Xinyuan Real Estate: A Lot Of Risk To The Story

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WG Investment Research


  • Xinyuan recently announced the resignation of its CEO, and this comes shortly after the company appointed a new CFO.
  • There are reasons to like Xinyuan at today's price but there are definitely risk factors that need to be considered.
  • I hold a position in Xinyuan and I plan to stay long the stock.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Start your free trial today »

Xinyuan Real Estate (NYSE:XIN) is a company/stock that I have followed for years now, and, in my opinion, the market has never been truly sold on the story for this Chinese real estate company. As soon as sentiment improves and XIN shares gain momentum, the stock sells off due to some type of broader market concern.

ChartData by YCharts

Notice the steep hills and valleys over the last three years. This makes sense though, right? Management has consistently failed to effectively communicate their strategy and, to make matters worst, there has been a revolving door in the C-suite. It's hard to keep momentum going when there's no one giving people a reason to stay long the stock (please take notice, management).

After saying all of this, I'm long Xinyuan (and plan to stay long) because I believe that there's a lot to like about the long-term business prospects of this company, even if I have to dig up the details myself. However, make no mistake about it, there's a lot of risk to the story.

Risk To The Story

It would be a major understatement to say that an investment in Xinyuan comes with risk. This is a risky investment that, in my opinion, has become even risker so far in 2019.

(1) Who Is Running The Show?

It was recently announced that Lizhou Zhang would be stepping down from the CEO role due to "personal reasons" and that the founder of the company, Yong Zhang, would now be serving as both chairman and CEO. And let's not forget that Xinyuan just appointed Mr. Yu "Brian" Chen as its CFO in mid June 2019. A new CEO and CFO in a matter of a month seems like a lot of change, if you ask me.

As I have stated several

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This article was written by

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Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long XIN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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