Earnings Call: Q1 2021

May 20, 2021

Earnings release

Hello, ladies and gentlemen. Thank you for standing by for KE Holdings Incorporated's First Quarter 2021 Earnings Conference Call. At this time, all participants are in listen only mode. 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, Call. The company's financial and operating results were published in in the press release earlier today and are posted on our company's IR website, www.investors. Ke. Call. On today's call, we have Mr. Sunny Yongdong Peng, our Co Founder and Chief Executive Officer and Mr. Tao Xu, our Chief Financial Officer. Mr. Peng will provide an overview of our strategic and business developments, and and 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 applies to this call as we will make forward looking statements. Please also note that Beiko's earnings press release and this conference call include 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 and a reconciliation of the unaudited 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 CEO, Mr. Stanley call. Please go ahead, Stanley. Thank you, Matthew. Hello, everyone, and thank you for joining us today on call on our Q1 2021 earnings conference call. We are very grateful to have achieved operational and financial results in the Q1 that considerably exceeded expectations, thanks to the tailwinds from China's robust economic growth following the COVID-nineteen pandemic and adherence of the national policy housing of living lawful speculation as well as our unwavering focus on the long term goal of delivering an excellent consumer experience through quality service. Our total GTV grew rapidly to RMB1.07 trillion, up 224.2% year over year. Meanwhile, the self reinforcing virtual cycle efficiency and scale scalability driven by quality service was further enhanced on our platform. We continue promoting industry digitalization by further building online infrastructure. In the Q1, our housing dictionary contained data for over 244,000,000 homes in China. Average MAUs, including our platforms, apps and retail mini programs reached RMB48,500,000 in the 4th quarter, up of 78% year over year. The expansion of our network scale also continue at a robust guidance, while we remain focused on the quality of our net worth. By the end of the Q1, the total number of connected stores reached 48,700, up 25.4 percent year over year. Similarly, a win win collaboration among stores and brands continue to prevail on our platform. In the Q1, 76% of transactions on our platform were completed through cross store collaborations and the transactions completed through cross brand collaborations remains steady at 36% on our platform, while connected stores accounted for 83% of existing home listings. In addition, We continuously supported our Canadian stores and brands in recruiting, cultivating and retaining agents in the Q1, which led to 41.8 percent year over year growth of the number of agents on our platform, reaching a total of RMB 528,000. With that overview, I would now like to provide you with some color on our existing in home transaction services business. Total GTV of existing home transactions in China grew 133 percent year over year in the Q1. The substantial gain was impact due to the low base in 2020 caused by the severe impact of the pandemic as well as the impact of some structural transaction growth at the regional level. On our platform, GTVO, our existing home transaction reached RMB673.4 RMB in the Q1, increasing 244.2 percent and the unit store GTV over existing home transactions achieved 174.7 percent year over year expansion. Continuously improved service quality and and agent specialization strategy, which encourages agent to focus on either existing home sales, new home sales or home rentals rather than their traditional mix functions in the industry added by the cooperative mindset we've forced among agents along with clearly defined roles and performance based commission allocation mechanisms. This strategy helps agents sharpen their focus, cultivate stronger professional service capabilities, promote efficiency efficient customer conversion across different offerings and ultimately improve store efficiency and the consumer experience. The agent specialization strategy has proven very effective in enhancing consumer experience and store efficiency. Taking the pilot city of Hangzhou as example, over 15,000 edge were assigned to different roles in the Q1. Unit store GTV was 11% higher in the store where agent specialization was implemented compared to stores that have not divided agent functions. At the end of the Q1, We have implemented this mechanism in 20 cities, covering 17,700 stores. Given the encouraging earning results, we plan to adopt this strategy in batches in at least 30 cities this year. In order to create value for our consumers, one step further and improve the real estate transaction process, we began opening offline contract service centers in our major cities. Our goal is to further guarantee transaction security, streamline the signing process and enhance the efficiency of multi parties, The real estate contract and the signing process tends to be very complicated and often requires comprehensive knowledge across financial, legal