapidly.
The first quarter the number of agents.
Was 427000 and.
And a number of attitude of engines.
Most recently with 381000.
Both degrees decreased increased approximately 6% quarter over quarter.
The novel Agile stores, and agents dropped 30% and 24% respectively.
From the <unk> pit.
Novel Elite.
Mid 2021 which is in line with our expectations.
COVID-19.
Searches in the second quarter May result, you saw the decline of the number of stores and the agents.
Therefore.
In addition to Les and Joe we will continue to operate in mice no.
The low productivity.
Loss, making stores.
And our steady fastening execute our store model.
This will also weigh on the number of Lynn Zhao stores and the agents.
At the same time.
Drive a notable increase in poor agent productivity, serving to reduce the 18th the churn rates.
In the first quarter.
I know you.
<unk>, Oh, Baker's App launched immediate O'brien Richard across Matney.
39%, so the Knight point 7 million up 6% quarter over quarter, we expected online traffic to grow as American E Commerce.
Regarding existing home transactions doses. According to pick when you search is to Institute mission why did your television where existing home sales dropped 52% year over year and of course, a corner and a T T V or use it to home transaction of biggest platform for the RMB 317 walk.
One 1 billion.
55% year over year, which is a coupon sales declined 46% outperforming the overall market.
Transaction volumes in some key cities, we're starting to bottom out in the first quarter.
The market.
Bomb was interrupted by COVID-19, resurging in mid March.
Confronted with a serious.
So no uncertainties, we are carrying to the principal Oh efficiency first.
Existing home business first.
He was the size.
New units of our scores and the agents do more refining and agree to base.
Our management, we aim to optimize efficiency and a better managing key operating.
Brady metrics, such as collaboration indicators second, leaving enhance our capabilities in existing home sales with a focus on.
Critical nodes in that transaction, including the cumulated juice customer leads on the home tools.
We will leverage our big data and technical capabilities to find the best Mr than a recall because pig and do it.
Our utmost in the missing men tenants so maturing on the sales stone Oh, Dear Oh good listings.
And also reconstruct this needs distribution to improve homebuyers coverage and sales conversion.
From the technical point of agreement are broadly application joined though pandemic.
Our efficiency after the lockdown and Shanghai since mid of March due to the COVID-19 resurgence. The weekly online leads generated and Leah streams via home tools increased by more than.
Kevin.
70% and 130%.
The harvest of humans.
Okay.
Virtual home tours and impairments.
When possible.
Tech knowledge, which transcendence the limits of time and expense.
Space It is supporting real time interaction into customers and edges.
With the sale the sales consultants.
Consultants.
Our shared screen throughout the tour, providing a more intuitive and enriching the billions compare with Kronos tanks all readings.
There is an efficiency.
Shouldn't substitute to a part of all offline operations and he is on.
Oh.
All of our peers.
This year, yes.
No.
He will spearhead productivity and quality enhancement tourists.
Maybe it'll be an efficiency oriented and improve agents.
Had productivity.
With the optimized.
These continued low performing stores.
Senior management must personally walking into each store and engage new stores naval operations.
Customers, we really emphasize.
Q citizens commitments and fulfillment.
Efficiency oriented strategy choices to Knox, we've gotta be a diluting alternatives transactions in Shanghai obese since dependent for more than two minutes.
Due to the pandemic.
Faced with many choices at this difficult time.
He could not remember and it gets to guarantee.
<unk> based pain in a wheelchair for agents near shore.
Putting a minable sources caring for engines into action.
Great.
Maybe the brace ourselves.
You have lower return periods to reduce agent turnover.
Which we agree with high returns in the future maybe Nate this is the right choice.
What do we consider like essential investment.
Most importantly, we have the output is.
As always our business philosophy on community for entity.
Devote more your community ops.
H and engagement to do what is within our capabilities for those in need.
The COVID-19 outbreaks since March all agents, who have served the community and it become a key team among communities with insurers.
An approved 22, new smart volunteers from Beijing, then that.
Alone, providing pandemic prevention and control services.
26, some found 100 times more than three some agents in Shanghai, Danielle well insured.
Why don't you to combat COVID-19 on the phone lines.
Wednesday on 854 communities during the lockdown.
In cities, such as Suzhou agents from <unk> brands and the manager actively participating.
Voluntary services modern when some 900 tons.
Okay Your community count.
Pandemic prevention testing Madden SMT.
Now necessities deliberately.
Out of services with.
First of all insurers, who can influence our strong boat bonds with the community, we believe that a community services.
Infinity.
Our future is.
More frequent touch points, although allow our scores and agents to truly integrate into the communities. More importantly, this is how we turned our belief, but we're taking care of customers into more practical action.
Turning to new home transaction services. According to National single arm studies statistics in the first quarter the overall market.
CTV or new residential home sales was 20, 26% year over year, making the second largest single quarter decline since 1999.
Meanwhile, a G T V. OCR 612, 100 real estate developers trail by 47, 6% year over year.
Against this back drop, but GTA V on new home sales on Baker's painful when the RMB Wednesday night, and making $2 7 billion.
Decreasing by 44% year over year.
Local market continue to decline with no signs of recovery in the first quarter.
Delivering it and where are you from that of <unk>.
The existing home market.
The ongoing depth classes that developers gas has made it home buyers increasingly risk averse.
Slow sales leads to the future.
Deterioration over the arc developers liquidity condition or the other.
Again.
Len auction classes fail.
And the person.
Doesn't teach almost day, one developers increased consistently.
In the current period of market correction, we will strike a balance between scale and the pension and the risk of amendments first we motivated agents to focus on low risk projects and reduce high risk project collaborations in the short term.
