XIN issued $200M bond at 13.25% annual interest rate this May!!!
It looks like the company is lack of money and can not get the money from the banks!!!
This company is showing $640M cash on book.
If it really has that much cash, I doubt it why it would need to issue bond at such a high interest.
How much interest XIN is giving to the bonds it issued to TPG this month?
Shorts are using my old post to confuse people. You can see how sneaky they are.
This was my old post before I did all my investigation on this company.
Now I have no doubts about the financial report and cash level of this company after my investigation.
In fact, this company now has more than $800 cash on book($12 per share) and it's real!!!
Sentiment: Strong Buy
keep up the good work ..I need more shares for the firm.. my charter % is still not maxed.... you didn't even ride the short bus ..you were home schooled by your parents and it shows..Tight money supply in china has stated by many experts
For those that don't understand.
Xin took the $200M deal at 13.25% so that they wouldn't continue restricting a large quantity of RMB which includes a 10% interest rate to buy more dollars. Thanks to the deal they now have more unrestricted RMB to make land acquisitions in China which is their focus plus have dollars to fund projects outside of China and pay divy's to shareholders.
In other words... they get to freely spend their RMB rather than locking it up in a box to be held as collateral.
It's like paying 10% for $200M plus an additional 3.25% to keep their RMB unrestricted.
I especially have doubts about their cash flow.
It's almost impossible for a housing company to have such huge positive cash flow.
Do you believe a middle size housing company in China could have such a high margin and profit?
Apparently they have been borrowing money at high interest 12% - 13.25% for the past years to pay back old borrowings. Does that sound familiar?
I don't care about TPG but I just think there is something fishy for a company to borrow money at such a
high interest 13.25% while they are showing $640M cash on their book.
Do you still think there is something fishy about XIN borrowing at 13.25%?
Still have doubts about XIN's cash flow? Is their margin and profit too high to believe?
Why don't you believe that the TPG investment is a positive?
As to why XIN has a high margin and profit in China......they have had very good projects and real estate prices have been booming for years n China.....including the past year. Even their one bad project in Suzhou turned out to make a profit in the end.
XIN has had high cash flow because they have been liquidating their housing inventory the last several years. When they begin, if they begin, to build up housing inventory....cash flow will slow.
XIN has been borrowing RMB for 5%-7% for the past years...each loan is listed in the 20-F. They had a 40M 16%+ loan denominated in US Dollars...which was recently paid off.
If you do not understand that a big part of the $640M cash is either restricted cash, loaned out at 10% as prepayment to possible land deals, or needed to start their 5 new projects....and mostly in RMB....then stay away from XIN.
Chinese banks typical charge credit worthy customer with around 6%-75\% interest rate. The question was raised for 13.25% bond issuing during conference calls, their argument was
1) They could wire the money from China, but they have to pay 10% tax chinese government in order to wire the money, for 13.25%, not mentioned the fee paid to investment bankers, for 10% tax, it's still make sense to wire the money from China.
2) They had 40 million loans was due this year, the interest on that loan was like 15-16% plus stock warrent, so 13% was a bargin relative to the 15%
3) They need to preserve the cash in China plus the money from US to do a major land acquision in the very near future, it's been 4 months, they have not bought any land.
Now they need more money.
That is cheap as housing grows very fast. It doubles and they are chastised for a 13% loan. Get real and buy because this stock is phenomenal. Time to make some money and find the values. Chinese real estate market is healthy if not too healthy in that the demand in high quality cities far exceed supplies. Way too many first time buyers have not bought in yet. The current system of land auction in china, as well as recovering USA real estate market will benefit xin because it has enough cash while smaller companies will go belly up.
2. Management seems to be sincere and level headed. Not too sugary, not too tight lipped. Like CEO's insistence to stay in NYSE. CFO candid and articulate.
3. Like how they manage their USA properties. Fast learners. Flipping Reno for 100% gain and have empahasis on East and west coast.
4. Very undervalued
5. crossing the 5 dollar barrier with good volume.
6. Dividend and US properties ligitimize their business and company
7: Expecting a double or triple in less than 2 yrs.
What is the normal interest rate for a small Chinese company with few US assets?
You certainly should not invest in a company that you doubt the financials....that is for sure.
I believe TPG has little doubt about the financials.