and tax tools. The lack of professional service offerings that fit these needs led to consumers imposed to transaction risk. Our contract service center address exactly this pain point as they become the go to location for customers regarding all contract related services. The process is completed with a professional contract manager to ensure compliance and full risk disclosure, which provides a safe, efficient and convenient contract experience for our customers. By the end of the Q1, we had opened of 74 contract signing service centers in 21 cities. Switching gears to our new home transaction services, in the 4th quarter, attributable to the low base last year as well as developers' strong incentive to accelerate sales rule. GTVO, our new home transaction services, was RMB343.4 billion, up 194.9 percent year over year, driven by the 220% GTV growth of connected stores and other channels as we continue to enhance the efficiency and professional training to our Canadian agents, on par with our stellar financial performance. We also made substantial strides in new home transaction in digitalization content enriched an ecosystem governance. This aim to empower service providers such as developers and continue to enhance the service quality and maximize value for the customer. As we communicated during our 4th quarter earnings call, we are dedicated to build online content for new home transactions to improve the consumer experience, online penetration and facilitate this segment's digital transformation. As of March 31, we enriched comprehensive and multi dimensional information for more than 10,000 new home sales projects on our platform covering 34 cities and offerings consumer with more online information such as 3 d property book through data processing. Together with platform and AI generated online content such as evaluation, assessment, reports and AR housing layout plans, we were able to better satisfy the consumers' needs for new home online information. We also optimized on new home sales traffic and the lease acquisition strategy. Thanks to all these initiatives. We generated on average a 10% increase in new home customer list in those 34 cities in the Q1 and significantly enhanced the online billings for customers. Moreover, we launched a new home business conduct improvement plan to advocate for a and transparent and healthy new home sales environment based on governance and a better collaboration mechanism in the new home transaction and services. Our goal is to facilitate a fair, safe, efficient and orderly ecosystem for the new home transaction services that addresses the improper customer information leakage and the forced rebates are promoting governance mechanisms in the industry, including rules and protocols as well as the capability to implement them, we aim to protect agents' rights and offer a sense of security and the uncertainty to them. Eventually, this would substantially protect the legitimization interest of developers and the improved agent efficiency and income, enhance the customer experience and create a vicious cycle that enhance the overall operating efficiency of the new home industry. In the Q1, we implemented a verification system at the agent level and put in place city level supervision teams. We have also signed agreements with 91% of developers on our platform on 5 doors, making a firm commitment to the developers and the overall industry. For new homes. Another important initiative is the new home sales empowerment plan by cultivating dedicated agents with the expertise on new home transaction services as well as online and offline full spectrum customer acquisition capabilities. The plan caters to consumers' different needs when purchasing new home projects compared with existing homes. At the same time, the portfolio of new home sales channels we offer to developers is further enriched, better meeting their needs for more focused and efficient sales channels. Lastly, on our emerging services. We have made steady progress in home renovation services and the financial services. We completed 551 home renovation units in Beijing in the 4th quarter, while progressively reiterating the infrastructure, including multiple self developer self developed systems. Among them, our self developed Beihua Beam System Version 1 was launched in the Q1 As part of the industry infrastructure, the Beowar BIM system successfully digitalized home renovation and decoration design. For designers, the BIM system enable automatic drawing output, accurate real time quotation and the generation of digital bill of materials, BOM, as well as accurate VR design efforts supported by the VR capability available on our platform. This not only solved the industry wide problem of utilizing and translating the abstract design from the designer's mind, but also lays out the foundation for the final construction feasibility with higher enhanced data accuracy. For customers, it's gradually reinforcing the notion that on our platform, what you'll see is what you'll get and empower them to take control of renovation costs in real time, the service reliability is greatly enhanced. We believe we have established the industry leading position in the infrastructure we provide for home renovation