Hello, ladies and gentlemen. Thank you for standing by for KE Holdings Incorporated’s Third Quarter 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. Also, today’s conference is being recorded. I will now turn the call over to your host, Mr. Matthew Zhao, IR Director of the Company. Please go ahead, Matthew.

Thank you, operator. Good evening and good morning everyone. Welcome to KE Holdings Inc or Beike’s, third quarter 2021 earnings conference call. The company’s financial and operating results were published in the press release earlier today and are posted on the company’s IR website, www.investors.ke.com. On today’s call we have Mr. Stanley Yongdong Peng, our Co-Founder, Chairman and Chief Executive Officer; and Mr. Tao Xu, our Executive Director and Chief Financial Officer. Mr. Peng will provide an overview of our strategy and business development. Mr. Xu will provide additional details on the company’s financial results. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applied to this call as we will make forward-looking statements. Please also note that Beike’s earnings press release and this conference call including discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to the Company’s press release, which contains a reconciliation of the audited non-GAAP measures to comparable GAAP measures. Lastly, unless otherwise stated all figures mentioned during this conference call are in Renminbi. With that, I will now turn the call over to our Chairman and CEO, Mr. Stanley Peng. Please go ahead, sir.

Thank you, Matthew. Hello everyone and thank you for joining us today on our third quarter 2021 earnings conference call. Before I go into more details that I need first provide a better future view of our industry. During the past quarter, the entire housing transactions and services industry, including ourselves faced a series of challenges. At the new and existing home and land market is to be honest substantial corrections, transaction throughs, marketing making a historical color. The industry laterally made difficult but the correct adjustments not only in its economic growth driven by high leverage, not sustainable, but it will also negatively affects people’s lives and to creates systematic risks without correction, creating the developers business model that will be based on high turnover, high leverage and a high housing price. Our national policy, though our housing is not either for living nor for speculation, that it encourages both housing purchase and the renting will become a castle in the sky. If the housing transactions and services industry blindly use pen in scale, without offerings, some professional services, it will be unable to ensure service quality, nor adequately protect our consumer rights and an efficient housing market will be impossible when we talk about to the license, even if it is difficult. We are referring to an instance where there is an opportunity to undertake daunting tasks with a week payoff in the short time, but a real crew to generate great value in the long-term as the participants of our industry in need of reform. And under guidance of the Chinese government’s policy to correct market instability and create more equitable housing circumstances is the biggest duty to show that our responsibilities for the great goods, rather than installing and serving our business needs. We firmly believe…

...including the fresh college graduates, low income groups, new urban citizens. Therefore, we are devoting more talent and resources to innovations and our rental services and regeneration of old residential communities. To facilitate work that is rewarding and fulfilling with the government's support of vocational education, we have established a multi-layered training and education system for housing services providers. This includes the Original Force Academy for brokerage brand owners, Huaqiao Academy, for store owners and Beike Brokerage Academy for agents as well as Craftsmen Academy for renovation services providers as we mentioned earlier. Our goal is to have more home related service providers with a path for long-term career development and cultivate more high-quality professionals and technical experts for the industry. All-in-all, despite the short-term impact on our business and the industry that emerged during the market downturn, the overall trend in the housing market remains healthy. Lastly, the regulatory authorities have responded multiple times to market concerns. Consumers' reasonable funding needs are gradually being met. Meanwhile, by the accelerated introduction of a property tax pilot program, we believe that a long-term regulatory mechanism can be quickly formed. In turn, we see this promoting the emergence of a new age of existing homes and the quality services sooner than we expected. The real estate sector in major developed countries accounts for approximately 10% to 12% of a country's GDP. Housing investment market makes up only about 5% and the rest comprises a broader array of housing services. In contrast, the real estate sector contributes to merely 7% of China's GDP. This housing investment makes up the majority of China's real estate sector. This indicates massive potential for our domestic housing service industry. If the past five years has been a golden age of real estate developments, then the next five years will be the age of joyful living, characterized by quality housing services. Short-term fluctuation imposed on long-term secure trends are simply noise. We follow our inner compass and will persist to become the leading comprehensive home services providers for the 300 million families in China. With that, I would like to turn the call over to our CFO, Tao Xu for a closer review of our third quarter financials. Thank you.

