China Real Estate Information Corporation (CRIC – a subsidiary of E-House) released estimated 3Q16 sales data for the country’s top 100 property developers (LINK). Xinyuan China is shown at #75 with estimated sales of 14.01Bn RMB. Xinyuan likely benefited from both high sales volume and rising prices in its key markets.
CRIC does not have access to any official company records and compiles its estimates from 3rd party sources like municipal data. “Sales” estimated by CRIC are never going to equal “contract sales” reported under US GAAP financial statements. Some of the sales in the CRIC data do not end up being closed and some are recognized in later periods (Xinyuan does not book a “contract sale” until it has received 30% of the price in cash). Even though the numbers don’t match, CRIC data in prior quarters has been a good indication of the trend in Xinyuan results:
Estimated year to date sales are 77% ahead of 2015 and far ahead of company guidance for a 30% full year increase. Overall market conditions in China were very weak in 2015 until May when the government began easing monetary policy and loosening housing market restrictions. Current conditions are now so strong that regulatory controls are being imposed in many of Xinyuan’s markets. While these controls may limit near-term sales volume and price appreciation, these high demand markets are much better for developers than the cities with high inventory of unsold homes. Investors should be expecting strong 3Q results from Xinyuan, but also be aware that the rate of growth in coming quarters will slow.