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Xinyuan Real Estate Co., Ltd. Message Board

  • shelly_showman shelly_showman Aug 8, 2013 8:34 PM Flag

    Let me 'splain it to you Mr. Gurnee from this side of the pond

    I would love to be able to kick your assets, (just a little humor there), but it is a comforting thought if one were willing to fly
    to China, and travel the various provinces where Xin's assets are located, I might be able to keep track.
    I heard a portion of the call about two loans just being approved at China banks and a couple not completed, but soon? Did I hear right? Xin has over 800m in cash and you're going to banks for loans? Why? So not only does the company sitting on all that cash not attempt in any way to use some to lower long term debt, but the amount of your ltd increased by about the amount of the 200m added to cash from the bond issue? (plus some other possible restricted cash).
    Then you get a question again about a cash audit. Yes, we know you have 11 on staff to do spot audits of cash. Employees of Xin's, paid by Xin on what is it 240 something bank accounts with 20 something subs? That would certainly be spontaneous and a 'surprise'......not! A forensic audit by a whole team would be required IMO (good thing my opinion counts for nothing), that's my disclaimer, I know nothing.........
    On to the next post.

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    • If you read Q1 transcript, you will know why they are going to banks for loans. "As of this call the Forum notes have been fully settled and repaid. So the questions, we get from investors, of course, is why did we initiate the bond, when we have such a large cash balance? Well, there are two basic reasons, first, we have big plans for land acquisitions in 2013, over US$650 million expected to be spend for new projects in China alone."

      Sentiment: Strong Buy

    • Excellent points, Shelly. When I used to have substantial shares of XIN, I may not like hearing what you said, but I respect them. Recently, I met a business man from China. He is the CEO and major shareholder of a Chinese public company. He told me that it is very common for Chinese founder to consider the company as his own. As a result, they consider the company's cash his own cash. They frequently take cash in and out for his personal investments.

      I have a hypotheses here. The CEO of XIN just took substantial of the $800 million cash to his own investment projects. (Who knows what he invested.) He would put money back in around the audit time each year. According to my friends, it is not difficulty at all. They can just use the other investments as collateral to get a short-term line of credit to fund the XIN cash shortage at the end of the audit year end. This is probably the reason why XIN always refuses to do a surprised cash audit and why XIN has so much paper cash on its balance sheet.

      We shall all wish XIN's CEO made sound investments. Otherwise, if one day his investments lost most of its value, he may not have enough collateral to get enough cash back.

    • You make a good point. I currently rank Xin a hold. The numbers look good but the loan question is troubling.

      Sentiment: Hold

    • Let's jump to the share buy back. A couple quarters ago you told a caller that the price of the shares was too much and when I checked, the prices were between $2.60 and $3.00 for that period. Yet you are saying this last quarter the average price you paid was $4.39. Does that make a whole lot of sense as an excuse? Nope, it sure doesn't.

      Let's jump to land buys next, as that's where I'm really confused and don't want to have to read the annual line by line. I'm
      sure this is where Rv and Stinky jump in.

      • 3 Replies to shelly_showman
      • Agree with you on that one Shelly, they have no concept of the point of share buybacks - to improve EPS. They seem to think if it goes up to 5, then down to 4.50, they should buy, rather than at $3 and less most of last year. They couldn't manage to spend half their allotment last year. Don't know that it's Gurnee - seems I recall a cc last year where he seemed to indicate he disagreed with the board on the repurchase plan, but maybe the new person will be able to improve on that score.

        Sentiment: Hold

      • In days gone by, we are talking 26 months ago was the last one, when Xin bought a piece of land and started development, Xin put out a PR on the progress. This has not been done since June 2011. Why is that Mr. G? I
        have my own thoughts on why not.
        In November and December of 2011, Xin put out a PR about buying a piece of land in Xuzhou in Jiangsu province. and Zhengzhou in Henan province. In the first two cc calls in 2012 they were in the 'planning' stage with
        the beginning of construction to begin in the 3rd or 4th quarter 2012. But when those quarters went by, and so did cc's. Nothing else was mentioned. Xin is very good at telling investors that things will happen in the 3rd and 4th
        quarter, but when the time comes nothing is said. So I head over to Xin's website and look under developments.
        Sure enough there are two with the names Xuzhou and Zhengzhou, but these can't be the same properties as one states construction began in 2010, which was long before this current purchase and the second one says
        construction began in 2011. But we know that's not possible as the land was only purchased at the end of 2011
        and construction didn't even begin in the first half of 2012. I'm sure both are large cities where more than one
        Xin property is built in each, but why can't I find either one has begun construction? Xin said they spent 125M U.S
        on those two properties, and it can't be the two listed on the website as the timeframes are really out of whack.
        The reason for no longer attaching the city with the name of the development in an update (like they used to),can't be because Xin puts out so many PR's with news. It must be another reason. I wouldn't leave it up to my imagination, no siree. I'm so confused...........................

      • A couple of quarters ago XIN did not have the Dollars to buyback shares and be financially prudent for the year ahead with their USA operations requiring Dollars just starting up. In May t2013 hey got $200M it is full steam ahead with the buyback.

    • You got that right Silly. With negative gearing.....XIN should be paying off LT debt. LOL!

      Perhaps the plan is to acquire land? Weird idea.....why not just buy the land with a Bank of China credit card! LOL!

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