Will Beike Gain More Value as Used Housing Transaction Ratio Rapidly Climbs?

The real estate market is warming up, coupled with the successful implementation of the “One Body, Three Wings” strategy, Shell has achieved steady performance.

Recently, Shell released its Q1 2025 earnings data, continuing the growth from the second half of last year. In the first quarter, total transaction volume (GTV) reached 843.7 billion RMB, a year-on-year increase of 34.0%. Net revenue was 23.3 billion RMB, up 42.4% year-on-year, with a net profit of 855 million RMB.

Specifically, Shell’s operations show many highlights. First, the transaction amounts for second-hand and new homes are significantly above market averages, demonstrating the competitiveness of leading companies. Second, rapid growth in rental and home renovation businesses has become new growth engines.

High Growth in Brokerage Business, Non-Real Estate Transaction Services as “Second Growth Curve”

The brokerage business is Shell’s core operation, consistently exceeding expectations since the second half of last year.

Among the total GTV of 843.7 billion RMB in Q1, resale housing transactions accounted for 580.3 billion RMB, a 28.1% increase year-on-year; new home transactions totaled 232.2 billion RMB, up 53%. Notably, this data was achieved amid real estate sales fluctuations. According to CRIC data, sales by the top 100 developers in Q1 decreased by about 7% year-on-year.

Shell’s resilience against cyclical fluctuations largely depends on improved operational efficiency. The company has increased investment in AI technology, launching multiple application tools that cover both B-end and C-end.

Among these, AI house-hunting assistant “Pudding” offers users AI-driven deep reasoning capabilities combined with real housing data to better understand user needs, providing intelligent and efficient property recommendations. The customer-side assistant “Laike” improves communication efficiency with clients, increasing transaction success rates.

Additionally, to enhance store and staff efficiency, Shell has improved internal management through tools like the Store Owner Dashboard and AI-powered property promotion assistants, as well as offline property focus meetings to facilitate property transfer and circulation. The platform also builds operational mechanisms such as a points-based benefits system and regional governance councils to motivate store owners to grow and promote cross-store cooperation.

In Q1, the average GTV per store and per employee increased by 8% and 14% respectively year-on-year, indicating improved efficiency. Meanwhile, the churn rate of existing stores dropped to 2.9%, a 6% decrease quarter-on-quarter and a 38% decrease year-on-year. Additionally, the six-month retention rate of newly connected stores in the first half of 2024 reached 94%.

Looking at non-real estate transaction services, net revenue in Q1 grew 46.2% year-on-year, accounting for 35.9% of total net revenue, establishing it as the “second growth curve.”

Home renovation and furniture services generated 2.9 billion RMB in net revenue, up 22.3%, with the profit margin reaching a record high of 32.6%, an increase of 2 percentage points year-on-year.

In rental services, net revenue reached 5.1 billion RMB, a 93.8% increase. According to company disclosures, by the end of Q1, managed properties exceeded 500,000 units, with “Worry-Free Rent” managing over 490,000 units.

In 2023, Shell established the “One Body, Three Wings” strategy, where “One Body” refers to new and resale housing transactions, and the “Three Wings” are full renovation, rental, and Shell Good Home services. Notably, the home renovation business has seen rapid growth since its launch in 2021, and the rental business also shows strong growth potential. For Shell, non-real estate transaction services have successfully opened a second growth curve outside core real estate brokerage, helping to increase the company’s resilience.

The Era of Existing Homes Arrives, Improving Operational Quality Is Key

With increased operational efficiency, Shell’s profitability is also improving. The company disclosed that operating expenses in Q1 were 4.2 billion RMB, a 31.3% decrease quarter-on-quarter, with adjusted net profit reaching 1.39 billion RMB.

In fact, after several years of adjustment, profit margins from Shell’s second-hand and new home businesses have stabilized. As the profit margins from home renovation and rental services continue to improve, future operational quality is highly likely to enhance further.

Shell’s Executive Director and CFO Xu Tao stated, “While maintaining reasonable cost control, we will continue to support long-term business development and fully implement the ‘One Body, Three Wings’ strategy.”

In Q1, Shell’s cash on hand reached 12.773 billion RMB, an increase of nearly 12% from the beginning of the period. The company paid approximately $400 million in dividends to shareholders in 2024. It also spent about $716 million on share buybacks, representing about 3.9% of the total shares outstanding at the end of 2023, all of which were canceled. Large-scale buybacks and cancellations demonstrate management’s confidence in future growth and fulfill commitments to shareholders.

Looking at the industry as a whole, since September 2024, a package of policies has driven a recovery in the real estate market, with transaction volumes and housing viewings significantly increasing. The main tone for 2025 remains “stabilization after decline.”

As a leading domestic real estate brokerage, Shell is expected to benefit directly from the market recovery. More importantly, with the slowdown of urbanization, the real estate sales market is entering an existing-home era, which is directly favorable to Shell.

According to research from Founder Securities, over the past four years, the proportion of second-hand home transactions nationwide has rapidly increased, reaching a historic high of 46% by the end of 2024, indicating that the second-hand market is gradually becoming an important part of the real estate industry. Additionally, as developers face increasing inventory clearance pressure, Shell will have greater opportunities to leverage its value.

Regarding future development, Shell’s co-founder, Chairman, and CEO Peng Yongdong said, “Looking ahead, we are confident in the long-term development of the company under the ‘One Body, Three Wings’ strategy and will continue to invest steadily in AI applications.”