E-House Holdings Limited (EJ)

Q2 2012 Earnings Call

August 16, 2012 7:30 AM ET


Michelle Yuan – Director, IR

Li-Lan Cheng – COO

Bin Laurence – CFO

Xin Zhou – CEO and Co-Chairman


Jin Song Du – Credit Suisse

Ella Ji – Oppenheimer

Jack – TH Capital

Brandon Dobell – William Blair



Hello and thank you for standing by for E-House’s Second Quarter 2012 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a Q&A session. Today’s conference call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the meeting over to your host for today’s conference, Ms. Michelle Yuan, E-House Director of Investor Relations.

Michelle Yuan

Hello, everyone, and welcome to E-House second quarter 2012 earnings conference call. Today, we are going to give you an update on our financial results for the second quarter ended June 30, 2012. If you need a copy of the earnings press release or if you would like to sign up for our investor distribution list, please go to the IR section of our website at www.ehousechina.com.

Leading the call today is Mr. Li-Lan Cheng, our COO, who will review some highlights from the second quarter of 2012. Ms. Bin Laurence, our CFO, will then discuss the financial results in more detail. We will then open the call to questions, at which time, our Co-Chairman and CEO, Mr. Xin Zhou will be available.

Before we continue, please allow me to read you E-House’s Safe Harbor statement. Some of the statements during this conference call are forward-looking statements made under Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC.

You are encouraged to review the forward-looking statements section of our Annual Report on Form 20-F filed with the SEC for additional information concerning factors that could cause those differences. E-House does not undertake any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Our earnings press release and this call include discussions of unaudited GAAP financial information as well as some unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures.

Please note that unless otherwise noted, all figures mentioned during this conference call are in U.S. dollars.

I will now turn the call over to E-House’s COO, Mr. Li-Lan Cheng. Mr. Cheng, please go ahead.

Li-Lan Cheng

Thank you to everyone for joining us on this call today. China’s real estate market showed signs of warming up during the second quarter, driven partly by pent-up demand resulting from the government’s restrictive real estate policies last year, and partly by increased credit supply. As a result, our primary agency services saw significant revenue increases, both sequentially and year-over-year.

The total GFA of preliminary sales was over 9 million square meters in the first half of this year. We expect transaction volumes will continue to be relatively healthy in the second half of the year, while maintaining our view that the government’s overall policy for the Chinese real estate market will remain in place for the near future.

Also during the second quarter, our online advertising business continued its strong growth, while our performance-based e-commerce business, which will play an increasingly important role within the online segment, started to take off. Since the launch of the e-commerce business last year, transactions on the e-commerce platform have reached a total of RMB18.1 billion and RMB1.4 billion in the last week of July alone.

In addition, we have made significant progress expanding our online secondary brokerage franchise platform with approximately 110,000 brokers and 5,000 stores joining the network. Going forward, we will continue to focus on our core businesses of integrated online advertising, e-commerce transactions and traditional agency services, while taking advantage of new trends and opportunities in the industry.

I will now turn the call over to our CFO, Ms. Bin Laurence, who will review our financial highlights for the second quarter of 2012.

Bin Laurence

Thank you, Li-Lan, and hello to everyone on the call. Let me walk you through our second quarter 2012 financial results in more detail. Revenues, second quarter total revenues were $114.1 million, an increase of 25% compared to last year. For the first half of 2012, total revenues were $173.3 million, a decrease of 1% compared to the same period of last year.

Second quarter revenues from real estate brokerage services, which include primary agency services and secondary brokerage services were $49.5 million, an increase of 29% compared to last year. For the first half of 2012, revenues from real estate brokerage services were $73.2 million, a decrease of 12% from the same period of 2011.

Second quarter revenues from primary real estate agency services were $45.4 million, an increase of 37% compared to last year. This increase was mainly due to a 43% increase in the total GFA of new properties sold and a 30% increase in the total transaction value of new properties sold.

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