Thank you, Stanley. Thank you everyone for joining us. I would like to provide a brief overview for our third quarter of 2021 financial results. As we guided in the second quarter's call, in past several months we saw a deep, sharp drop of the overall property market, including live auction, new home market and the existing home market, amid unprecedented crackdown on speculation with an array of quoting measures from credit tightening to [Audio Dip] home price being rolled out. This factor adversely impacts our operational and financial result in Q3. We are experiencing a sharp market downturn. We still want to emphasize our three fundamental beliefs towards this industry. First, housing is one of the largest and the most complex industries in China and a prime candidate for the digital disruption. Second, Beike is and will continue to be indispensable to transaction and can be empowered to thrive. The third, professional and thoughtful services build customer trust and transcend market stakeholders. We are confident that our continued support in maintaining the best cost service, by providing – by supporting our agents and further upgrading the infrastructure in housing transaction and services will help us grow through these cycles and further improve our service quality, efficiency and business scale. We maintain our long-term view in pursuing our mission to transform the housing transaction and services industry in China by leveraging our people, better insights, technology and platform. Turning to our financial details in Q3. Our net revenue was RMB18.1 billion in Q3, compared to RMB28.5 billion in the same period of last year. Exceeding the both higher end of our guidance on the Street consensus. The year-over-year decrease was a primarily attributable to the decline in total GTV of 28.9% to RMB830.7 billion in Q3 form RMB1.05 trillion in…

Thank you. [Operator Instructions] Thank you. And the first question we have is from Liping Zhao from CICC. Your line is now open.

[Foreign Language] I’ll translate for myself. I have two questions here. Firstly, we have seen marginal improvements in terms of falling housing mortgage rates recently. What do we think of these positive signs? And can we expect the real estate market to bottom out regulation-wise in the near-term? Speaking of transactions, when will we see a rebound in terms of transaction volume? And secondly, investors are concerned about the state-owned property leasing system, which are regarded by some as replacements for third-party brokerage platform. What do you think of the government’s attitudes towards the mutual positioning of real estate brokers? Thank you.

Let me address your question. Regarding your first question, the decisions and deployment on the long-term mechanism of real estate market are accurate and effective. We have witnessed the largest-ever regulatory package in terms of quantity and types of policies, including restrictions on property purchase, loan, sale, pricing, land auction, irrational price cuts, financing and payment, as well as the potential property tax. Accordingly, the property market across China quickly froze in Q3. The existing home sales market dropped 41.6% year-over-year in GTV, on par with our guidance in last earning release call. The decline of the new home market was larger than our previous expectations, down around 14.1% year-over-year. The downturn in Q3 was across the board rather than just one single segment, showing a chain effect from the credit tightening to the cooling-off of existing home sales, and then to the new home sales and land markets where the price cuts in turn further weighed on existing home sales expectations. And the expectations and behaviors of market participants resonated, led to a pattern of credit crunch, impeded transactions, and downward revision of expectations In particular, Specifically, transaction volume of existing home sales market continued to drop month-on-month in Q3 to a long-term historical low, with some cities to a 10-year record low. Housing prices fell widely, and our Home Buyer’s Enthusiasm Index has fallen to a low level since 2019. The largest impact comes from the sharp fluctuations in loan origination paces. As the first year adopting the housing loan concentration management, we saw a mismatch between credit supply and market pace. The average loan origination cycle continued to extend in Q3, 77% longer than the same period last year. A large number of downstream transactions have also been affected. Meanwhile, a total of 14 cities introduced the…

Thank you. That’s very clear.

Thank you. We have the next question from the line of Miranda Zhuang from Bank of America. Your line is now open.

Thank you. [Foreign Language] Thanks management for sharing and for taking my questions. Can you pls elaborate more on progress of home renovation business and other new initiatives? Thanks.

