Xinyuan Real Estate Co., Ltd (Xinyuan), is a residential real estate developer that focuses on Tier II cities in China. The Company focuses on developing large scale quality residential projects, which typically consist of multiple residential buildings that include multi-layer apartment buildings, sub-high-rise apartment buildings or high-rise apartment buildings, together with auxiliary services and amenities, such as retail outlets, leisure and health facilities, kindergartens and schools. It also develops small scale residential properties. The Company’s network covers more than 34 million people in five strategically selected Tier II cities, including Chengdu, Hefei, Jinan, Suzhou and Zhengzhou. As of September 30, 2007, the Company has completed 13 projects with total gross floor area (GFA) of approximately 939,829 square meters and comprising a total of 8,645 units, 99.6% of which have been sold.(1)
At Xinyuan, we acquire our development sites primarily through public auctions of government land involving a transparent bidding process. This acquisition method allows us to obtain unencumbered land use rights to unoccupied land which can be immediately developed without the need for additional demolition, re-settlement or protracted legal processes to obtain titles.
Our business model focuses on rapid asset turnover, efficient capital management and strict cost control. As of September 30, 2007 we had completed 13 projects with an additional 7 under construction and another 7 in the planning stages, and we currently have over 570 employees, 160 of whom are sales and marketing representatives.(2)
Financials(3)
Forward PE 5.28
PEG 0.14
PB 1.39
Low debt
high current ratio
high insider holdings
robust yoy earnings growth(4) and forecasts(5)
Downside risk
Inflation will cause the government to raise interest rates but XIN focusses on affordable housing in a country that will keep growing.So while speculative growth would not occur the growing middle class will still buy homes.Besides this the company's focus on rapid asset turnover and effective cost control will stand them in good stead in a difficult market.So my point is I do expect real estate to suffer in China as in the rest of the world but this company has what it takes to survive and prosper.
References
1.google finance
http://finance.google.com/finance?q=xin
2.company website
http://www.xyre.com/english/about/index.html
3.motley fool
http://www.fool.com/investing/general/2008/03/04/a-homebuilde...
4.fox business
http://www.foxbusiness.com/markets/industries/real-estate/art...
$9.4399 (04/23/08)