Wow.
And advancing the commission in advanced model to ensure the collection of receivables.
And then accelerate sales to a high quality project.
All together boosting our fixtures business cycle.
We refine our call cooperating to two coupling collaboration.
Stay on the developers and the high quality developers please.
Please go <unk>, good increase mid incremental sales opportunities.
As we grew sales standardization and a scientific and a very fine management capabilities.
Partners, we endeavor to jointly build a healthy ecosystem.
On top of that leveraging.
The vintage.
With our unique comprehensive residential housing data.
He attended our rich to the throne and of the industry value chain could develop to develop more services and products to help developers efficiently.
Their customer Rich research project assessment and sales conversion.
Next move.
Moving to our progress and plans for our two wings business yes.
That's probably the market.
Kind of wins are home renovation, finishing finishing services achieved remarkable growth in the fourth quarter. We also completed the acquisition of shouldn't do at Ano no alcohol.
No synergies created created between should do on a big cool.
Are clearly reflected in the significant improvement in traffic a sharing and the use of Brian Chin.
And the operational management.
While these improvements on our crude Shlomo batches, assuming shouldn't do when fully completed consolidated.
<unk> innovation tuition revenue in the first quarter will show, a 54% increase year over year to RMB.
Yeah.
H 800.
<unk> meeting.
Contracted sells well how increased by 16, 3% year over year driving environment, 8% increase in average contracted price.
In addition to 50% gross in a number of contracts.
Which reached close to 600 and 506400 in the first quarter in Stark contrast trust.
Total output value of the home decoration and the renovation of industry decline.
$25, 25% to 30% year over year in the first quarter. According to the China building The Commissioner Association.
This year, our overall strategy remains focused on building awareness dump solution for home ownership as we continue to leverage traffic directly from housing transaction sources.
<unk>.
In the late new retail models and build a better place for home inflation Sims.
Our core business.
Function Sunesis.
Who are providing strong support for home renovation and finishing services.
Corner.
Definitely referral customers from our core business contribute roughly 23% on a home renovation and the foundation contract.
It sells almost all new AD increase incrementally cool on the top line, we experience this threshold to rich almost 30% in the second half of the year near Shanghai and Beijing Saturday bathroom.
Acquainted unremarkable.
The remarkable 17, 7% in the 75% of all is contracting astellas, respectively on progress in major cities.
Has been faster.
Naturally excited exciting.
Contracting of cells in Shanghai.
Hum.
Can do when they're thinking increased.
Most imagine 570%, 219% 100%.
170% year over year mismatch.
First quarter shrink was more comprehensive supply chain and a massive skus under amendment also shows an acoustic I'll put out here.
Did you diversity and scale assisting US you know achieving higher customers, an action and an average contract price in the future we've been leveraging our SaaS system.
As our supply chain management tool.
Pat the scale back procurement and further reduce procurement costs, while he is Julien.
Supply.
With respect to project delivery lead enhancing the quantity and the corn crops mens Miss you all.
I'll put that in there.
Samsung when instructions.
Construction on the delivery cycle, while utilizing our online Amazon system.
Conjunction with.
Offline management.
Through ultra suit symptomatic and scientific point, there Amendment management, they worse delivery cycle has reached.
Industry leading level.
98.
Days in the first quarter, we aimed to shorten our overall delivery cycle from 130 days at the beginning of the year to 120 days. After the end of the year. Meanwhile, we strive to consistently enhance customer satisfaction through construction about.
Boucher services small construction site customer N P S management and a complete compensation measures.
Moreover.
Our home furnishing revenue consistently growing in the short term, we will continue to deliver to drive Becker and <unk>.
Sales.
Oh, okay.
Mice.
Nature.
Applying appliance and other categories as high gross margins through our home renovation sauces.
In the fourth quarter.
Two our enriched and skills and an improved sales.
<unk> shouldn't do and let's say it was average contract price increased by 7% and a 21%.
Year over year, respectively home furnishing accounting for 10% of total contract yourselves in the fourth quarter and it made up 30% on contract itself in Changzhou connect ship stores.
We've been through integration oceanview, our home furnishing under the innovation services.
Hi, Andrew.
Now enter a more rapid development phase with targets, it's amongst the kuehne <unk> sales to exceed RMB 1 billion.
And amongst the contracted sales in Beijing, Shanghai, and Guangzhou to surpass 100 million niche sometime in the second half of the year.
During the first quarter, our development approach to beg huh.
Home rental sources become increase increasingly clear.
I would like rental property management services.
Chelsea event.
Got it.
Cute.
Don and Brad can progress there's over 5000 units.
Corner in the first quarter.
During the first quarter, our units under management highly dependent from three cities to eight cities and our bias that is 7% quarter over quarter increase to reach nearly one <unk>.
17th Summit.
And this year, we added two how more than 50000 units under management, our calculated rental model, we believe that our carefree rental model can transfer, but that gives birth rental properties in the market into high quality reliable professional management.
And then institutional nice long term rental properties.
Meanwhile, with respect to cost.
With centralized opponents.
First use apartments project.
We participated in using a light.
Julia.
Creations approach peak when new news apartments launched at near Shanghai, Chile Street in the first quarter. The project has a total of two seven 907.
78.
Sediments unit amongst the rental as low as RMB, two soundness and 100.
And the it's acute.
Occupancy rates of which.
98% today in March we launched our.
Treat two light services guarantee program to protect that.
Lights in the interests of both tenants and our homeowners the system.
Provide loss compensation.
Where is the most <unk>.
Concerning issues such as commission rent in the property and then there is no certainty sure Anthony alone, allowing quality and the warranty on a worry free rent, which doses to be truly accomplished the first corner to light.
