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Xinyuan Real Estate Co., Ltd. Message Board

  • peregrinearchery peregrinearchery Nov 9, 2012 9:58 AM Flag

    Gurnee said next few quarters won't be as good as the previous

    If you listened to the first 10 minutes, said that projects aren't online yet and it will be slow

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    • That's exactly what I said this year. The amplified earnings caused by accounting method will not sustain. That's exactly why XIN's p/e is low. Market makers and institutions know how to play with this type of companies. They pushed XIN's price low and accumulated more as uneducated investors cried why XIN's p/e is so low and it must be a fraud. Then, when the actual earnings start to decline, that's whey the stock will go up. Unsophisticated investors are always slow to use new information to buy stocks. They stuck in old facts while the market is looking for forward information.

      • 2 Replies to stan.ackman
      • Stan,

        Have you computed the difference in potential earnings under the CFA method? It doesn't look all that different to me, so I'm not sure where the amplified earnings comment comes from.


        Sentiment: Buy

      • Disagree. The accounting method XIN uses is what they are asked to use according US listing rules. Gurnee addressed this previously. The reason earnings will be down in the next 2-3 quarters is that the company was conservative with regard to inventory in the face of RE uncertainty in China starting mid 2010. Remember, there had been talk of a bubble in the chinese real estate market for over 2 years now, and the government put curbs on new land purchases by tightly regulating local governments to deplete inventory. All in all, I see this a short-term hick-up and a long-term positive. The company showed foresight and care in the face of uncertainty. They increased their cash position, decreased debt, and decreased inventory. Now as the market improves they build up inventory again, and this time not only in China. Better prospect, stronger company, undervalued stock price due to Wall Street scare of Chinese RE bubble, European debt crisis, and small cap fraught.

    • Guidance for Q4 is terrible. Looks like the fact they hadn't bought land and initiated projects to get through the downturn is causing a delay now. I am anticipating that revenue will be lower for 3 consecutive quarters now. Stock is still undervalued though, and Gurnee needs get analysts to cover the company.

      Sentiment: Hold

      • 1 Reply to marcino3000
      • Marcino, my question for you is when a smart investor knows the earnings after Q2 2012 won't be good. In my opinion, smart investors should know this as early as last year. That's why they refuse to pay a above 4 PE for XIN. Now, I see the result is actually better than I expected last year.

        Have you seen companies' share prices go up when their earnings drop? I have seen many examples. Simply, the longer term outlook is rosy while the current earning is not good.

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