Yes. Let me quickly translate. So this is Stanley, let me quickly address your question. So firstly, the whole renovation decoration business is very similar. Like the housing transaction business, meaning the overall industry size are very big but overall the user experience extremely are worse. So we do believe in this industry. We have a lot of opportunities we can continue leverage what we have accumulated in the past 2 decades. So for the home decoration business, we do have a couple of takes in terms of the overall outlook. Firstly, the overall China customers will continue more focus on the quality. We do believe it will be the fundamental because If you look at the recent policy trend, definitely that the golden times for the new homes pretty much has been passed. So the next era definitely will be that the people with more focus on the joyful living. So we do believe the opportunities will be arising from this kind of transition period. Secondly, we do believe the scientific management will continue help us and also help the industry to upgrade, especially followed by some of the other initiatives for example like more digitalization we do believe we can restructure and continue our practice above of those kind of scientific management into the home decoration and the renovation business. And thirdly, is about the value about the service providers in the home decoration the renovation business, if you look at the overall the conditions for the service providers in the home decoration and renovation industries, it is still relatively low. So, by doing the continuously training as well as upgrade for those kind of professionals, we do believe it will be help us to continue to help those kind of service providers to further improve their professional…

This is Stanley. I also want to give you additional colors in terms of the previous question regarding to the so called the E-government administrative systems rumor. What we do believe is definitely there is always a bigger problem underneath of the smaller platforms. So in order to better to see what the intention behind of the government. We need to look at the policy trend in China. If we look at the general, the policies in China. Definitely there are two major parts, one is housing is for living in, not for speculation and the other one is encouraging of both of the housing purchase and a renting. Right. So based on those two of the fundamental policies as well as add on the recent new trends such as a pilot program for the property tax, we do believe during that kind of stability of the policy trend, Beike’s value will continue shining since we can provide a very comprehensive solutions and which is quite in line in those kinds of policies trend going forward. And meanwhile we do believe our, as we mentioned before, so our fundamental orientation for our business is also quite in line with two of the policies direction. So any of those kind of assumptions, we do believe some of the rumors will be definitely fade away in the market. And as far as we can continue to hold and adhere to the policy, continue improve the efficiency as well as improve the user experience, we do believe Beike’s value will continue shining, that will continue to bring the value into the whole industry. Thank you. [Foreign Language]

Thank you. We have the next question from John Lam from UBS. You may proceed with your question.

Thank you. [Foreign Language] I have two questions, the first question is mainly on the property tax. How the property tax affect the buyers and also the sellers sentiment and also their purchase behavior, and also not so if management hear anything regarding on the implementation details of the property tax. Second, is regarding on the competitive landscape. So, first on the one hand we have seen Centaline have massively lay off people, about 7,000 people and also the senior management also left the company. But at the same time a major online news media company Toutiao they also announced to enter into the property agency sector, so how the management feel the over the agency competitive landscape. Thank you.

Thank you, John. Let me address your first question regarding the property tax recently as indicating as see published by President, on the journal “Qiu Shi”, China should strengthen the regulation and adjustment over the high-income class, proactively and prudently promote legislation and reform on property tax, and ensure effective implementation of a pilot program. We believe that the government will definitely and duly expand the scope of pilot property tax to more cities. In October, as resolved at the meeting of National People’s Congress, the State Council is authorized to carry out a pilot property tax reform in certain regions. Property tax, as a new local tax package, will play its fundamental role to narrow the gap between the rich and the poor. Considering the requirements on “proactively and prudently” promoting the legislative reform on property tax, coupled with the current market correction since late September amid falling existing home sales volume and prices as well as the mounting risks in developers, we see a current focus on stabilizing expectations and preventing an overcooled market. As expected, the scope of pilot property tax will extend to more cities, applicable to all existing residences than incremental. Nevertheless, the focus should be on multiple residences or residences with a high total value or high unit prices, fully considering affordability of households to ensure basic living needs while attaching importance to tuning the wealth gap among households to better achieve the goal of common prosperity. The introduction of property tax will have a significant short-term impact on the market. Some owners of multiple residences may sell part of their properties, leading to higher market supply and hence wait-and-see sentiment among buyers in the short term. However, from the long-term perspective, transaction volume is predicated on housing supply and demand fundamentals. The rational…

Thank you, Tao Xu

Thank you. We are now approaching the end of the conference call. I will now turn the call over to your speaker host today, Mr. Matthew Zhao for closing remarks.

Thank you all for being here. Thank you once again for joining us today. If you have further questions, please feel free to contact the Beike’s investor relation team through the contact information provided on our website. This concludes today’s call and we look forward to speaking with you again next quarter. Thank you and goodbye. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may now all disconnect.