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Xinyuan Real Estate Co., Ltd. Message Board

  • olssongustav olssongustav Dec 6, 2013 6:42 AM Flag

    Maybe not so bad?

    The new loan will make an extra 6 MUSD in interest every quarter. They had around 55 MUSD in operating profit the last 2 quarters so it will affect it with around 10%. On the other hand they will significantly raise their turnover the coming quarters and the operating profit will also go up. Maybe this was the reason for the low earnings guidance the coming quarter of around 30 MUSD after tax earnings, they already know they would have increased interest expenses.
    I think it is a good upside, most of the expenses in construction is paid by the presales in China so I guess they need most of the loans for the land payments, and it just a small part of the total costs and it is paid in installments. Once they get presales going for the new land during the coming quarters in 2014 there will be an increase in profits.
    My opinion is that long term it seems very good with a good land bank at the moment!

    Sentiment: Strong Buy

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    • quite right, i believe all indicators are green for 2014 and even 2015, they have increased their land bank very strongly recently, these recent announced projects will come rapidly on pre sales stage ( this is good for cash generation with also a sharp increase in sub contractors payable) / gearing will increase to around 25%/30% end of 2013 and probably go souith late 2014 and 2015 / i think they could earn $ 170m in 2014 and $ 220m+ in 2015/ stock very cheap / target price around 8/9 $ in coming months / expect dividend increase

 
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