I thought this company is legit. Now I do have some doubts.
The management claimed they went to the market for 13.2% loan simply they did not want to pay 10% tax to send the money into US.
But, 10% tax vs 13.2% annual interest is nothing.
Apple went to the bond market, because they borrowed under 2%
XIN did some stock buy back and dividend, then all the money they paid for dividend and buy back was significantly less then the 200 million bond they issued, where are all these profit?
The company stopped buying any shares when the stock was traded over $5, even they claimed the book value is $11 the stock is cheap. They made this claim repeatedly during the last two conference call. So if the stock is cheap, why don't they buy. I don't like lip service.
In theory, most of chinese real estate comanies are making money, there are something going on, it does not add up. Could be the management take the company's cash for their personal use?
There are many reasons why they got the 13.25% Dollar loan.....the 10% withholding tax is one reason. Other reasons are the freeing of Yuan from restricted cash to available cash, the continually appreciating yuan.... today at 6.1502 to the Dollar, higher margins and profits in China, the ability to buy back stock at 30 cents on the Dollar. etc.
All the profits are in China.....in Yuan....and perhaps soon in land.
When XIN has the Dollars they have bought back.....they now have a lot of Dollars.....my guess is that they are now buying back.....especially with a possible equity offering in the next 3 years.
Management may be using the companies cash for personal use......so I urge you to sell if you think that is true.
Management of a company doesn't have to "steal" a company's cash for personal use. Like the private jet XIN is renting. They can say the jet is for business purposes but they can use it for personal reasons anytime they like. They could have other perks where their all their vacation expenses is paid for by the company or the rent on their expensive penthouse or mansion is paid by the company too. None of this is illegal.
So why risk stealing cash illegaly from the company when you can just hand out huge perks and bonuses to yourself legally?