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Xinyuan Real Estate Co., Ltd. Message Board

  • staccani staccani Sep 5, 2012 6:28 AM Flag

    Why Mr Gurnee is our biggest plus

    I believe Mr Gurnee is our biggest advantage because;
    1) He knows which levers to use to appeal investors (increase dividends, increase buyback, clear communication to sharholders ie focusing on liquidity and profitability etc) and he is a good CFO
    2) He is the CFO of a company listed in the NYSE and.. most important he is a US citizen and his family is in the US as far as I know, and as such he is himself a guarantee of compliance to US laws and accounting standards unlike many other Chinese companies listed in US having Chinese CFO's/CEO's residing in China. He would not put himself/his family and his assets at risk.

    Sentiment: Strong Buy

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    • @casey2, On the Pricing Model stuff, we only designed it for XIN, so to answer your questions directly: the assumptions behind the model require that it be a non SOE that listed using a true IPO, not an RTO.

      I've made the model publicly available. If you want to access it, go to Google's documents page and search for "XIN Pricing Model: Discounted Cash Model" and it should come right up for you.

    • hmmmmm are you really sure you are a lawyer? CFO can be sent to prison for up to 20 years for falsely certifying financial statements. There is nothing to laugh about it, in particular if the CFO is a US citizen and might not get away with it like many Chinese CFO's seem to do. This is the biggest deterrent to Mr Gurnee if he ever had in mind of certyfing financial statements which are not correct and I am sure that he would never hide or conceal anything risking 20 years in jail..

      Sentiment: Strong Buy

      • 2 Replies to staccani
      • Hey, how did you get your post to double space like that? The one I just posted appears single spaced, for some reason.

      • Yeah, I know, and so did Palaschuk and Wu (Section 11 of the '33 Act, if memory serves; plus, analogous provisions in the '34 Act) It didn't stop them. In fact, Palaschuk (like Gurnee) has been given Immunity for the criminal side of Longtop, so in case he needed a great example of how you still WON'T have to go to jail in a Chinese fraud, his good friend Palaschuk (I mean that without sarcasm) is exhibit A.

        Can I ask you an honest question, based on our disagreement over whether bulletin boards move markets? Are your posts intended to be "pump" type posts? If they are, tell me, because then I won't attempt to correct them. I only do that to make sure you know the truth, but if you already know the truth and are just trying to "spin" that truth to pump XIN, then I'll leave you to it.

        I don't just say I completely don't believe BB posts move markets, that's genuinely what I believe, so if you want to head up XIN's propaganda department, just let me know. I'm unlikely to care, as long as people I like aren't being intentionally misled.

    • The new format doesn't allow LINKS, but if you want to read some of the Gurnee-only reasons XIN's price remains depressed, I'll bump forward a thread called "Fraud and XIN? Why the Market Worries."

      In the first post, there's a still active LINK which will get you to the information.

      • 1 Reply to hmmm26
      • I am sure I have not connected all the dots.

        Longtop is a software company. Fraud was straightforward, increase cash, increase sales, and print a dummy invoice. “Are we having noodles or rice for lunch?”

        Xinyuan is a real estate company. Fraud a little more complicated, increase cash, increase sales, owe the local government official paper work for LVAT, and owe paperwork to funding bank to get cash. Two independently produced third party documents for EY to check.

        Technology is wonderful but China is China. In China, every legal document requires the customer’s fingerprint in red ink with a copy of the front and back of their ID card. All bank officials have their own personal stamp, as well as a bank seal. Every page of every document is “chopped” by the bank official with the stamps. Three original sets of documents are generated and signed as indicated. The first day of an audit the audit team would only be worried about rice or noodles.

        In the Q2 call, the company said a couple things about cash. They have 240 bank accounts. The internal audit staff is going spot check those bank balances twice between the annual audits. The other point made relevant to the following narrative is the company pushed back on a SAT to book reconciliation.

        Cash fraud, at Xinyuan, is likely but it is not management stealing from shareholders. With 240 bank accounts, there is a site manager somewhere kiting between the operating and payroll accounts in the China I know and love.

        The unsettling information from an internal control perspective was the mild push back on a suggestion to reconcile SAT to book. I would think that would be a routine control procedure. Routine enough that not doing so would be a material internal control weakness. I think management should institute this procedure immediately.

        It is possible there are some off-balance sheet games with expense but if so, it is not effective currently.

    • Is that a joke? It'd have to be.

      As we've seen time and time again (Derek Palaschuk, CFO of Longtop, and recently, Xiang Wu, CEO of CMED), having a few US assets doesn't give any guarantee against fraud.

      In terms of whether Gurnee's a "good CFO," how do you know that? I personally don't have a clue as to what Gurnee's skills are vs the one million other potential people who could hold his job, but I do know this: those other one million don't come with the price drag that Gurnee comes with.

      I've previously outlined, but never actually run, there is a research avenue to quantify the Longtop risk. Shall we bet, you and I, right now on whether or not that research will show that Longtop is damaging to XIN in a way that it isn't to XIN's peers?

    • As a XIN shareholder, I will vote against Tom Gurnee. He did zero due diligence on Longtop case, and very likely he has zero impact on integrity of XIN's financials.

    • Yes, I agree. Mr. Gurnee can only help the company. Dividends, buybacks, buying in the U.S., coming to the U.S. to get confidence in the company, he is doing what he needs too.

      Up .08 yesterday, let's do it again today. Hopefully the company will come in and buy their 64k shares early.

      Sentiment: Strong Buy

    • I am not sure I am connecting all the dots.

      Tom is a solid CFO and expat businessperson, no doubt. He is fighting an uphill battle not of his or the company's doing.

      Chinese companies have a long tainted history. More importantly, the vaulted Big 4 are also tainted because of the position of the Chinese regulators with the PCAOB. You mix in concerns whether VIE agreements are even enforceable under Chinese law and the renewal of 3 of the Big 4 JVs on the Mainland this year. There is more than enough to worry about.

      If this was any other country than China, save North Korea, it might not bother a company like XIN. Which country would actual jump off the cliff closing themselves off to direct access to the western capital markets other than China?

      I am not sure where Tom lives makes much of a difference. What does make a difference is the Big 4 on the Mainland can and have demonstrated they will play by rules not consistent with listing rules and SEC regulations. Until that issue is resolved, the big boys are not going to show up and move these prices to where they should be. If Tom manages to do it before then, he can wear the big red S and you have to wonder why superman is playing in China.

      I am here because the Minster of Finance's May 2012 regulations looks like China is not going to dive off the cliff. China, US, Hong Kong, EY, and DT get Longtop and Standard Water resolved as grown-ups and China will be rock n rolling with XIN leading the way. I am thinking end of 1Q13 with the bounce in 2Q, still plenty of time to accumulate.

      The fly in that ointment would be taking the company private. Curse you China Construction Bank. Let the laowai win one this time.

      • 1 Reply to caseysxyz
      • Tom Gurnee is a big plus in addition to all the reasons we have mentionede also because he is personally responsible and liable in case of false financial statement, frauds AND he is a US citizen, living at least partly in the US, with family and assets in the US, he might be easily convicted in case of fraud, no issues with extradition of Chinese nationals etc. This is just one additional reason to believe that XIN financial reports are fair and correct

        Sentiment: Strong Buy

 
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