Date: 3 October 2024
Broker: MIB Securities (Hong Kong) Ltd
Overview of BEKE-W (2423 HK)
BEKE-W is highlighted as a key beneficiary in the property sector, specifically among property agencies, following recent easing measures introduced by the Chinese government. These measures are aimed at reviving the physical property market, with positive implications for companies like BEKE-W that are involved in property transactions and agency services.
Government Easing Measures in Tier-1 Cities
As of 30 September 2024, Tier-1 cities such as Shanghai, Guangzhou, Shenzhen, and Beijing implemented several easing measures to support the housing market. These measures included:
- Loosening Home Purchase Restrictions: Complete removal of restrictions in Guangzhou, with partial easing in Shanghai, Shenzhen, and Beijing.
- Down Payment Reductions: Reduction in the required down payment ratios for both first and second homes, although the down payment for second homes remained higher than the national level.
- Tax Cuts: A reduction in the value-added tax (VAT) for secondary homes, exempting VAT (5%) for homes held for more than two years in Shanghai and Shenzhen.
- Removal of Home-Selling Restrictions: Shenzhen completely removed restrictions on selling homes.
Impact on BEKE-W (2423 HK)
BEKE-W, as a leading property agency, is expected to benefit from the improved sentiment in the physical property market resulting from these easing measures. The loosening of home purchase restrictions and the reduction in down payment requirements are likely to increase transaction volumes, which will directly benefit BEKE-W’s business operations. The company’s position within the property agency market allows it to capitalize on the anticipated increase in buyer activity in Tier-1 cities.
Property Market Sentiment Boost
The broader rally in the Chinese property sector, as evidenced by the SSE Property Index’s 34.3% increase since its 18 September 2024 low, reflects renewed investor confidence. This market recovery, driven by distressed valuations of privately-owned enterprises (POEs) and state-owned enterprises (SOEs), signals a more favorable environment for companies like BEKE-W, which are directly involved in facilitating property transactions.
Strategic Positioning in the Market
BEKE-W’s strong presence in the property agency space positions it well to take advantage of the improving physical market sentiment. As consumer confidence increases and transaction volumes rise due to the easing of policies, BEKE-W stands to gain from the growing demand for property agency services, especially in Tier-1 cities.
Conclusion
With the recent easing measures aimed at reviving the property market, BEKE-W is well-positioned to benefit from the increased demand for property transactions. As one of the leading property agencies, the company is set to see growth in its operations as the physical property market sentiment improves in China’s key urban centers.
