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Xinyuan Real Estate Co., Ltd. Message Board

  • hmmm26 hmmm26 Nov 16, 2012 2:40 PM Flag

    XIN's Revenue and Earnings Outlook for the Next 5 Q's

    Today, I read the transcript from Friday's ER. I've pieced together the following from Gurnee's extremely vague comments on future Q's numbers. If I pieced any of it together incorrectly, please post corrections.

    If you have access to any other analyst estimates, for the love of God, post them.

    I. This Quarter.

    Gurnee expects revs of $150 million and EPS of .28-ish. Those numbers will be Y/Y decreases from $200 million and .38 in 4Q, 2011.

    II. 1Q, 2013.

    Here, Gurnee got really vague. He gave no specific numbers, but he did say he expects 1Q's revenues and earnings to come in lower than the current Q's numbers. So, all we can say for sure is that 1Q 2013 revenues are expected to be "less than" $150 million, with EPS "less than" .28.

    The obvious question here, surprisingly unasked by the analysts during Q&A, is: "How MUCH less?"

    However that question ends up being answered, 1Q 2013 will represent a Y/Y decline in numbers from 1Q 2012: "Less than" $150 million vs $173 million in revs, and "less than" .28 EPS vs. .31 EPS.

    III. 2Q, 2013.

    Here's the entire text of Gurnee's comments for 2Q: "The second quarter of 2013 should be up over the first quarter, if nothing else simply due to the recovery from Chinese New Year."

    That's a pretty useless comment, since we only know the upper limits of 1Q's expected numbers: less than $150 million and .28.

    We also don't know how much the increase is expected to be over 1Q's numbers, but citing CNY as the primary cause of the increase rather than specific project revenues coming online doesn't inspire a lot of confidence.

    IV. 3Q and 4Q, 2013.

    Here, Gurnee's comments turn much more optimistic, and much more concrete. Again, no specific numbers are given, but his specificity is reassuring:

    "But it’s in Q3 and Q4 of 2013 where it should be exciting as four new projects in China come online bringing with them substantial sellable inventory."

    V. Conclusion.

    Without access to more analyst estimates, the only thing we can safely say is that revenues and profits for the next 4 quarters are expected to decline, Y/Y.

    But until we get more data, the vitally important question of "How MUCH will revenues and earnings decrease over the next 4 Q's?" remains impossible to answer.

    What doesn't remain impossible to answer is why XIN's sold off over the last week. Announcing revenue and earnings declines is never going to help a stock's price, but I think the damage could've been minimized if Gurnee had given more specific estimates, despite the fact that those estimates would've represented Y/Y declines. Vaguely alluding to decreases and then only setting the upper end of expected ranges without a bottom limit just freaks people out.

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