<unk> commenced operations in Chengdu, Shanghai, followed by developer developments in most cities.
Finally, I would like to sync all your western for their support.
Hey come on successfully list on demand both on the Hong Kong stock exchange.
A way of interaction.
May 11th.
Presenting on the phone.
Home for our journey forward at empower us for our next destination.
The substantial uncertainty we face right now reflects the challengers.
Business has all the all of these things.
Yeah, Phil Baker.
Our efforts are.
These center on reducing the uncertainty.
The business of providing value to the industry.
Sureness.
The phone.
Phone against the uncertainty all the information really authentic and his team.
Against Noss Engineering cooperation so our agent cooperation network and.
Against the uncertainty and customer choice Sundar Akamai optimization, all of our products with reduced uncertainty is service providers kind of entities.
Through training.
Vacation under examination.
And at combating the uncertainty you service.
Sure.
Steady fast commitment to service quality.
I'm Gonna nation has on spirits in a group of small 90, when attenders are greater.
And at the same time more confidence about the future. Therefore, the recent the recent market trends.
And Vincent so that through.
That's true.
They may be do not change who we are as.
Uh-huh organization.
Even so two strengthening our things plus sentiment you know what.
States duration.
There is no doubt that if we are being tested and engineered on multiple fronts phones.
Oh housing transaction services matched right now.
The many changes its operations all of our two wings must've been solid underlying and abilities and.
Cannot collaborate.
Decisive actions.
Amongst two hour, who I'm gonna initiative to streamline costs on a year to leaner, while maintaining our metallurgy.
Theater, another strong Pos iron clad all the sites, we uphold our belief that as we overcome the obstacles we have emerged stronger with new capabilities at a lower structural costs.
Steps we.
We are taking today, we have solid you're fine on concentrated foundation empower all development for the next decade and.
And a sustained value creation for our customers service providers and shareholders.
With that I would like to turn the call over to our CFO . She called Truckloads review on our first quarter financials. Thank you.
Thank you Kelly.
Thank God for Geneva.
Important cause more detail about our fourth quarter <unk>.
And the results I would like to provide a brief update I'll, probably some housing markets.
During the fourth quarter more and more cities in clubs.
Perhaps for the whole fortress principal operating property market.
After a variety of policies was on presents to the frequency of the push into the sector.
Deep <unk> in the second half opportunity.
With leather boots.
The subsidies.
Bolt on payments.
Without mortgage rates until readout on the wounds for home purchase.
Any thoughts of a ball stone bonds with recovery of.
According to Baker Hughes.
The big cloud PPV.
Home sell another 1% to 216% hotel.
Cool.
It doesn't tend to work with that.
32%.
Typically Q1, Q4, Q suite with banking.
Whilst the new home construction remains soft.
The Knickerbocker.
Do they.
There could be challenges.
The fourth quarter.
So.
Uh huh.
The resurgence of COVID-19, burdens in many cities in China, including launching in factory in Shanghai, which went into our thinking why blocked up.
With borrowing mobility restrictions and at the local level control measures in place our operations in those areas are.
Being adversely affected.
The wage our local stores have been closed temporarily until the transaction Hudson disrupted.
However, that's what we experienced in the first half of 'twenty 'twenty consumers.
Consumers are increasingly demand higher standard of living conditions.
After COVID-19.
After outbreak of COVID-19 demand has become even stronger. So therefore, we believe that the pent up demand will be released in the subsequent period with the reopening of the economy in the foreseeable future.
But until April try not to top leaders signaled some old news to meet new upbeat to lids com.
So a poly Bureau meeting is proud to support the reforming of local property policies.
Optimizing the developers.
Our pre sell funky regulations.
We believe the bulkier policies worldwide <unk> monkeys sentiments on the body.
On the home cells, which will be gradually rebounded.
To summarize both those market recovery was due pigmented temporarily disrupted by COVID-19 in Q1 with Muji the old concept from volume.
We were able to utilize the opportunity to pull to optimize all execution.
The late to Guam walk to be batch are positioned well.
For the market recovery.
Turning to our financial details in Q1.
Net revenue decreased by 39, 4% to RMB 12, 5 billion in Q1.
<unk> 730 <unk> one.
In line with the high until forward guidance.
The street's consensus.
The decrease was primarily attributable to the decline in total <unk> up 45, 2% to RMB 586 million in Q1 from RMB Sultan under <unk> 9.6, 98% pure <unk> to between two one.
Due to the continuing downtrend of the TV market because of its new home transaction at the new home transaction since the second half of 'twenty to 'twenty one.
The merchants are linked to COVID-19 and city regions.
Corresponding restrictive measures in Chihuahua.
And so a relatively high base of the same period of last year.
In particular on that revenue bump existing home transactions services were RMB six points reported in Q1.
Compared to RMB 10, 2 billion interest in <unk> 2021.
Primarily due to a 44, 5% decrease from two TV offer this new home transaction to RMB $374 1 billion in Q.
From RMB $673 4 billion and just imperial to get from Q1.
Net revenue from the new home construction services.
Decreased by 45% to RMB five 9 billion.
In Q1 from RMB nine 9 billion.
Same period of 2021.
Primarily due to a 43, 9% decrease in <unk> of new home transactions. After RMB $192 7 billion in Q1 from RMB $343 4 billion with the same period opportunities from two one which was partially offset by a moderate increase.
The commission rate of the new home transactions.
Our net revenue from the merchant and other services or RMB 0.5 billion kilowatt compared to RMB 0.6 bidding the same purion <unk> 2021 primarily attributable to the decrease of net revenue bump into services, which was partially offset by the increase of net.
