Xinyuan 3Q17 Contract Sales Estimate from CRIC

China Real Estate Information Corporation (CRIC – a subsidiary of E-House) released estimated 9M17 sales data for the country’s top 100 property developers (LINK).  Xinyuan China is shown at #75 with estimated sales of 15.8Bn RMB year-to-date, which means 6.56Bn RMB for 3Q.

XIN Contract Sales CRIC 3Q17

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 3Q17

In August Xinyuan provided guidance that 3Q contract sales would be about 4Bn RMB.  Subsequently sales launches this quarter in Changsha, Jinan, and Zhengzhou (1Bn RMB in 3 minutes) rapidly sold out.

Several Chinese cities have recently announced new real estate market restrictions and banks have been pressured to tighten lending policies (LINK).  A side effect of previous policies intended to limit price appreciation has been to reduce perceived risk of new home purchases.  If demand has been artificially restrained then eventual relaxation of policy will bring higher prices so speculative investment seems attractive.  The new policies attempt to discourage such buying through mandatory holding periods.  The outlook for property developers such as Xinyuan will remain positive so long as demand remains strong.  The greater risk would come from a surge of home inventory available for sale and this is not yet evident.

 

Advertisements

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

  1. As a reply to Mr Morss, the CRIC data has historically seemed to be fairly good at predicting actual contract sales, just like Mr Sheehy states in this blog post. But during the past few quarters there have for some reason been big discrepancies.

    Here are ttm numbers for actual sales (in $m) divided by CRIC estimates (in RMB Bn), according to Mr Sheehy’s numbers above:

    Q4/14 126.6
    Q4/15 103.3
    Q1/16 99.7
    Q2/16 99.2
    Q3/16 92.5
    Q4/16 83.5
    Q1/17 76.5
    Q2/17 88.5
    Q3/17 ?

    It seems like the actual sales are shrinking compared to the CRIC estimates. Does it indicate that less deals are closing nowadays compared to a couple of years ago?

    To keep up with the ttm figure of the previous quarter, Xin contract sales would need to be $546m in Q3/17. Also the strongest CRIC estimate ever for Xin would indicate that there are good chances of contract sales clearly above $500m.

    If only the company would be able to pay a bit less taxes on its profits, it’s not too nice for the shareholders when more than half of the profits go to taxes.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s