China Real Estate Information Corporation (CRIC – a subsidiary of E-House) released estimated 4Q16 sales data for the country’s top 200 property developers (LINK). Xinyuan China is shown at #77 with estimated attributable sales of 19.07Bn RMB for the full year and 5.06Bn RMB for 4Q.
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:
CRIC’s estimate of full year sales is 41% ahead of 2015 and also ahead of company guidance for growth of 20-25%. There is greater than usual uncertainty about the sales outlook due to implementation of government policies to restrict short-term housing demand in many of Xinyuan’s markets and the company’s strategy (explained in the 3Q conference call) to limit sales while these policies keep prices artificially low. Considering these factors, the CRIC estimate suggests a good 4Q sales performance by Xinyuan. The conference call also explained that the company had set a large budget for land acquisitions (2Bn RMB in 4Q and 3-4Bn RMB in 1Q17). It does not appear that any of this fund has been used yet so with good 4Q contract sales the company enters 2017 in relatively strong financial condition.