[ET Net News Agency, 18 September 2020] E-House China Enterprise (02048) and Alibaba
(09988) jointly announced the launch of a property transaction platform under Tmall and
shared details of their latest strategies.
With a more generous commission payout to brokers as well as empowerment through the
Alibaba tie-up, Goldman Sachs sees potential upside to Fangyou's (E-House's brand) GTV
(gross transaction value) in 2021 and onwards, and believes management may consider
revising up its 2021 GTV target for Fangyou (currently Rmb300bn) in the near term.
As E-House now charges 3% of commission revenue (as a service fee) from the previous 10%
(as the platform commission split) from brokers, the research house sees potential margin
dilution in the near term.
In the meantime, Goldman expects Fangyou to remain profitable, as rapid property sales
growth and potential higher commission bonuses (if projects are sold at a faster rate than
targeted via an enhanced network effect) offset fixed costs.
Goldman reiterated its "buy" rating on E-House with a target price of HK$14.8. (KL)