China Real Estate IPO: Xinyuan Real Estate Co.

Xinyuan Real Estate Inc. (XIN), a Chinese residential real estate developer, is expected to issue a public offering of its stock in the U.S. this week. The company has operated since 1997.

All quotations are taken from the company's most recent SEC filing with a link provided.

XINYUAN REAL ESTATE INC. (XIN)
Business Overview (from prospectus)

We are a fast-growing residential real estate developer that focuses on Tier II cities in China, which are a selected group of larger, more developed cities with above average GDP and urban population growth rates. We utilize a standardized and scalable model that emphasizes rapid asset turnover, efficient capital management and strict cost control. We commenced operations in 1997 in Zhengzhou, the provincial capital of Henan Province, and were ranked No. 1 among all property developers in Zhengzhou in terms of contracted sales of residential units for the years 2004, 2005 and 2006, according to statistics prepared by the Bureau of Real Estate Management in Zhengzhou. Since 2006, we have expanded into strategically selected Tier II cities around the country and expect to benefit from the rising residential housing demand in these markets resulting from increasing income levels of consumers and growing populations in these cities. We currently have operations in five Tier II cities, including Chengdu in Sichuan Province, Hefei in Anhui Province, Jinan in Shandong Province, Suzhou in Jiangsu Province and Zhengzhou in Henan Province.

Offering: 17.5 million shares at $13.00 - $15.00 per share. Net proceeds of approximately US$224.9 million will be used to acquire land use rights for future property development projects, for working capital and for general corporate purposes.

Lead Underwriters: Merrill Lynch, Deutsche Bank

Financial Highlights:

Revenues increased by US$118.6 million, or 119.1%, to US$218.3 million for the nine months ended September 30, 2007 from US$99.7 million for the nine months ended September 30, 2006...Cost of real estate sales increased by US$69.9 million, or 93.1%, to US$145.0 million for the nine months ended September 30, 2007 from US$75.1 million for the nine months ended September 30, 2006... Cost of real estate leasing decreased by US$27,591, or 7.9%, to US$319,750 for the nine months ended September 30, 2007 from US$347,341 for the nine months ended September 30, 2006... Gross profit increased by US$47.3 million, or 197.1%, to US$71.3 million for the nine months ended September 30, 2007 from US$24.0 million for the nine months ended September 30, 2006... The gross margin of our projects is normally in the range of 20% to 30%. However, our gross margin increased to 32.7% for the nine months ended September 30, 2007 from 24.1% for the nine months ended September 30, 2006...Net income increased by US$23.5 million, or 188%, to US$36.0 million for the nine months ended September 30, 2007 from US$12.5 million for the nine months ended September 30, 2006.

Competition:

The real estate industry in China is highly competitive. In the Tier II cities we focus on, the markets are relatively more fragmented than Tier I cities. We compete primarily with local and regional property developers and an increasing number of large national property developers have also started to enter these markets. Our competitors may have greater financial or other resources than us. Competitive factors include the geographical location of the projects, the types of products offered, brand recognition, price, designing and quality. See “Risk Factors—Risk Relating to the Residential Property Industry in China—We face intense competition from other real estate developers.” In the Tier II cities in which we operate, our major competitors include China Overseas Property Ltd., China Vanke Co., Ltd., Sunshine 100, China Resources Land Limited, Henan Zhengshang Real Estate Co., Ltd., Henan New Greatwall Real Estate Co., Ltd. and Longhu Real Estate Co., Ltd.

Additional Resources:

• Company website
• Online road show
• MENAFN.COM: 'China's Xinyuan Real Estate plans $300m IPO'
• AP: 'Xinyuan Real Estate Discloses IPO Terms'

Comments

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did not mention on which day public offering would be made