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Xinyuan Real Estate Co., Ltd. Message Board

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  • caseysxyz caseysxyz Oct 2, 2012 7:57 AM Flag

    Something totally unexplained going on with this stock...

    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.

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3.16+0.03(+0.96%)Feb 10 4:02 PMEST