and decoration, including the system, products and applications for both consumers and service providers. In terms of financial services, Recognizing 60% of our sellers in the Xinyhome transaction have a demand for property redemption, We promoted the An Xinbao products to meet owners' redemption needs for more efficiently and at an average 26% decrease in cost. At the end of the Q1, this product had entered in 7 Cities, improving the overall transaction experience for homeowners in existing home transactions. In summary, 2021 is off to a strong start. We financial our financial and operational performance has spotlighted our core strength and we continue to gain traction with our AC network in new and existing home markets. The national policy of house are not for living, not for speculation that underpins the foundation for a steady and healthy real estate market provides added support to our mission to transform the housing transaction and the service industry in China. Going forward, we will continue to involve our business and invest in initiatives close to our core while creating a new and better normal for the industry, building trust and increasing value for everyone along the way. With that, I would like to turn the call over to our CFO, call for a closer review of our financial of our Q1 financials. Thank you. Thank you, Stanley. Thank you, everyone, for joining us. I would like to provide a brief overview of our Q1 of 2021 financial results. We are pleased to deliver another strong quarter of financial results marked by high revenue growth and a strong portfolio. On net revenue increased by 190.7 percent year over year to RMB20.7 billion in Q1, exceeding both high guidance under 3 consensus. The revenue growth of net revenue was driven by solid GDP growth of 224.2 set year over year to RMB1.07 trillion. The high growth rate in the Q4 of 2021 was primarily attributable to a lower base in the 6th period of last year on the impact of COVID-nineteen. However, although we experienced the impact of trend viewing in Q1. Our net revenue in Q1 still surpassed the revenue in both Q2 and Q3 of last year and only declined single digit on a sequential basis, demonstrating the strong momentum of power plant growth. In particular, our net revenue from existing home transaction services increased by 202.1 percent year over year to RMB10.2 billion in Q1 mainly due to a 244.2 percent year over year increase services increased by 187.6 percent year over year to RMB9.9 billion in Q1, primarily due to 194.9 in Q1. The increase was primarily due to an increase in GTV for financial services around housing trust and services as as well as increased number of HongTech region units completed Sunu's comps by 4th grade 4. By 860.4 percent year over year to RMB4.8 billion in Q1. Gross margin increased to 23.3 set from 7% in the same period of 2020. The increase in gross margin mainly attributable to a lower base of in Q1, compared to of RMB2.1 billion in the same period of 2020. General and administrative expenses were RMB2.1 billion. Compared to RMB1.1 billion compared to RMB1.1 billion this period of 2020, mainly due to the increase in Kaitan as well as share based compensation expenses. Sales and marketing expenses were RMB1.1 billion compared to RMB577 1,000,000 in the same period of JingXunting, mainly due to increased onlineoffline advertisement and the branding teams. Research and and expenses were RMB638 1,000,000 in Q1 compared to RMB451 1,000,000 in the same period of 20.20, mainly due to increase of high comp in experienced R and D personalized as well as increased share based competition expenses. Income from operations of RMB1 1,000,000,000 in Q1 compared to loss of operation RMB1.6 billion in the same period of Q2. Operating margin was 4.9% in Q1 compared to negative 22.9% in the same period of 2020, primarily due to the increase of net revenue and impact of COVID-nineteen operating in last Q1. Excluding non GAAP items, our adjusted income from operations was RMB1.6 billion in Q1 compared to adjusted loss from operations of RMB1.5 billion in the same period of in 2020. Adjusted operating margin was 7.6% in Q1 compared to negative 28.8 percent in the same period of 2022. Adjusted EBITDA was RMB2.0 billion in Q1 compared to negative RMB1.2 billion in the same period of 2020. Net income was RMB1.1 billion in Q1 compared to net loss of RMB1.2 billion to secure of 20 20. By 2 non GAAP items, our adjusted net income was RMB1.5 billion in Q1 compared to adjusted net loss of RMB1.1 billion in the same period of 2020. Loss attributable to Credit Holdings Inc. Ordinary shareholders of RMB1.9 billion in the same period of 2020. Attributable to RMB1.1 billion in the same period of strategic intent. Diluted net income per ADS attributable to RMB0.88 in Q1. And that's a net was RMB0.88 in Q1 and that's a negative RMB3.92 in the same period of 2020. Call. Adjusted diluted net income per ADS attributable to core holding income and ordinary shareholders was RMB1.25 in Q1 compared to negative RMB3.64 0.64% in the same period of 2020. As of March 31, 2021, the combined balance of our cash, cash equivalents, restricted cash and short term investments amount to RMB62 1,000,000,000 or 9.5 billion. Quarter. Looking forward