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The world of Chinese stocks on the U.S. stock exchanges continues to rock through rather bizarre twists and turns. A new one has just popped up for Xinyuan Real Estate (XIN), a respected tier 2 city Chinese housing company stock, written about previously by other seeking Alpha posters who outlined why XIN may be the world's cheapest stock.

XIN reported strong earnings in a weak market on May 9, earnings of 31 cents per American depository share (15 cents / Chinese common share), but brokerage houses reported a miss instead of an upside surprise, XIN beat earnings estimates by 20%. estimates were 25 cents / American Depository Share (ADS).

But the stock hardly moved up. That will likely change.

Here's the kicker -- the financial streams reported earnings by Chinese Common share and the brokerage houses interpreted them based on earnings estimates for ADS shares and earnings results from the common shares (1 ADS share = 2 common shares). The result: Ameritrade, E-Trade, and Scottrade all report a $0.10, 40%-, miss from ADS estimates of $0.25 even though the reality is a $0.06, 20%+, upside surprise in earnings for the quarter.

In a call with E-Trade this morning, the premium account rep said she would look into it with customer service, but it looked as if they were posting data from the feed. A call to Thomson Reuters, supplier of the data for some of the sites, resulted in a transfer to at least three different areas, none of whom could explain how incorrect information on a feed gets corrected.

Welcome to the crowd. Once the issue was raised to one of the message boards, a poster contacted Starmine (Thomson Reuters) - the analyst there looked into the issue and has now corrected it. From the post:

Just got word back from Thompson Reuters: "You were correct. We were not applying the correct ADS ratio in the EPS figures. Now we have amended the Q1, 2012 Earnings per share actual to $0.31 as per the press release provided by the company. It may take a few days for Fidelity to reflect the corrected figures, but it's been corrected on our end."

The issue, of course, lies with the reporting of one number relative to one metric, the 15 cents per share earnings relative to the 140 million plus common shares in the Chinese company, and comparing it to a different relative number, the 25 cent per American Depository Share estimate for the 70 and change million ADS shares. In the case of XIN, 2 Chinese common shares = 1 ADS share. So earnings of 31 cents actual for the quarter vs estimate of 25 cents looks pretty good & 15 cents incorrect relative number vs 25 cents estimate doesn't.

The stock responded yesterday and this morning bouncing around its resistance point of $3.50 a share, apparently investors are confused too. Hopefully, the Xinyuan CFO's trip to the U.S. to discuss the stock will clear up any outstanding questions.

Tom Gurnee, the CFO, summed up current XIN valuation on the conference call yesterday like this:

Finally, let me turn to shareholder value. The trading price on the New York Stock Exchange where ADS has closed at $3.28 yesterday. That was May 08, 2012, for a total market capitalization of approximately $240 million. With approximately $73 million fully diluted ADS as outstanding and the midpoint of guided earnings being at $1.40 per ADS, our forward 2012 price earnings ratio works out to 2.34. With the March 31, 2012 book value of $656 million, and a book value per ADS of $8.99, closed yesterday with a price to book ratio of just 0.36 or put it another way we traded at discounted book value of 64%.

The annual yield of our declared dividend payable on May 15, 2012, was $0.04 per ADS, works out to a 4.9% yield per year. In short Xinyuan's ADSs are very, very inexpensive. On Friday I'm headed to the US for several weeks. I hope to meet many investors across the country to try and build confidence on Xinyuan Real Estate. Please feel free to contact me via email at tom.gurnee@xyre.com if you have any questions or you want to meet with me.

Once the earnings correction propagates (20% upside surprise vs wrongly reported 40% downside miss) there will be easy access to the true growth view of this stock. At that point, it may no longer be a candidate for "the world's cheapest stock"!

Source: 'World's Cheapest Stock' Xinyuan Real Estate Gets No Respect For Beating Earnings After Report Mix-Up