JP Morgan: Raises BEKE-W (02423) target price to HK$65, maintains "Overweight" rating, bullish on pre-owned home and rental renovation business

JPMorgan released a research report stating that it has raised the target price for BEKE-W (02423) H-shares from HK$59 to HK$65, and the target price for its US shares (BEKE.US) from US$23 to US$25, maintaining an "Overweight" rating, and has listed KE Holdings, Inc. Sponsored ADR Class A as one of its top picks in the China entertainment and vertical internet stock sector. The bank is more bullish on the growth prospects of the company's pre-owned home, rental, and renovation businesses, and has raised its 2027 net profit forecast by 7%, expecting net profit to grow 77% year-on-year in 2026. The bank noted that KE Holdings, Inc. Sponsored ADR Class A's 2026 net profit growth is expected to be supported by the expansion of rental services and cost optimization of its brokerage network and stores. The company's share price has risen 13% year-to-date, outperforming the KraneShares CSI China Internet ETF (KWEB), which has fallen 31% over the same period. Pre-owned home transaction volume has remained resilient, growing 11% year-on-year in the first nine months, with cumulative transaction volume in October up 26% year-on-year as of October 18. JPMorgan expects KE Holdings, Inc. Sponsored ADR Class A's operating profit to grow at a compound annual growth rate of approximately 25% from 2026 to 2028, mainly benefiting from improvement in the pre-owned home market and the development of rental services and home renovation businesses. Of this, about 40% of the company's profit comes from pre-owned home transactions, and recent property market policies are favorable to the related business; rental services are expected to generate approximately RMB1 billion in profit in 2026, with business volume growth exceeding 30%; the home renovation business is expected to reach break-even in the third quarter. The bank believes that artificial intelligence will help KE Holdings, Inc. Sponsored ADR Class A provide better housing services to developers and buyers, expand market share, and improve the work efficiency of top brokers. These positive factors are expected to offset the pressure from a possible decline in new home transactions.