to the Q2 of 2021, we expect our net revenue to be between RMB22.5 billion and RMB23.5 RMB5 billion, representing an increase of approximately 11.7 percent to 16.7% from the same quarter of Jitsi Ching. Subsequently, low year over year growth rate of our revenue guidance, mainly due to higher rate in the same period of last year, which results from meaningful portion of transaction shift from Q1 to Q2 last year due to the new COVID-nineteen operating. This business outlook reflects Compass' current operating review of the business situation and market condition, which is subject to change. Meanwhile, since our business operation has been negatively impacted by COVID-nineteen outbreak in Q1 last year and the meaningful portion of the transaction has been shifted to Q2 of last year. We suggest investors to look guidance and take care of financial performance as a whole for the first half of twenty twenty one versus the first half of twenty twenty to better reflect our business Last but not least, we announced that certain cities have implemented new city level real estate policy change during the Q4 to control over the housing price, which may bring negative impact to the regional real estate market in the short term. Nevertheless, adds. We believe that the stable gross market expansion was a sustainable development of Paycom and the whole industry. Since the rising and upgraded demand of customers remain the mainstream in housing transaction market, we believe our industry leading service will continue to attract more customers and the lowers to mitigate the short and fluctuation between cities. In conclusion, with the launching that includes our prepared remarks. We will now open the call to the questions. Operator, please go ahead. Please stand by while we compile the Q and A roster. For the benefit of all participants on today's call, Could you limit yourself to one question? And if you have additional questions, you can reenter the Q. Goldman Sachs. Please ask your question. Thank you management for taking my questions and congrats on the strong quarter again. I have three questions. First is about the efficiency fee at Lianjian 3P Stores. Can we share a bit more color into the GTV plus growth as well as the main drivers of the growth for the quarter? And then second is on the anti Trust Regulations in China. How does management think about the regulatory environment and the impacts our company, if any? 3rd is for the macro and housing industry where we've seen some tightening policies in couple of Tier 1 cities? And what would be the impact from those cities and how should we think about future trends? Thank you. Thank you, LC. Regarding our store efficiency, boarding Jia Opera and store. For the Q1 of 2021, the average Our connect store increased year over year 193%, whereas quarter over quarter decreased 5 set. The year over year increase is mainly due to the impact in our 2019 because last year, we introduced the 2019 That's during the period, our VR2 was not only effective, but did not very well. So that's and a meaningful portion of transaction, Q1 to introduce this main reason. For the quarter over quarter decrease, this is owing to versus 90,000 normally. So every Q4 is strong quarter, every Q1 is relatively weak quarter owing to the Chinese New Year holiday. If you look at this Q1 versus Q1 was last Q4, the number for this quarter call. Even though we have the impact for the Trans New Year, but revenue effect was quality, efficiency and stability on Canadian stock is further played out that the traditional loan season of Q1 and with a big seasonal first quarter did not show much impact. And Q1, we still delivered robust results as a number exceeds last Q2 and release. By the end of Quni twenty, there were more than 31% storm past 50,000,000 Brightline. Looking forward, this number increased to 36.7% in this quarter. That means more than 17,000 store in paper platform already passed the of $50,000,000 We anticipate by 2025 more than 90% of our store on platform can pass the $50,000,000 to our IPO model and set 2019 as a basis and we are very confident that our plan of Yanjia from 2019 to 2024, the pay per every year will be reached 11% to 12% under Connect store efficiency while we're 15% to 16% year over year. In the long run, we would like Regarding your questions for recent untime trust regulation, the comments from Beike is that Beike consistently rate within the bounds of the laws, regulations and rules. We always prioritize the interest user and guidance and the biggest driving to be an outstanding company in 2 compliance with the rules and regulations. For the mentally, Our understanding of antitrust governance is to regulate and promote healthy and sustainable industrial development. For selected industry integration, that was being more platform based, digitalized and automated and to prevent the disorderly expansions through capital investment to establish an automated and combined competition environment. Regulation are in place to promote the health development for the industry and encourage environment, the non public sectors in the economy. Through this round of frequent communication with government authorities as a corporate system, we are even more determined to take