Nomura lowers KE target price to $22.9, maintains "Buy" rating

Nomura published a research report indicating that KE (02423.HK) slightly missed expectations for adjusted earnings in the fourth quarter of last year; total transaction volume reached RMB 724 billion, with revenue declining 29% year-on-year to RMB 22.2 billion, roughly in line with the market's conservative forecasts. However, the company's adjusted earnings fell 62% year-on-year to RMB 517 million, below the market expectation of RMB 641 million.

The firm believes that while there have been positive signals in the second-hand housing market recently, it is still too early to assert that the real estate market has bottomed out. However, the firm is optimistic that due to KE's ongoing operational optimization, along with improvements in rental and renovation businesses, the company is expected to gradually enhance its profitability in the fiscal year 2026.

The firm stated that based on a more conservative outlook for the real estate market, it has lowered KE's revenue forecast for 2026 to 2027 by about 9% and adjusted earnings estimates down by 4% to 9%. Consequently, KE (BEKE.US) has seen its target price for U.S. stocks reduced from $23.6 to $22.9, maintaining a "Buy" rating