Revenue of home renovation services.
Cost of revenues decreased by 55% to RMB 10 points of repeating what.
<unk> 15 point marketing just imperial for 2021 course.
Gross profit was RMB, two 2 billion in Q1 compared to RMB four 8 billion. This imperial's 2021.
Gross margin was 17, 7% in Q1 compared to 23, 3% in the same period of 2021.
The decrease in gross margin was mainly due to one a lower contribution margin of this new home transaction resulted from a relatively high percentage of fixed compensation cost for the entire agents under to a relatively higher percentage of cost related to the store of net brand new attributes.
The decrease of net revenues in Q1 compared to the same materials 2021.
Operating expenses.
Decreased by 17, 5% to RMB 3.1 bidding.
<unk>, three 8 billion and just imperial 2021.
General <unk>.
<unk> expenses.
<unk> thousand 522 million in Q1 compared to RMB 2000, Hungary onto a meeting with the same period of 2021, mainly due to the decreased level of provision of credit losses on the personnel costs.
And marketing expenses were RMB 361 million in Q1 compared to RMB 57 meetings, just in pure <unk> 2021 related to the decrease.
Granted the pricing of the promotional market activities.
Search and development expenses for <unk>.
$749 million in Q1 compared to RMB 638, many different periods.
Mainly due to increased personnel cost.
Loss from operations was.
<unk> hundred 18, many cooler compared to income from accretion so RMB 2000 under certain meeting in December <unk>.
One.
Operating margin was negative seven 3% in Q1.
Parents, who four 9% the same period 22 gigawatt.
<unk> due to one a relatively lower gross profit margin and to increase the percentage of total operating expenses of net revenue is a bit volatile the decrease of net revenue in Q1 compared to this imperial's 2021.
Excluding non-GAAP items.
Adjusted loss from operations was RMB 450 million Q1.
Compared to adjusted income from operations all found themselves in the 564, maybe just imperial's come into July .
Adjusted operating margin was 93, 6% in Q1.
Care to seven 6% just in pure off two two to one.
Adjusted EBITDA for.
It was RMB 351 million in Q1.
That's one two soldiers on the committee.
Imperial's 22 megawatts.
Net loss was RMB 600, continuing in Q1.
Compared to a net income of RMB <unk> 50.
<unk> 59, many interest in June of 2021.
Excluding noncash items.
Net income was.
And between taken in Q1.
<unk> 1500, <unk> is the same kill rate.
After 22 kilowatts.
Net loss attributable to <unk> holdings Inc's ultimate shareholders.
RMB $618 million compared to net revenue net income attributable to <unk> Holdings, Inc.
Shareholders, so far south of under 59 million interest Imperial for 2021.
Adjusted net loss attributable to <unk> Holdings, Inc was RMB 29 million.
Q1, compared to RMB sells in the final hunger in the two meeting with the same period of 2021.
For the fourth quarter of 2022.
<unk> net loss per ads attributable to <unk> Holdings, Inc. Solid initial ordinary shareholder was RMB 0.52 compared to diluted back in play.
Yes.
Attributable to <unk> Holdings, Inc. Ordinary shareholders of RMB 0.88 in the same period of 2021.
That's the diluted net income per gas.
<unk> holding.
Although shareholders.
<unk> zero point, though true compared to RMB 125 interest in pure opportunity can be won.
Next I will talk about the recent update regarding all the caps marquee on operation initiatives.
That's why it's all our near term focus on corporate financials.
Firstly because successful primary listed often main part of the stock exchange of Hong Kong, but we often Stockton on may 11th.
The Doe program.
Unlike a second release team.
Rich has been adopted by many other U S Chinese films.
We cross a hiatus as hoped on the street with procedures.
Also lowers to maintain our promo releasing scatters on Hong Kong changed even under the most extreme cases.
If all of a copy to reach the top the New York stock change to a sneaker.
Meanwhile, <unk>.
One likely keep IPO, where it is.
You didn't issue new shares or institutional crypto by way of introduction, enabling us to worldwide dilution Java shareholders' interest.
So home commonly see.
Is the solution farmers with the full responsibility to takeover the turnaround activities and the risks.
The two protect the best interest of our shareholders.
Secondly for one of our true Wind's business home, Brendan <unk> and finishing services.
We successfully completed its acquisition option duty channel.
So combination while fourth to leverage respective advantage on both sides.
Which will allow us to replicate our model more rapidly.
To empower industry.
Shown to work the cost studies and Tal with credential stimulus since may occupancy lift.
Let's turn to gaming transaction pump acres going choices and support.
Revenue soap opera home resolution function services.
But I think to grow more rapidly in the future.
Thirdly, we are aggressively cutaway personnel restructuring Marina.
Our focus on middle and back offices.
We executed a seamless mischievously for our financial services business back in Q3 opportunity to do what you will do which would be more focused on the development of our core business.
Approximately RMB 250, <unk> severance provision for the period.
This time, we've made some really beautiful twice.
Due to uncertainties associated with the recovery in new home markets.
Margins also called Nike offerings and to a certain cities on.
Based on our prediction after lethal to market dynamics.
It was a big change that we're making in a preemptive manner.
<unk> bathroom round on before hungry 30 million <unk>.
Severance provision may be incurred in Q3.
By doing this a one off adjustments leap at EUR personnel Scottrade well before the optimized under way will be Apple B pass because all the business during this tough market.
Firstly.
We believe our strong cash generation capability.
Sufficient liquidity rugby assurance of coffee and navigate through the market cycles on the culprits of fallout from the COVID-19 outbreaks and certain impacts from the relatively slow recovery of the housing market.