social responsibility as our top priorities. At the same time, the government also gained a better understanding of our Beaker business model and the contribution we have made to help call. Industry growth and duration over the past 20 years. Baker sincerely welcomes the supervision, compliance and suggesting from customers and the public so that we can fix the problem and eat with ourselves and the further give back to the clarity. At the same time, we are also very grateful that the regulatory authority for their understanding and the guidance of our and the definition of what we have brought to the entire industry. Regarding your third question for the macro economy and market related to people's livelihoods and welfare. Studies we always mention is housing for living, not for speculation. And this is the key policy to promote the study in the healthy environmental market. The goal versus policy is to protect health environmental mark. Based on the judgment in this year, some savings have been introduced relatively mild measures. These measures have effectively prevented the market from overheating in some cities' market changes and the wider severe measures and greater situation down the road and forced the market with stable growth, which provide a beneficial environment for Baker's operation. From a macro perspective, What government want is the stability is not freezing. In other words, the market cannot too hot and cannot too quote and the moderate gross market is beneficial to the China economy, especially post pandemic period. A market with reasonable is the best market to prevent drastic hits in the trust that sometimes people pull forward future transactions. And this is very conducive for the operation of companies that has launched and marketing outlook such as we do because we want in line with government demand, which is steady transaction volume for the long run, instead of benefiting only during the peak seasons. From a macro perspective, obviously, we see all regulatory policies into curbing speculative demand market with the goal of squeezing out, but the mainstream demand growth still in cities markets such as amount will be gradually released in the remaining months of the year and we will welcome to a conclusion. Although some cities need to be put down, but the remaining transaction in most of other cities will be still secured. So from this perspective, we do not believe nationwide transition volume will be significantly impact. One case to reference is excluding the GTV in our Tier 1 cities like Beijing, Shanghai, So our GTV in March compared to January still increased to 55.5% in March. As a national platform allows us to mitigate the successful situation in 2 cities and Baker, we are very confident to deliver robust results for the rest of the year. The 19 years history of Beifeng and Dianjia has proven that a neutral market with a balanced supply and demand provides the best obligation for our long term development and our course of development from 2017 to 2020 also demonstrated with Baker is a firm supporter and the beneficiary of the natural party house for leading non profit equity. Thank you. Your next question comes from the line of Thomas Chong from Jefferies. Please ask your question. Thanks management for taking my questions and congratulations on a very solid set of results. My question is more about the second half outlook as well as the trend for different segments. Can management comment about how the trend will look like for the GTV revenue and the profitability together with on a by segment basis, how should we think about the trend for the Existing home, new home as well as the emerging services outlook as we come to the second half? Thank you. Okay. Thank you, Thomas. And regarding the first question for our second half outlook, because Baker has delivered the factors in this guidance financial performance in past 3 quarters, continues to add IPO. So looking forward, we have the confidence to continue to deliver strong growth for the rest of the year. Just now, we gave our guidance of Q2 revenue is RMB22.5 billion to RMB23.5 billion. This year over year, we still have 11% to 16% increase. Providing housing price going up too fast and the rationale. So I just as I just answered the question to ILC, We still thought the second half of our market will be stable and healthy owing to the rising amount and people's earnings will change to 50,000,000,000 in the addition. So we do not believe the nationwide transition volume will be significant effect. So We are very confident to give us robust results for the rest of the year. This is our answer to first question. The second is regarding a question for our take rate on our commission rate. So I think this question will iterate time to time during the past year calls. The level of commission rate actually reflect the service quality, protection efficiency and number of service expense that we offer. Today, China residential market The platform cannot and the platform has the capability to actively control it, namely raising the commission rate without being justified by service quality, transaction efficiency and the number of service guarantees offered is not sustainable, especially for the new home sales