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Xinyuan Real Estate Co., Ltd. Message Board

  • teknowiz teknowiz Oct 1, 2012 12:27 PM Flag

    Something totally unexplained going on with this stock...

    I was starting to lose it with this stock, but then bang...

    They just spent $216 million on real estate purchase!!! I mean this is simply huge! I thought this will finally put all the doubts about their cash to rest. Those who are questioning cash, where did this money come from?

    In normal circumstances, this should have doubled stock price in a few days from this ridiculously low valuation.

    Past 6-12 months there is just nothing but good news about their business
    Beating estimates quarter after quarter..
    Buybacks..
    Rising Dividends..

    And the stock just barely responds, if it does the gains fade out in a few days..

    This is simply just weird in most the most vicious sense.

    Either this is the most egregious manipulation or there something mysterious behind this.

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    • Actually, Teknowitz, you seem to be the only person I can find who knows anything about those purchases. You mention the $216 million figure. Was that paid in cash at the signings?

      If not, what were the terms of these purchases? If expenditures are going to be a stand in for a cash audit, the amounts paid, and when they're paid, become critical.

      I made a mistake during the CCME war: I assumed 100% of the cash number was there largely because of the tens of millions of dollars they were paying out (and like a good investor, I was independently verifying) each month. My reasoning was that since they clearly had SOME of the money, then that must mean they have ALL of the money they claim.

      • 1 Reply to hmmm26
      • It would not be prudent to be all cash. The debt to equity was 54 % at 11, which is a little rich. So, let's assume they did 40 % on the new deals. That would be 100 million more debt and 150 million out of cash. With a 200 million operating cash flow that leaves room for one more good deal this year or two small deals. If all the announced projects are in the 25 % to 30 % GP range all is good. With US in quantitative easing while China is fighting inflation it would make sense to borrow as much as possible in the US and pay cash in China.

        I am coming to the opinion the valuation has nothing to do with the sellers but rather the buyer. The valuation is based on the dividend and not on the earnings. The valuations become insane when you look at any other measure. The problem is there is not any buyers willing to buy large chunks below a 5 %. I think the buyers are a bunch of mainland Chinese that are totally stoked with a 5 % return. Whose to blame them after staring at 30 % declines in the A share market.

        There are only couple things that will move the price to a decent valuation. Some active institutional finding the stock as part of a core strategy. Or, someone showing up and buying the company.

        There is not going to be some earnings miracle that will rocket it into orbit. The company is sound and working its plan. The only thing sexy about is its in China. Sometimes the market is just stupid.

    • Blue Ridge - with a basis of $1.75 is apparently selling for the first time (? redemption or other - fund is now 6 years old -- there are 2 funds in China in Blue Ridge - XIN investor is the first $300 million fund, not the 2007 1.45 billion fund) - selling started in the Spring. Pressure likely off by end of year (but with increased volume, could be earlier) --- institutional buying -- attracting new one -- will take away selling pressure and stock will pop -- only a question of when, now & the markets are trying to sort it out. The news this week and last -- accelerates the timeline for sure (because of stock volume)

    • Actually, more like $250 million in land this year. It will work out well for EPS next year. Most likely their quarterly EPS will hit, or exceed, an average of $.50 a share, which would give us $2.00 in earnings for 2013.

      Sentiment: Strong Buy

 
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