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Xinyuan Real Estate Co., Ltd. Message Board

  • chinamannyc2003 chinamannyc2003 Mar 5, 2013 9:01 PM Flag

    Hello folks!

    Just want to drop in to say hello or ni hao, as in, you good?

    Looks like I made the right call to exit once I realized although one million great things about xin may not have changed, one thing, the environment, may be different, and consequently, xin's future prospect may be different. it is back to being a channel trading stock which i am not particularly fond of, until and unless the management steps in to clarify its future biz plan and guidance.

    right decision is hard to make, especially when it involves selling a stock that seems to have everything going for it. it is difficult to detach personal feelings and fantasies from reality. we all are dreamers. But even very successful people need mentors to bounce ideas with and they know when to ask for help. some of you have correctly deducted that the 60 mins clip is red herring, filmed before the govt policy change. when the 2 combined, one-two punch was lethal. I anticipated it and I exhaustively warned you about it. And I am not afraid you will beat me to the exit because you are just too proud,,,

    take home message: learning to spot a good stock to get into is only 10% of the required task. The other 90% is when to sell it. i try to hold things forever but often i cannot.

    hopefully xin will stabilize soon to take some edge off your nerves. some of you have a disadvantage because you are not familiar enough with china. as chinese saying goes: if you know yourself but not your enemy, you win 50%.
    start paying attention and stop reinvent the wheel,,,


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    • chinamannyc2003,

      Sorry to see you go. I hope you decided to re-enter just so you continue to contribute to the board.

      When evaluating the risks surrounding XIN keep in mind that the price to book ratio at less than .5 provides a big margin of safety against real estate market declines. The way I look at it, XIN builds condos for around $100 psf and sells for around $130 psf. However, because of the PB ratio a new shareholder's basis in XIN's condos is closer to $50 psf. The calculation is a little more complicated than that but you get the idea. Even if the market price drops to the point of being below XIN's cost and leads to an accounting loss, the new shareholder still makes money on the sale since she basically bought the condos for 50 cents on the dollar.

      I am worried about losses on their land positions should the bottom fall out of the market. I think they have around $250m tied up in raw land ($50 million in NYC which is safe). If Chinese land prices fall by 50%, that could lead to $100m write off, but the balance sheet is strong enough to sustain even a sever and unlikely event like that.

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