IFM Investments Ltd. (CTC) Q4 2011 Earnings Call March 15, 2012 8:00 AM ET Executives Donald Zhang – Co-founder, Chairman and CEO Harry Lu – Co-founder, Vice Chairman and President Kevin Wei – CFO Analysts Cai Liping – William Blair Ella Ji – Oppenheimer Presentation [Prepared Remarks] Question-and-Answer Session Operator (Operator Instructions). The first question comes from the line of Cai Liping from William Blair. Please go ahead. Cai Liping – William Blair
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Cai Liping – William BlairOkay, I see. And from your – from CTC’s perspective, are margins similar if you do new home transactions from your store versus secondary property transactions? Harry Lu Yeah, it’s pretty similar. Cai Liping – William Blair Okay. And then, for 2012, do you see the potential to further lower your store-count from the current level or do you expect to maintain the current 300 something stores? Harry Lu At this moment when we look at the market, the whole market developer, we believe our store-count will remain pretty stable. Cai Liping – William Blair Okay, all right, all right, thank you. Operator Thank you. And your next question comes from the line of Ella Ji, Oppenheimer. Please go ahead. Ella Ji – Oppenheimer Hi good evening. A quick follow-up prior question, in terms of the commission expenses that you pay for your sales people are they similar for primary transactions versus secondary? Harry Lu At this moment. Kevin Wei Sorry Harry, go ahead, go ahead, yeah. Harry Lu Yeah. At this moment for the business the commission will collect by provided service to serve new home through our existing secondary network, the commission in our structure is pretty similar. Ella Ji – Oppenheimer Okay, great. And also it’s very impressive to see that you have made a good cost to savings in this quarter. So, going forward, will you continue closing underperforming stores or are you pretty much happy with your network at this moment? Harry Lu That will really depend on the home market development, but the firm at this moment from where we stand here probably our store-count will be pretty stable right now. Ella Ji – Oppenheimer Okay. Harry Lu So, yeah, we’re probably going to remain, you know, pretty much in the same level of store-count. Yeah, I mean, for – the numbers were definitely lower than what you see that for the – by the end of last year. Kevin, do we just quote the store-count recently right now?
Kevin WeiYes 340 is the second wheel of this year. Harry Lu Okay. Ella Ji – Oppenheimer Okay, great. That’s helpful. And then, in terms of those transactions you made since February, the purpose of those purchases are these mostly for own residence or for investments? Harry Lu Actually majority of them are still is, like you know, people will purchase home for themselves. You know, especially in the early stage of this rebound, with majority of home buyer is, like new home buyer buying smaller units. But recently we do see some buyers buying some, you know, relatively large units as well. Ella Ji – Oppenheimer Okay, thank you. And lastly, would you give us an update in terms of E-Houses transaction? And also, you know, if we assumed the transaction is successfully completed, could you comment you know, how do you plan to do the primary businesses in the, you know, Beijing area, you know, E-House is also a primary agency in the same market. Harry Lu I think for E-House, basically you know, we already disclosed have the list of press release talking about after we signed these term sheet. You know, we did have this discussion and then, you know, we are pending you know a discussion between founder and the avenue capital (inaudible) settlement talk. You know, once we you know, finish this settlement talk we’re going to resume this negotiation within this discussion. But talking about in future, we believe you know, we already kind of set the model right now to sell the new home through our existing secondary network which is quite different compared with what E-House has right now. You can look at the commission we collect from developer is more than 2% and but you know typical commission they get from developer is 1%. We are more like, you know, the using our precision network to kind of bring our own customer to please the developer to have them move their products and that’s a big difference. We’re going to keep doing that in the future. So, I think that that model would be quite different with existing primary agency business. Read the rest of this transcript for free on seekingalpha.com