Xinyuan Science & Technology Service (NEEQ:870929) Outstanding 2017 Results

Xinyuan Science & Technology Service (XSTS), the property management subsidiary of Xinyuan Real Estate, filed its 2017 Annual Report (LINK).  Even though XSTS shares are not yet trading publicly, the NEEQ listing provides visibility into the rapid growth in Xinyuan’s recurring revenues and income from this business.  Highlights:

XIN STS 2017 Results

The company’s NEEQ listing was approved on 3/15/17 (LINK), but the ownership structure shows that no shares are yet publicly held:

XIN STS Ownership 123117

Combining Xinyuan STS year-end results with valuation ranges of Hong Kong listed competitors suggests a fair value of $74-183mm.

XIN STS Comps Apr 2018

XIN STS Valuation Apr 2018

It would be very positive to see a public placement of Xinyuan STS shares that brings attention to the value of this asset light business with sustainable and growing revenues.  Placement of Xinyuan STS shares at a premium to book value would be significantly accretive at the parent company level.

Xinyuan Real Estate has not yet filed its 2017 20-F annual report.  The 2016 20-F filing (LINK) disclosed that the company managed 9.0mm sqm of residential units.  The Xinyuan STS report discloses total area under management of about 31mm sqm (vs 25mm one year ago) which includes public spaces.

Minor revisions may be made to this article after Xinyuan files its 2017 20-F.

Disclosures:

At the time of publication the author is a public shareholder of Xinyuan Real Estate.  The author believes that information in this article may be of interest to other public shareholders.  The author does not make any recommendation regarding any investment in Xinyuan and investors are encouraged to check all of the key facts cited here from SEC and HKEX filings prior to making their own investment decisions.

 

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