market is the typical 2B market. Developers are more than happy to dominate position. And just number of calls in our past 4 years following 2 papers to solve efficiency and excellent service quality, Our new home commission rate more desperately increased from 2.55 to 2.66, 2.71 at 2.74. And in the Q1, our tuition rate for the new home is 2.3 We cannot have any intention to increase our tuition rate. Instead, we will focus on to pioneer with developers to jointly and continuously promotes by the customer experience. So for example, we are doing the we're together we've partnered with new home buying process as to regards to bank agreement. And the full leasing home sales in the past 3 years, Our proprietary brands of Li and Jia, the machine rate gradually grows from 2.3 to 2.4 and the connected store gradually grow from 1.89 to 2.07. In the future, we still I'd say the change in commission rate will continue to rely on the progression of the service quality, efficiency and the service agreement we offer to plan. Regarding your last question for our emergency sales Financial Services and for our declaration, let me talk about the renovation declaration first. In Q3, our call. For the renovation and decoration, the total contract timing is 2,500 and the unit is more than 2,300. And in this Q1, even there is some impact for the Chesney New Year holiday, but we still complete the project with of 551 units. And we recently foresee both the contract signing as a number of unit declaration complete in 2021 will be doubled compared to 2020. The very important thing is we believe the key success factor for a separation construction business, customer acquisition efficiency, control over key channels and control over delivery process and the service quality. And this market in China is big, it's around the RMB3.6 trillion in 2020 and with loan market concentration and growth rate in the next 5 years, we estimate will be above asset labor, which leads to future market opportunities. So, Paykel, we have our inherent beneficiary. We are doing this. The first, we have advantage from the Xingqong transaction, and we anticipate the 6% plus of the Xingqong transaction are strong related off line integrated capabilities and the bank have a powerful off line management and empowering machine and have a rich office experience. So we are reasonably foresee our system is rooted in the business demand and continues to improve effectively assist the management's operation and the income and the business roadmap to assist Royal Life's overall of the world has been in progress. And for our financial business, the growth of financial service GTV in Q1 exceed our expectation. This is mainly due to our sustainable growth of our new home transaction services and our stable financial service penetration rate. And regarding the modification regarding some This was mainly due to the fact that the Q1 market is very volatile and the major cities have undergone various regulation adjustments and the consumers' tax liability, freight and Other friction costs have been improved has been increased. The similar size, we sought nature of the financial services to assist the in home transaction and how consumers should complete the transaction. So we have strategically launched and expand as a scope of Greenfeng Financial Services in some cities, especially the current travel services. So it's actually reflect we pass over some benefit to our transaction business by providing some reliable financial service free of charge to our customers and they were not very happy to realize that part of profit from those services soon. And this is also in line with national policy of housekeeping and our full expectation. We will continue to support Thomas, this is Danny. Let me add on in terms of Our philosophy is to develop of the new business in the future. So firstly, when we look at the new business, we always look at the big potentials or big market size in those kind of areas. We noticed a rounding of the residential topics, there always be some of The big market potentials such as renovation and decoration. And when we noticed those kind of industry, they always had some of the common pain points such as overall user experience are extremely low and there's the overall players in that market are quite fragmented as well as overall service procedures are quite complicated. So based on our Past 19 years of experience from the Lian Dao's practice to Beike, we believe the transforming of The industrial Internet will definitely goes to the routine, firstly, doing deeply, then doing horizontally. So we believe it's the only way to do that, right, especially when we're doing deeply, it means we will Dig deep into that industry and understand the standard and build up the new standard for the services. So in the past 19 years, we actually got a couple of the takes. Firstly, is what we used to call The 3 standards, right. So firstly, it's about the service provider standard. What kind of service This could be called good services and how we define that. So that will be the first thing is we can further empower to the service providers in the industry such as declaration and the renovation. And secondly, it is standard for the overall service