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Xinyuan Real Estate Co., Ltd. Message Board

  • staccani staccani Aug 24, 2012 9:37 AM Flag

    My expectations for 2013 revenue and earnings

    I believe XIN is going to be a top performer in the next 5 years because:
    1) It is trading at ca half of its net cash.
    2) It will have annual earnings per share at ca USD 2.5 (my estimate)in 2012
    3) It is buying back shares amd will continue to do so until its market price will get closer to its fair value
    4) Chinese economy is still and will be one the fastest growing economy in the foreseeable future (7-10% compound growth per annum)
    5) The Chinese real estate market will be growing at a rate faster than economy
    6) The Chinese 2nd and 3rd tier cities real estate market will be growing at rate faster than 1st tier cities
    7) The urbanization process will keep at faster rate and XIN
    is likely to tap the growing demand of reliable, affordable, nice looking homes to the expanding Chinese middle class
    8) XIN is expanding also abroad and will gain more and more international exposure, taking advantage of real estate markets where unduly penalized by the last few years' crash
    9) RMB is an undervalued currency and despite the efforts to keep its value under control it is deemed to appreciate against USD and Euro

    For all the above I expect XIN to be growing revenue and net income at an avg 30% per annum in USD terms, that would mean with ca 65M an ang oustanding shares ca:

    a) 2012 Rev $900M; Net Income $160M ; Earn $2.5/share
    b) 2013 Rev $1.15B; Net income $220M ; Earn $3.25/share
    c) 2014 Rev $1.5B; N.I. $240M ; Earn $4/share
    d) 2015 Rev $2B; N.I. $310M: Earn $5/share
    e) 2016 Rev $2.6B; N.I. $400M; Earn $6.5/share
    f) 2017 Rev $3.4B; N.I. $520M; Earn $8.5/share

    At an avg P/E of 10-12, that is why I think this can be a USD 100 stock in 5 years time, being now a $30 stock trading at 1/10 of its value

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    • ok ... but before talking about currencies you must ask me (joke). FOREX and commodities are my place.

      RMB may be undervalued or not depending where you look.
      Chinese -'ve to repeat over and over again- aren't stupid or 've younger brains as our ALL AMERICANS ones (including me).

      The current situation clearly showing that their policy 's to level imports with exports although doesn't like to your "fox guarding the henhouse" called Geithner.

      Less than a month ago China bought the largest oil reserves inside Canada agreeing to pay up to 50% of the total stock IN ADVANCE.

      This indicates -at least- two things:
      1. - Their time is longer than ours.
      2. - They feel no worry to exchange their savings (American treasuries)buying commodities as they did in Australia three years ago.

      China exchanged "money toilet papers or debt papers" to commodities regardless how much payable in advance. Buying real assets.

      Feeling a bit sorry for the American and European middle class but the nature of the property has changed a lot. And 'll change much more.
      Chinese children -average- consume 8 times less milk than developed countries and their wages start from USD 5000 annual average ....
      The chinese sportwomen/sportmen @ the Olimpic Games in London are a minority. A great one but a minority.

      As Jim Rogers says, farmers are going to make very good money.
      Those with savings must buy Nebraska or Iowa.



    • thanks acorisk I think you are one of the brightest and most competent posters on this MB, and this is not because you are long XIN, but because you often provide interesting insight into the numbers and useful Chinese market information to support your analyses. I also read your blogs in seekingalpha. I believe we are sitting on a goldmine here, both XIN and the market just need some time to let this value emerge and further develop.

    • appreciate cogent comments to start the post.
      - don't bother to get into a platitude argument with those offering "darts" with no data

      My take on what you've said (since you asked us to put something forward) whether growth ends up being 30%, 40%, 20%, 25%, 15% or even 5% -- will be growth.

      Vanke and Poly and others are at a PE of 8-10 or so --- meaning that consistent, transparent value creation and financial reporting by XIN will normalize XIN in the market... bumping it into the $20 to $30 per share range. Compoound growth of 30% in my mind is realistic, but icing on the proverbial cake -- not a necessity to see a 10x return over the next few years.... yes, a multiple of that would be even better, but 6% dividend while waiting is a pretty good...

      thx for taking the time to put a great forecast together.

    • I tried to summarize why i expect a 30% XIN growth in the first 9 points of my first message. Remember that the 30% growth will be also coming from XIN ability to increase market share in China and expand abroad. I am normally quite good at forecasts, so as a challange to you and all other people on this board let us see who gets closer, we can start concentrating on 2012 and 2013 estimates. I provided mine in my fist message above.
      As for China population 1.6B was an estimate of Greater China population in 5 years time. OK may be it'll be 1.5B/1.45B if the one child policy is not lifted? That does not change the substance of the discussion.

    • If your argument is only as simple as this, you are very likely will lose the argument to the more sophisticated businessmen in China.

      Also, correct yourself if you could. China does not even have 1.4 billion yet, and it will not expect to have 1.6 billion population anytime soon unless the one child policy is taken away. You have to admit you know very little about China.

    • 1.6 Billion people willing to improve their living conditions along with wealth creation, urbanization and economic growth un China

    • thanks for your suggestion I had not realized that :-)

    • I like your rose outlook on XIN. But I don't see how XIN can earn $8+ per ADR in 5 years. But have a optimistic view on future will make you live a long life --- maybe something more important and rewarding than make money in stock market.

    • You are more optimistic than the management themselves. Their internal goal is to reach 10b CNY sales in 5 years. They planned to have 10B sales in 2011, but after the housing clampdown, they are being more realistic.

      They are short of projects on sale for q4, which seems to be a blunder. But you can't blame them for being cautious. They bid on another parcel of land in Suzhou a couple of months ago, but eventually dropped out, presumably because of pricing going up too high. Now they got land in a new development area. Maybe a bit more risky. But the price is cheap,and the local government is behind the new development. XIN could be rewarded handsomely on this project.

      Kunshan is selling out well now, better than Q2, much better than Q1. It will be a good day when they can put Kunshan behind.

      • 1 Reply to leopoldli
      • 10 B RMB is ca USD1.5B sales in 5 years' time. Yes you are correct I am more optimistic than management, but at least in the last year or so I got closer to actual results than they did. I understand they are usually quite conservative and I cannot blame them, it is always better to be cautious when providing guidance but I am confident that they might end up outperfoming they own estimates (and probably they are as well although they would never say that to the market).

    • that included also 2014 and beyond:-) Anyway comments about real estate market in China and XIN fundamentals and prospects are more than welcome

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