As of March 31st 2022.
Our cash cash equivalents.
Cash and short term investments of RMB 52 billion.
U S dollar seven 9 billion.
The balance of our long term pressure items.
Many including long term investments amounting to RMB, 18, 9 billion or U S. Dollar so EBV.
In addition, we also announced that puts a certain way you propose to establish a share purchase program.
Which we may repurchase up to U S. Dollar one of our gas over a 12 months period.
Southern tube opinion agenda momentum for our shareholders at the general meeting to be convinced that that's comp.
So the move of the skull as our confidence in the fundamentals and the long term growth of all our business.
Turning to guidance for the second quarter for 'twenty to 'twenty two.
Considering the housing protection market is due at the early stage of recovery.
As the potential negative impact to COVID-19 containment measures in certain regions.
As well as the higher base in fact offsets in Peru to inject into what.
We expect overall market, which b of this new home sales to fall over 60% year over year in Q2.
On the over market with GTD of new home transaction to decrease over 50% year over year.
In Q2, according to Baker Hughes.
Cute.
This song all of Balkan submissions.
Moving forward to Q2 2022.
We expect total net revenues to be between RMB 10 billion and RMB 10 5 billion.
Representing a decrease of approximately 56, 6% to 58, 6% from the same period of 2021.
To support cuts conceits of potential new paths to loosen the rules included to the policy measures.
The emergence of the COVID-19, certain regions that correspond.
Correspond to the strict measures reached remains uncertain and the may continue to adversely affect our business.
The Companys Carter than a preliminary view on sort of puts and institution on the market conditions, all of which are subject to change.
Today, I'd like to reiterate our consistent headaches.
While we're focused on weathering the Shelton turbulence, where you arguable chemo effort to developing and investing in all of our long term capabilities.
Even.
It might take time to achieve financial returns on existing investments.
The longer it takes and it's a more difficult disease.
Size of the way the call.
Although China's hotel market has undergone deep adjustment last year.
Speaking of uncertainty from the COVID-19 outbreaks in the first half of this year.
Great.
China will eventually win the battle against COVID-19.
The long run we also believe that.
Stablish mento for long term halt in multiple countries.
So ongoing reposition trend to.
The change in terms of structure to results and mortality among the superclass because.
That's all I'll comment on precise loss improvement of people sitting Felicia sorry.
So it's a tremendous commercial firms to install transport on the upgrade to <unk>.
Sector of pay TV.
Starting with the vertical penetration to <unk> the industry practice protocols.
Europe by horizontal dysfunction to integrates the entire industry.
Our proven positive sides.
It may not be a shortcut.
It's a path that's the duty that you all have a culture of doing the license over its a quick site type of things.
When the full phase <unk> ICL with <unk>, all with one button children's gladly.
I don't believe we will bring long term benefits to the industry.
Customers.
All in all we're at.
Fully furnish the challenging changes.
And the calculation with 50 commission under responsibilities.
We will always be self motivated.
Driven by all the long pursuit go to create indispensable value for the industry's.
Put it that way.
We will never stop.
That concludes our prepared remarks, we'd like now to open the call for questions. Operator. Please go ahead.
Thank you to ask a question you will need to press star one on your telephone withdraw your question press the pound key.
Well the benefit of all participants on today's call. Please limit yourself to one question and if you have additional questions you can re enter the queue.
If you're going to ask the question in Chinese please follow with English translation.
Our first question is on the steel side with Morgan Stanley . Your line is now open.
So is it just all with a tier one I've mentioned bonney townhome, a finished lot more telephony a cheaper.
So you pick up some type of outlet you don't like the U S. All pharmacopeia the change out the trunk.
No I don't want to keep it all between say 40000, essentially to see a whole bunch of Nancy Gioia shellfish listen those are the H&R himself. So you're telling me I'll, let chip I intend to hold a schedule with Jeff on shelf Oh My God. So much you can take a honey at the first with US agenda, yet they choose to go for sure. The ship now it sounds like you're off with Saia T. At all costs that you'd see Kenya, yeah. It yourself on the way.
Yeah without sugar per se not muscle function I'll actually I thought your thoughts of kind of by email me on that no such a thing.
Thank you management for taking my question. So my question is about industry outlook, a co manager Michelle with US your view on the current market countries should I say on the sales trends are you a platform for policy from homes and new homes in the quarter to date also the pandemic has brought impact to not only just the property transaction market by yourself are impacting the overall employment in a call such as.
Sentiment in that context, how should we think about the timing and trajectory of our public Derrick knocked down a recovery at the fourth first quarter analyst call. You mentioned that you were expecting the new home market to decline, 5% to 10% and it's just the whole market to decline over 10% of young yet for your for 'twenty 'twenty.
Wondering if there is any changes to that expectation. Thank you.
Think of student lending thrust of your question since the beginning of this year.
<unk> policy signals have been released to continuously from the top top <unk>.
Especially for the mortgage REIT high volume.
My concern amongst.
In April National wide posted the second home mortgage REIT with the lowest level since 2019.
L P R and for home purchase markedly lower too long to full points two 5%.
Mortgage origination cycle loans.
Also dropped from 73 days.
Page 29 days in April May.
Making portfolios the mortgage pool cycles since 2009.
This measures continue to be incremental to that particular level from our observation at least the Morgan city.
Tier two cities.
The team Joe Suto Changsha why.
The central hub algorithms using policies.
The policies Hep b level not the easy that include <unk>.
Relaxing.
Actually the purchases restructuring, reducing the down payment division and the issuance of home purchases.
But for subsidies.
This isn't policies, how can place the pulp to grow promoted most of the transactions.
In fact, it's relatively limited.