procedures, right, especially, for example, like the renovation business during of the whole construction part and how we can provide SOP as well as defined of the new standard for the overall services is what we continue to work on. And the third part, it was a standard for the standard for the data as well as the system, right? So we noticed the industry such as all the markets such as declaration. There is no systematic data has been online and has been digitalized. So that is why in the past period, we really focused on how we can build out the standard, how we build out the protocols As I have been mentioned during my prepared remarks, for example, we also build up the BIM system as well as other initiatives in order So further increase of the standard as well as the protocols and the standing for this part of business. So in summary, when we look at the new business, as I mentioned, so we always had the full commitment as as well as the endeavor to further transform of that power business. So we strongly look at encourage the investors to look at our efforts for the new business at least on the 3 year basis, right? So and that will give us more confidence to continue and prepare more efforts to further transforming of the new business in the future. Thank you. Thank you. Your next question comes from the line of Liping Zhao from CICC. Please ask your question. Good evening, Stanley, Tonglen, Neste. Thanks for taking my questions. I have two questions here. First one is related to the new home transaction. Some believe the entry barrier of new home transaction business is relatively lower compared to existing home transactions. There are more players in the market recently. What is Baker's core competitive advantage in new home transaction? And what's your strategy to protect and gain more market share? And second question related to existing home transactions. So compared with property service company, Baker has strong efficiency in matching buyers and the listed homes. However, those property service companies have the advantage of being localized to payers and tied to relationship with property owners. In the long run, whether our ACM plans to involve more players along the industry value chain for example those property service companies? Thank you. Okay. Thank you. Regarding your first question for the new home sales and our core competency, and that's a nice note. And we truly welcome more players and team to decide where we will help us to keep Hanbal new more continuously reevaluating our strategy and iterate ourselves. And from Baekho, we do hope to cooperate with everyone to make this industry better environment for agents and increased agent efficiency and improved the customer experience for the housing transactions. So far, we do realize there is some strange things like unfair competition and the capital based disorder dysfunction such as such as low commission rates, higher rebate of so called unrealistic bank evaluation promise. This is definitely follows proposition and which is made of deep understanding of how to do business with the new home transactions. And in the past and last year, was mega Internet of the entry into this industry with high profile top, which ended up with acquisition as this approach is rationale. So the core competence of the Nifeng business only 2 things. The first is caring about agents, guaranteed agent basic interest and timely payment. By far in 4th bank in Q1, we paid RMB4.3 billion, submitted in advance through secured agent interest to make sure the people will get money in time. The second is the care about customers, improving the customer experience in new home buying process and promoting the 3 days cooling down period, etcetera. This is what we have continuously doing. Also, we are not prepared at this moment, but we are already on the way of doing so. While there is a well, So currently, PayPay will be 24% of online information building and should become even more closer with the developers to be built by orderly and better sales OpEx. How to its clients brand install outside ACN to further promote Okay. Regarding the second question for the Singhaler, I would like to say your question is for some sticking orders. So this is nothing new. There's always a so called sticking order issue in this market in past 20 years, which we treated this as a kind of normal leakage loss to our business. We call this model as a parasitic model. We have always believed that as long as we insist on providing quality service and business good for the Chinese consumers, consumer will vote with their feet, which have been also verified by our past 19 years of history. And for those who want to take advantage from skipping orders, whether they're property management companies or other brokerage companies, may be ultimately punished by the market. We believe that as the Chinese market enter into the year of balance between supply and demand, consumers' amount for the quality service will rise further and the consumer will increasingly choose a better quality service provider like score. The business volume through the Skip order will also decrease, which will not generate Skip in net impact towards the future. For some optimism, actually, they do have some local