China Real Estate Information Corporation (CRIC – a subsidiary of E-House) released estimated 1H17 sales data for the country’s top 200 property developers (LINK). Xinyuan China is shown at #79 with estimated sales of 9.24Bn RMB for the half, which means 4.75Bn RMB for 2Q.
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 and “contract sales” are also different from “revenues” reported by Xinyuan under percentage of completion accounting. 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:
In May Xinyuan provided guidance that 2Q sales would be 20-25% higher than 2016. This may capture sales estimated by CRIC in 1Q17 but not recognized by the company until 2Q. There may also be a significant timing difference related to the exceptional sales result at the Zhengzhou International City project in June (1.32Bn RMB sold in 2 minutes).
CRIC commentary notes the increasing concentration of sales among larger developers with the top 100 firms taking 58% of sales (by value) in 1H17 compared to 40% in FY15. In the past year listed and larger companies have been able to raise domestic and international bond financing on attractive terms. At the same time regulators have worked to shrink availability of shadow bank financing channels that were used extensively by smaller private companies. This divergence presents an opportunity for stronger companies to acquire land from weaker companies that are unable to develop it. In recent months Xinyuan announced private land acquisitions in Kunshan Xi’an and Zhuhai. Presales at these new projects are likely to begin in mid-2018. The company says it is also working on deals in Qingdao and Wuhan.