I'd like to take a turn draw additional gains.
The 19 measures too.
Paper lines Monkey mortgage deals.
<unk> first.
Listening to restrictive policies and pulse in the past two years old by two one.
This demonstrates the government's significantly at the commission to boost the market.
As a result.
New home sales marketing conflicting molding rebounded in multiple.
Nevertheless.
Due to the continuous liquidity crisis.
Chris.
The pandemic.
50 of the new home sales market post ghansham.
Looking more broadly.
The easing policies.
Implemented anticipated.
The market remains sluggish for the following reasons.
For example, with safety policies and multi NUCYNTA ER.
The equity markets.
Sure Jim.
And the Shanghai.
Most importantly.
The series of marquee collection metrics in 2021.
Were also above on presents to the results.
With new ones in loss.
Copied us.
But the idea is that Chrysler faced by developers have made homebuyers increasingly.
Worse.
The severity and the momentum of the economy downturn have also led to the effect of homebuyers teaching.
With respect to the future combat well lifestyle.
Yes.
The evolving situation.
With respect to the normalized the control measures with water like rebates homebuyers with filling a possibility on the maintenance transaction more difficult.
So basically this evening.
Home sales market began to pick up.
After Chinese new year, and as a market bottom out in the first quarter.
But for the subsequent recovery with the interrupt.
And then Mick.
According to pay per visit and securities in the first quarter the TV <unk>.
New home sales market in China.
By 50% year over year.
Quarter over quarter.
The price trend has shown that divergence.
Liable.
Secondly in fiscal <unk>.
And the fluctuating in the second Joseph JP on the stochastic.
Okay.
Vehicles.
New home because I think it can be influenced by 44, 5%.
Sure.
Oh, it's two homes of volume rebounded in February and March.
The month over month growth rate in March reached with 45% under sales returned to the level of the glad to mention too.
So colby.
Yeah.
So colby operate many.
And in the remarks, we dropped the T cell to the housing market recovers that as well.
Regarding to new home sales market trends.
Diverging from dental students in your home market.
<unk> momentum continues to be lackluster.
The anticipated salt, though towards materialize as opposed to the platform.
In first quarter with the TV overall <unk> pulp hundreds of those did come.
So by 47, 6% year over year.
According to data from the National Bureau of statistics.
<unk> the residential home sales across concrete was down 36% year over year.
Making the second the market for a single quarter decline since the 19 megawatt.
So year over year decline in lower tier cities has been <unk> lockers and the high tier cities.
Almost the same trend.
T V of the new home sales on Baker platform decreased by 44% year over year.
Looking ahead.
Moving forward, we are still there are still many uncertainties in the short term with respect to the new home monkey due to the fully reasons of course.
The participants in both the cash crunch of private.
Developers and.
And second is into well take Multan further easing policy to take effect and certainly we saw this consumers are more concerned about why therapies passion scrap developers can deliver houses.
Called fuel system related policies.
Number four it's a bogie.
The pandemic along with the respective control measures.
However, in the long run we still remain quite confident because the potential demand or leaving you mentioned are strong.
We believe.
<unk> bin.
Holmes.
New highway clinicians.
<unk> and <unk>.
That has the easing policy takes effect and the pandemic.
Close the market rebounded to recovery under the transaction relative to intermodal.
Okay.
Regarding your second question was actually doing with certain presented many cities since the fourth quarter of this year.
We will make a significant impact on the Companys performance.
Half of this year.
Okay.
At the same time, we will continue to monitor.
Evolving situation of the pandemic to excite the impact to our full year's performance since.
Since March.
So colby operators.
Most into alto <unk> pulp capacities.
And the.
With the ability to continue to measure.
Sure.
Roughly 6% of in home.
And what impact that's going to move in Q1.
I believe the 25% that's being home sells a study to be effective.
You too.
As such.
So the pace of market recovery is delayed.
And Shanghai and the neighboring cities, New Young said Weaver Delta to.
The transaction also harmful one months in Q1 were affected under the transaction.
Just two five months slightly to be filed in Q2.
No April hundreds of self storage in Shanghai were closed.
According to all we're conservative estimates transactions in Shanghai will come nearly two dozen deals throughout the country.
In Beijing at least so take yourself conviction I expect it to be in kind of effects pedal.
In Q2 most.
<unk> put some store Kimberly.
Closed.
And motel, 6%, so Tim Nicholson me, we've seen everywhere, where we operate approximately 140 <unk> committees on the identical lockdowns or restrictions.
Puts a profile of a new homes House project.
Spending defaulter onsite tubes.
However, we'd like to have greater as the housing demand.
Actually demand, which well.
Only be delayed rather than disappear because that's the way it starts booming market.
But after post pandemic based.
Based on our experience in early 2020, I assume as well as some more recent transactions was suspended during the lockdown will be completed after the pit than makeup.
Supplies.
Looking into some pent up demand during that period will have first go.
We'll rapidly when the pandemic is over.
Which means that which the longer time or is it depends.
The pandemic impact on our business activities.
ILEC fix Xinjiang special case.
Which went under lockdown beginning on March <unk>.
13th.
So two weeks that followed acres. The weekly is new home sales in Houston experienced sequential decline.
65%.
However.
During the two weeks after the lockdown and Apple.
Our weekly volume increase the subsequent truly by 400 per such.
It was also 75% higher into two weeks pre lockdown means.
Making up for almost all type of analysis, you correct you into low cost sees it.
The decrease for the amount that will be released post pandemic.
We'll also depends on the eastern after local using policies embarrass cities. This is the fact that it's wise to the homebuyers to become certification and the other factor.
Factors.
Thank you Steve.
