NextFin News - BEKE-W, the dominant force in China’s integrated online and offline platform for housing transactions, reported a staggering 61% year-on-year collapse in net profit for the fourth quarter of 2025. The results, which reflect a deepening chill in the Chinese property sector, were further marred by a sharp contraction in transaction volumes and a strategic reduction in the company’s agent workforce. Gross transaction value (GTV) for existing home business plummeted 35.3% to RMB 482 billion, while revenue from the same segment fell 39% to RMB 5.4 billion, underscoring the severity of the market’s retreat.
The earnings erosion was driven by a combination of a high base from the previous year and a persistent decline in market share across China’s most critical urban hubs. According to a research report from UBS, BEKE-W’s market share in the four major first-tier cities and Hangzhou continued to slide through the end of 2025. While the pace of this decline showed signs of slowing compared to the third quarter, the underlying physical market remains fragile. Home prices in these top-tier cities fell by 1.7% month-on-month in November alone, leaving the platform with a shrinking pool of high-value transactions to facilitate.
Internal cost-cutting measures have added a layer of complexity to the company’s recovery narrative. BEKE-W recorded RMB 4.9 billion in GAAP operating expenses during the quarter, a figure that includes significant one-off costs related to "optimization initiatives." These initiatives primarily involve the reduction of the company’s agent count, a move intended to preserve margins but one that UBS analysts warn could trigger a negative market reaction. The logic is simple: in a brokerage business, headcount is the primary engine of market share. By thinning the ranks of its agents, BEKE-W may be trading its long-term competitive positioning for short-term fiscal stability.
The company’s gross profit margin felt the squeeze, dropping 1.6 percentage points to 21.4%. Management attributed this to a structural shift in revenue, where higher-margin segments like existing and new home sales contributed less to the total mix. While the home rental business provided a slight buffer to the margin compression, it was not enough to offset the broader malaise. Furthermore, a change in accounting treatment for the "Carefree Rent" business—moving from gross to net revenue recognition—has artificially suppressed revenue figures, though management insists this shift has no impact on cash flow or unit-level profitability.
Investor sentiment has soured as the gap between policy support and market reality widens. Despite a moderate policy response from the Central Economic Work Conference in December, the anticipated "floor" for the property market has yet to materialize. UBS subsequently lowered its target price for BEKE-W’s H-shares to HK$47.5, reflecting a more cautious outlook on the company’s ability to defend its territory. The platform now finds itself in a defensive crouch, attempting to navigate a landscape where the traditional drivers of growth—aggressive agent expansion and rapid price appreciation—have turned into liabilities.
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