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Xinyuan Real Estate Co., Ltd. Message Board

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  • growth.value growth.value Sep 24, 2012 7:44 PM Flag

    Walt's One Item "Data Set" Mistake

    1. My pleasure.

    2. Most XIN's senior employees should receive options as part of their compensation packages. So, when they exaggerate XIN's earnings, they hope the market will price XIN higher, making their options worth more. But the market for whatever reason seems smart enough to know how much XIN is really making.

    3. One thing I don't know for sure is how bad XIN's "fraud" would be. It may use aggressive accounting to boost its earning by 100%, or it may end up do something nobody is even creative enough to think about.

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    • harumph why in my day we would not shilly shally we would just lay our money out and invest. i started investing in 1955. i was a whipper snapper then learned a few things on the way. so i'm long on xin.

    • "What kind of fraud" Is that what you said Hmmm? Any 'fraud' with the numbers matters. I'm only
      going to post this opinion once, and certainly not fully, as my name isn't Shel off this board, so I
      have to watch what I say. I am hoping that Chinese stocks are done on US exchanges whether it's
      by the SEC,PCAOB or on moral grounds. The only way the truth is even used by Chinese companies is if you add the word 'convenient' before the word truth. It's an entirely different cultural
      view on the subject. Doesn't mean the business doesn't exist in most cases it does. I think to Chinese business the fact that we place such emphasis on that value makes Westerners a joke to
      the Chinese. I hope the American investor never comes back as an 'investor', because they will
      always be at a disadvantage. Maybe I'm in the minority on this view, I hope not. Of course greed
      will win the day, no matter the values, when it comes to making money.

      • 2 Replies to shelly_showman
      • Your point is ridiculous as usual. Ptr is a legitimate Chinese company. As is Cnooc. China has the second largest economy in the world. The idea there are no legitimate companies there is absurd. Accounting questions do not equal fraud. Jack Welsh when he was at GE used to "massage" earnings. In a good year they used to take a little off so they could add it back when needed. Many companies do accounting tricks. But the fact is Xin has a legitimate business that is doing well. In the future it might help if folks say exactly what they mean instead of engaging in innuendo.

      • 1. Yeah, understanding how the cultural differences between China and the west has molded their corporate culture has been by far the hardest thing for me to learn, and it's still an area I've got a ton more learning to do.

        While I totally agree with your (western) view that any fraud anywhere in a company matters, I've had to learn to accept the kind of "little frauds" in my stocks that I think GV was getting at, because the only alternative to allowing them is not to invest in China stocks at all.

        2. Heh, I liked your "convenient" truth thing. I agree. I also believe the Chinese are probably as baffled by what they see as our fetish-like obsession with fraud as we are by their widespread tolerance -- even acceptance -- of fraud as having some kind of "legitimate" place in a company's books.

        3. I disagree with your proposed solution, though. I don't want to see all China stocks delist from the US and head back home. As an investor, I'd lose the protection of the SEC in exchange for, what, the CSRC? I have serious doubts about the CSRC's effectiveness, even its willingness, to properly police the companies listing with it.

        I truly believe the SEC is the last, best defense against corporate fraud. I think they do an outstanding job here, and do the best they can regarding foreign issuers. I therefore want the Inspection Rights negotiations to produce a happy result, some kind of agreement between the SEC and China that allows the SEC to function more or less the same there as it functions here.

        That's not an impossible dream. There's tons of countries where the host governments allow the SEC enough power to validly enforce its reporting and auditing requirements, and where it's allowed to properly function, the SEC's largely produced the same miracle of corporate transparency that it has created here in the US.

        Now, we just need to convince China.

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