Our next question comes from Timothy Zhao with Goldman Sachs. Your line is now open.
How does this issue, though this is Danny I'll go with you.
Right now, which again is that what you saw when you show up on your call.
That's why you saw franchise Alamos Stefan cellular drones country. You mean, you hook what should you touched on that you can go to China.
Oh, sorry, what did you guys sounded myself all of Kenosha sides colleague Sam you know women.
And I hate yourself with a show on the way.
But anyway as I said.
One you wish on me I don't want a woman Condor.
Clinton, though keeps it at that Sean do you want me to adjourn nature, you feel you'll be odd to me that give me. So now when they can die.
Couple of thing I forgot Waikiki Saturday night, Lockdown like Eutocia Bush weightless that should know how to find yourself.
Second my friend and congrats on the very solid results. My question is regarding the new home transaction business climate.
<unk> management provide any breakdown between Soe assesses the private involved personally in terms of GTA V and any differentiate yourself commission rate and what is the impact of I saw you used concentration rate increase on your business and how is our best model happen to change along with that and also on account receivable was also relate to their new home.
Dennis that's madness, the further need to book of Aegis as we see the decrease in the <unk>.
Quite off provision actually has a positive impact on the generic hot in the first quarter. Thank you.
So as you can see let me address your question.
The other important question to stay under central government's own tobaccos concentration ratio has been increasing this is actual.
The land auction perspective in the first quarter.
On the central garments give out this fall to 71% of orchestra.
In terms of the cells.
According to Baker <unk> cute.
After 1200 give I'll post COVID-19 in Q1 61.
<unk> accounted for 28%, representing an increase of four 2% quarter over quarter in the 5% year over year.
Of the top 10 developer itself steel developers accounted for 37%.
Send you an increase of four 7% year over year.
Untypical Praful.
The percentage of the state and the central government owned develop or has it been pushed out as well.
Statements Central owned tobacco GTA V. That's percentage of Bay club, New home sales.
<unk> to more than 25% in Q1 problem.
Two 2%.
Representing one 3% quarter over quarter increase and up.
The 3% year over year.
Chris.
From the impact.
Onto page due to the increased concentration of the state and the central own tobaccos, we want to emphasize that.
Regardless why give up on state owned or private.
They are only two five turns that could impact April the first Lucky Commission rate.
The second is a better risk.
Just two factors largely oxide bylaws.
The trend of increasing brokerage service penetration rate well roadmap change I want to emphasis on CS into long life, regardless of whether it would be about a penny state owned or projects that fit the same pain points in customer acquisition.
And has the same strong dependency onset subtitles.
As such.
<unk> increased our brokerage service from attrition rate is underway.
Nobody know change.
Based on because our two data.
Brokerage service penetration rate of the state owned and private developer also at the same level of the answer.
We'll also drive every year the key factors.
Determined that both brokerage service and Tricia link and the commission rate.
Particularly of the new home project I use a separation.
The cities continue to inspire.
New land, while will become increasingly distant from the city center.
Fourth the increased accretion between new home projects that I use.
As a result of weather diversified state owned and private.
Jay the lake hopes to a concentration on the connection to the end user will continue to grow.
Self built.
The sales channel have become.
Paradox under the Newton versus normal if the so called black on page profitability state.
Brokerage services.
Okay.
I think whereas the one when it becomes collaboration with the sales channel we are as a brand of choice.
Good well on integration.
Molten hunting meeting I mentioned, China.
Within truly helped <unk> to effectively connect and use of <unk>.
Increase the sell through which gave us.
On whether the compelling competitive advantage under the new Dutch windmill.
Yeah.
Both commissioner linked.
For the full country state owned developers.
Commission rate ended relatively lower symbol is <unk>.
Therefore, the impact of lower higher concentrate.
On the developer where.
Multi market neutral.
Still with developers average commission rate is 20% lower than that.
Private developers.
On Tuesday, only developers portray there.
They are being closely towards the city center, resulting in low degree of separation between that project and use it.
At the same time.
Certain costs will stay on the webcast.
With the relatively low.
Is there a requirement for the studies soon another agent.
Richard.
However farm.
Operating profit point of view the risks of the car.
Increased throughput from a state owned developers are quite low.
Increase the state owned developments will help to lower our bad debt ratio.
Partially offsetting the impact of reduced commission rates.
Britain pockets.
Speaking to new pounds, a higher percentage of <unk>.
Profit margin roughly neutral.
Regarding your second question was.
Full paper.
As always we perform so very prudent accounting treatments.
And also book the appropriate provision for all aged receivables timely with Frank.
That new collateral record.
So in the past quarters.
We almost broke all opens sufficient provision for all of the potential risks from Gabor person, who have Nike public opinion okay.
Some financial crisis.
Oh, one more thing to mention this on May 12.
Soon it announced that the increased.
<unk> U S dollar denominated senior notes, Wisconsin.
Based on the principle of prudency clunky.
We may make a bad debt provision of <unk> receivable.
The highest provision how does the provision ratio.
At the end of Q1, the balance of the accounts receivable and authors who book sooner Inc. Was RMB, one 2 billion.
<unk> 700, 1980 with a fully covered by collection.
For the remaining $450 million, which are the collateral we increased our bad debt provision from 13% in Q1 to 85% in the future as consequence of the unique power, but assume that bad debt provision adjustment our pins out in Q2 could be RMB $260 million.
Thank you kenzie.
Yeah.
Our next question comes from Liping Zhao with TICC. Your line is now open.
How 'bout standing toga naphtha Alicia.
So oh, what do you mean it that way.
I'll show you why shouldn't we see a fantastic.
Fantastic.
