Coverage Initiated on Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN)

Coverage Initiated on Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN)

Coverage Initiated on Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN)

Xinyuan Real Estate Co., Ltd. (ADR) (NYSE:XIN) is a Chinese Real Estate Developer and Property Manager.

Xinyuan Real Estate, acting through its U.S. division, XIN Development Group International Inc., made its 1st entrée into the U.S. multi-family market with the $54.2 million acquisition of a development site in Brooklyn, N.Y. in 2012.

Since then the stock has been range bound despite what appears to be a low PE and very attractive fundamentals, something we have seen a lot of in Chinese companies. The question is why? Sometimes it is a missed opportunity and others have proven to be “not what they appear to be”.

Valuation Ratios

Company industry sector
P/E Ratio (TTM) 3.47 54.84 15.55
P/E High – Last 5 Yrs. 4.08 68.18 25.30
P/E Low – Last 5 Yrs. 1.29 11.87 12.32
Beta 1.47 1.61 1.46
Price to Sales (TTM) 0.29 5.07 4.14
Price to Book (MRQ) 0.38 1.71 2.22
Price to Tangible Book (MRQ) 0.39 1.77 2.38
Price to Cash Flow (TTM) 16.37 15.81
% Owned Institutions 14.44 0.03 0.40

 

Q1 revenue rose 41.2 percent to $235.4 million . Qtrly diluted net earnings per American Depositary Share (“ADS”) attributable to shareholders were $0.09 . Qtrly expecting full year 2016 contract sales to grow between 15% and 20% .Sees FY net income to grow between 20% and 25% compared to 2015.

 

Xinyuan Real Estate Co., Ltd. (Xinyuan), incorporated on March 26, 2007, is a holding company and conducts business primarily through its operating subsidiaries in China. The Company, along with its subsidiaries, is a real estate developer and property manager that primarily focuses on residential properties. Xinyuan is engaged in developing large scale residential projects, which consist of multiple residential buildings that include multi-layer apartment buildings, sub-high-rise apartment buildings or high-rise apartment buildings. Its segments include property developments in Zhengzhou, Henan Province; property developments in Jinan, Shandong Province; property developments in Suzhou, Xuzhou and Kunshan, Jiangsu Province; property developments in Chengdu, Sichuan Province; property developments in Beijing; property developments in Sanya, Hainan Province; property developments in Changsha, Hunan Province; property developments in Shanghai; property developments in Tianjin; property developments in the United States, and other. The other segment relates to investment holdings, property management services, installation of intercom systems, landscaping, engineering and management, real estate sale, purchase and lease activities.

The Company’s projects include auxiliary services and amenities, such as retail outlets, leisure and health facilities, kindergartens and schools. It also develops small scale residential properties. In addition, it provides property management services for its developments and other real estate-related services to its customers. The Company acquires development sites in China through public auctions of government land, direct negotiations and entity acquisitions (to access land rights held by such entities). It operates in approximately 13 markets in China, such as Beijing, Shanghai, Tianjin, Chengdu in Sichuan Province, Jinan in Shandong Province, Suzhou, Kunshan and Xuzhou in Jiangsu Province, Zhengzhou and Xingyang in Henan Province, Sanya in Hainan Province, Changsha in Hunan Province, and Xi’an in Shaanxi Province. It also operates in three locations in the United States, including Irvine, California; Reno, Nevada, and Brooklyn, New York. It also leases certain properties, including an elementary school, approximately two basements, five clubhouses, seven parking facilities, 10 kindergartens and a shopping mall.

The Company’s completed projects include Zhengzhou Longhai Star Garden, Zhengzhou Xinyuan Splendid, Zhengzhou City Manor, Zhengzhou Central Garden-East, Suzhou Lake Splendid, Suzhou Colorful Garden, Chengdu Xinyuan Splendid I, Jinan International City Garden, Kunshan International City Garden Zhengzhou Century East B and Suzhou Xin City. The Company’s properties under construction include Zhengzhou Xin City, Zhengzhou Thriving Family, Xingyang Splendid II, Kunshan Royal Palace, Chengdu Thriving Family, Changsha Xinyuan Splendid, Shanghai Royal Palace, Henan Xin Central I (Zhengzhou Nangangliu Project), Zhengzhou Fancy City (Zhengzhou Jiaotong college project), Zhengzhou Xindo Park, Tianjin Spring Royal Palace and New York Oosten.

The Company competes with China Overseas Property Ltd., China Vanke Co., Ltd., Sunshine 100, China Resources Land Limited, Sunac China Holding Limited, Henan Zhengshang Real Estate Co., Ltd., Henan New Greatwall Real Estate Co., Ltd., Longfor Real Estate Co., Ltd, Greenland Group, Tianhong Land, South Asia Group, Rongqiao Group and KWG Property Holding Ltd.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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