Why Xinyuan Real Estate Shares Jumped
Feb 27th 2013 2:32PM
Updated Feb 27th 2013 3:20PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Xinyuan Real Estate , a residential real estate developer in China, roared higher by as much as 11% after reporting its fourth-quarter earnings results and raising its quarterly dividend.
So what: For the quarter, Xinyuan's revenue jumped a whopping 31.7% to $261.3 million as contract sales increased a more modest 9.5%. Diluted earnings rose to $0.47 from $0.38 in the year-ago period, and $0.44 in the sequential third-quarter. Xinyuan also announced a boost to its dividend of 25% from $0.04 to $0.05 per share, payable tomorrow. With few, if any, analysts following this small-cap builder, investors were free to judge the results on their merits alone, rather than against estimates, and investors appear to like what they've seen.
Now what: What's truly astounding is that Xinyuan is predicting net income for 2013 in a range of $90 million to $100 million, or $1.25-$1.39. That's a forward P/E, based on its current price, of less than four! This shows that investors are giving Xinyuan's results much less credence following the numerous Chinese small caps that turned out to be fraudulent companies in 2011/2012 and are still quite leery of Chinese small-cap stocks in general. However, the simple fact that Xinyuan is paying and boosting its dividend could be a good sign that its profits are legit and that they could continue higher. This could be a name worth watching moving forward.
Craving more input? Start by adding Xinyuan Real Estate to your free and personalized Watchlist so you can keep up on the latest news with the company.
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