Oh, God willing farmer sanction do that but it seems like <unk>.
Oh, Oh Oh.
Gotcha Gotcha.
It's been quite the same.
Thanks management for taking my question I think Sandoz dot heads to consolidate in April .
Earlier than previous expectation could you please share the integration process and.
Is there any updates for R&D revenue contribution considering the heightened COVID-19 control in certain cities in the second quarter.
Oh, well, that's what a gigawatt contact with anybody.
Yeah sure.
Or was that all these years.
Uh huh.
Yes, it's a study that would be quicker you cross sell question actually has been mentioned a couple of the matrix asphalt updates during my prepared remarks, and later on I'll give you a multi dose.
Got it.
But we're not doing drove antibody dependent and therefore, they hold against the car.
You know what time that there were particular to hold in Fujian.
Well I think what you should see equal where does that go with that.
I know somebody here.
Did it go into you're not feeling as though you can think of.
I want to just to give you more details in terms of the fundamentals and are we truly believe all those kind of operational results. It's about based off those kind of businesses. We have lots of great. Thus far is that sometimes we have that.
But do you know what how can I go through and you don't need to heat and cool one Chicago one off when it wasn't called out E. G. The anchovy downtown and you don't see I see.
Granted that argument yard consented to either get nutrition club.
Cool cohort on people.
Oh.
That will truly be doing between our one body also transaction business and the tooling for new business and there are a lot of synergies between that especially the resources sharing for.
For example, I think the.
The Hudson transaction business, whereas she has a very strong potential depending upon why is the bigger potential.
Potential customers to refer into the Hudson a declaration as far as the other services.
Thank you all again I prefer the sound Yamaha Yeah, an emotional Biatch Huh Al you said you know what don't you saw this at home.
Cornell yourself into that so if they don't work.
So in general the same panel.
So as you want them to change the only thing I'll take what I would tell them when they call phone company like language on the ocean pork or chicken should be Oh, yeah, well turmoil she's here on the phone call.
Because you know for one company with one thing that's when ETP affluent yeah welcome to Sandra on sound zone.
Oh I'm sure there are truly interested in children's villages, yeah, yeah, what's in that country.
Secondly in the past two decades experience problems the danger to the euro where actually it has been accumulated a series of the methodology.
Especially if you look at the nature of how the home decoration and the foundational business there are couples of features such as Oh wall.
<unk> are extremely prologue.
It's a pretty handsome pay the rules are very complicated as well as our customers' decision, making with plus acres up ever had right. So all of those kind of.
Features we truly believe Alex Prs and the methodology of accumulated from the housing transaction. Obviously, we can replicate those kind of experience into the new business and Meanwhile, we also accumulate.
A bunch of the Knowhow in terms of the same thing lacking management data management as well as our service commitment and we do believe by all of those tend to be apartments. When you can provide a different kind of services into the Hudson declaration basically in the future.
So I guess I don't know what I'm, saying.
Cause healing year, local and central around and talk to you more minivan.
So do you know what is it you shouldn't really your decision until the end of until you want me to go you made household mission into the appointment.
Uh huh.
The.
Tell me something will go up.
Well I shall Angela I think I'm, telling you know them well.
If you don't have to defend it.
In the Meanwhile, we truly believe our new business also.
You're all of which are in the field, which is kind of inspire us. We always ask the question Paul itself, if not us who will be changed of the industry. So we do believe as I mentioned, the second part all of those kind of expertise as well as the inspiration could it be.
Help us to continue bringing up at her role and also the home decoration as well as our home rental business apart.
Oh did you say it wasn't uncle uncle, Sam I'll show deal, Yeah, well it sounds like Auckland to chicken killed them into containers was about if I'm in a constant on tissue issue.
Awesome.
Thanks.
This along with our Undrawn one that's just we don't call them you don't take with them what can be language hung T shirt.
If they don't have the Ponca once you know what he hears about Zynga in June .
Saudi and.
My time with him home to cleanup surety warming and genomics and I'm glad to have our endorsing or if they don't meet him. So he's really got a LIFO more weight in benzene Thompson at Banca <unk>.
Well, maybe you can tell them you got a feeling for.
And what time of year and Umpqua three while we aren't doing insurance and you can go up and more things.
Yeah.
So, let me see that down and something else.
Quintin Lai from this year.
When they saw that this year it sounded though a bioequivalence again no problems that once people.
Thank you my 20, <unk> got behind as you know, we think constellation was somewhat Josh.
So we strongly recommend you are when you look at all of those kind of data is similar like what we showing internally is we want to make a balance between the speed of the growth as well as the quality of the girls. So we all the mainstay should always focus on the long term ends up right. So.
For example for the home decoration business, we want to make a balance.
Our mall up to quality efficiency, that's why I must calibrate. It. So we look hard at the data such as for example, like the one her mouth. So.
The overall contract revenue surpassed 1 billion RMB. So we do believe by all of those kind of outflow in the foreseeable future.
Reach to all of those kind of go so in summary in the long term.
For myself as well as a team we announced Mario Barraza.
The growth for the business.
And that we are more on the customer satisfaction.
And so it has a whole weekend using the online pass throughs as well as the other technical ways to continue brings a difference into the industry.
Okay.
And that's my answer thank you for your question.
Back to you operator.
We are now approaching the end of the conference call I will now turn the call over to your speaker host today, Mr. Matthew Zhao for closing remarks.
Thank you all for you Terry. Thank you once again for joining US today. If you have further questions. Please feel free to contact Bay consumer maturation team soon as our contact information for Whitehall website. This concludes today's call and we look forward to speaking with you again next quarter. Thank you and goodbye.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Yeah.
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