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Xinyuan Real Estate Co., Ltd. Message Board

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  • stan.ackman stan.ackman Jul 16, 2011 7:05 PM Flag

    XIN should pay a regular dividend

    Unfortunately, your view is based on a static fact rather than ongoing basis. XIN is current earning is based on the peak or near peak of the Chinese real estate market. I am not saying Chinese real estate market will totally crash, but saying the future earning power of XIN will be much more depressed. I know the P/B is below 0.5 and P/E is around 3. However, when XIN's earning punges to 20-30% of the the current level. The P/E will be no longer that low.

    If XIN is able to recapture its earning power. I would still consider it a buy. However, I don't see that. I am not going to convince all of you, but just want to remind you guys to look at the company in the 5 years beyond future (as you guys mentioned it is a 5 year stock). Ironically, you guys focus on current P/E, P/B, and dividend yield rather than the P/E or dividend yield 5 years later.

    RIMM has current P/E around 4. Why? Because it will surely lose most of its revenue and profit because of competition. Kodak used to be around P/E 5 at price $30 in 2002. Now, it does not even have a positive P/E with price of only $2.7.

    XIN will have problem to pay another dividend in 2 years. Basically, by then, it has no cash to pay. As a real estate company it has problem to finance its deals. The company is currently paying dividend because the owner of the company who own 40% of the company can take the dividend cash away from the company to his own pocket. When the company could not be run anymore. He would already get millions of cash. But you guys will be left only little dividend payout and a penny stock.

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