JP Morgan lowers KE target price to 47 yuan, maintains "Overweight" rating

JP Morgan published a research report indicating that due to the weak real estate market in mainland China over the past two to three months, coupled with limited real estate stimulus policies, it has lowered the net profit forecasts for KE-W (02423.HK) for the next two years by 10% and 21%, respectively. The bank also expects the company's performance in the third quarter to generally meet expectations, but anticipates a risk of downward revision for the financial forecasts in the fourth quarter and into next year.

The bank mentioned that since KE is highly correlated with China's real estate data and policies, it believes the company's short-term stock price may be under pressure. However, due to the company's ongoing cost improvements and active repurchase efforts this year, it expects shareholder returns to reach 7% this year, thus maintaining its "Overweight" rating. However, as the bank has lowered the company's earnings forecast for next year by 21%, the target price for H shares has also been adjusted from HKD 57 to HKD 47. The target price for KE (BEKE.US) ADR has been reduced from USD 22 to USD 18