Xinyuan 2Q17 Contract Sales Estimate from CRIC

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.

XIN Contract Sales CRIC 2Q17

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:

XIN Contract Sales by Quarter 2Q17

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.

 

 

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3 thoughts on “Xinyuan 2Q17 Contract Sales Estimate from CRIC

  1. You have made a bunch of useful reports on Xinyuan John. Thanks!

    A 1.3 billion RMB project sold out in 2 minutes, it sounds like in Zhengzhou? Is that real? It sounds crazy.

    I pasted the article text into Google Translate to read it in English but the resulting translation does not make much sense:

    “2 minutes to sell 13 billion [sic?], is Xinyuan opened the 618 electric war war prelude?

    2017-06-20 Xin Yuan official micro
    Concerned about “Xin Yuan official micro”, a share of wisdom city home

    June 16 evening 8:00, Zhengzhou Xinyuan International Metro election room re-Kai, 2 minutes that sold out, sales of 1.35 billion yuan, and then build a new height of residential value, creating the Central Plains property market selling legend!

    Cloud election room opened 2 minutes that sold out.”

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    1. I think 1.3Bn RMB in 2 minutes is real, but also involves a bit of theatre.

      ZZ International New City is a huge multi-phase project that will take 3-5 years to complete. You can see on the 1Q press release that Phase 1 has total projected sales of $647mm (about 4.4Bn RMB) so achieving 1.3Bn in sales in one launch is great, but not inconceivable.

      I think the company takes reservations ahead of an official sales launch. So the sales booked during those 2 minutes reflect months of marketing efforts. The theatrical effect comes from creating an atmosphere that convinces buyers of future launches to act quickly.

      I think ZZ Intl New City (and all of XIN’s projects) is currently subject to restrictions on the price that can be charged for presales. The fair market value is almost certainly higher. The buying frenzy makes sense if buyers know they are getting a good deal.

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