community advantage. It is difficult to provide consumer with the most comprehensive source of listing. Most owners will not change cost in the same complex. This is the common practice from our observation as the property management companies cannot provide enough listing and source within. At the same time, the real estate developers do not have stability to automate the most professional and efficient service provider in the real in the brokerage industry. Therefore, from a base model perspective, it is difficult for the proxy management companies to generate capability for real estate brokerage service on a large scale. This public company's prudent broker company from serving to owner and the damage to owners' rights and interest. According to the civil court, the owner has their own rights to vote for the approximate Excellent property management content have always been the object for our study. We believe as long as the property management content that aim to provide consumer with good service by quality will not choose the vicious competition by taking or cutting orders from their consumers. We also welcomed the more actively established contact with the leading problematic companies as we explore to build our partnership in the residential services. Thank you. Your next question comes from the line of Bin Ding Ding from JPMorgan. Please ask your question. I'll translate myself quickly. I have two questions. So the notice that recently the management of Anjuke made some comments on Weibo regarding the industry as well as Baeko. So my first question is a follow-up on antitrust. I know from a market share perspective, we are not Apparently not in office dominant position in the market. But in what aspects or processes are exposed to the highest potential anti trust risk in UOB. 2nd question is related to competition. So from a competitive angle, will the changes in recent competitive dynamic, including the listing of Anjuke bring Any changes or make you become more aggressive in terms of certain operational strategies? Thank you. Okay. Thank you, Binbin. Regarding your second question for the antitrust, I believe I have already gave a very clear answer and the collaboration will answer from ILC from Goldman. So regarding your first question, I'd like to say Ijike used to be a leading online information in China Real Estate Verticals. It has been storing and accumulate online user traffic and used to establish some competitive were founded in this area, just like Ehouse, Jianmohu Huang and Huang Cheuvang, that is one of the fellow industry participant and we have a rich respect. Normally, Weizhuyn comments other peers' performance directly, but I'd like to take the chance to share our view on how to be a capable company when doing housing construction in China. Maintaining and providing authentic listing is not an option. It is the foundation for all real estate transactions. Eliminating inauthentic and the fake listing marks the beginning of the successful early business model. This is why I want to mention the point 1. The point is when select new home projects work with people should adhere to a comprehensive risk management system with 3 key requirements: scale of the project, reasonable commission rate to incentivize agents and the solid payment call back capability as well as the positive cash flow of the business operation. Otherwise, the business model is not sustainable. The 3rd comprehensive risk assessment system has tested and experienced offline operation ops, policy accounts receivable turnover days and deep pockets to provide commission in advance to secure the agents' interest. Subscription monitoring the preventive rebate and the customary intercepting behaviors. This is a long way to go. The competition through the shortened behavior such as excessive commission, sharing and lower price will bring the high opportunity to its model in the long run. This is a definite the focus competition and the on spin off the market. So we're just comfortable one thing for RNG per user. We noticed the cash position might be a bottleneck for Anjuke to grow its new home business, as doing new home business requires strong cash position audit. According to Anjikode's prospectus, as of February 28, 2021, the balance of Anjikode's cash, as equivalent short term investment totaled monthly to RMB1.63 billion, while in the same period that Beikel just paid commission in the balance of RMB 4 percent related to agents to secure their interest, which covers 160 and 130,000 payments and recovered 5,018 projects. From an apple to apple basis, our cash, cash credence and short term investments amounted to RMB49.1 billion of Q1, which count 30x of 1. Regarding recent noises from Yao Jingbo on social media, we will reluctant comment on him. Will he go slow? 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, operator. Thank you once again for joining us today. If you have any further questions, please feel free to contact Baeko's Investor Relations team through the information provided on our website. This concludes today's call and we're looking forward to speaking with you again next quarter. Thank you and goodbye. This is today's conference call. Thank you for participating. You may now disconnect.