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China's economic recovery, as of 2Q23, reflects vulnerability, particularly evident in the declining property sales over the past few months.

April through July saw successive Y/Y decreases of 11.8%, 19.7%, 28.1%, and 23.8% in new residential property sales. Despite the government's initiative to decouple the financial aspect from the housing market, the inherent consumption-driven recovery remains sluggish.

BEKE's stock price, a significant player in the housing market, exhibits a strong correlation with State housing policies.

Recent relaxations in housing regulations at both central and local governmental levels—including easing residential restrictions on purchases, introducing lower mortgage rates, and price reductions—have shown some positive outcomes.

We anticipate more supportive policies to emerge soon.

On the revenue front, BEKE's 2Q23 performance is poised for growth, with an expected 45.6% Y/Y increase, translating to RMB 20.1B. This projection slightly overshadows the general consensus of RMB 19.876B.

Yet, the revenue expectations for 3Q23 appear overly optimistic, hinting at potential challenges in meeting those targets. Given these trends, a cautious approach is advised for the upcoming 3Q23 outlook.