Monday, March 19, 2012

A Possible Glimpse into Last Week's Sales in Kunshan

As we have described in the past (see here, here, and here), some news of sales for particular cities and property developers appears to be reported on an ongoing basis in the Chinese press. 

It should be understood that we here at Whacko Trader are not familiar with Chinese, and we are relying on google translate in order to understand what these news reports are saying.  It is possible that we misunderstand what the articles are saying.  However, we post the links to the original articles so people can see for themselves and possibly confirm if they or someone they know speaks fluent Chinese.

The most recent article that appears to describe Xinyuan Real Estate's property sales relates to the Kunshan International City Garden project.  A link to the article is here, and the article appears to relate several interesting developments from this project.  One is that 35 units were apparently sold in the project in the past week.

The article reports that sale prices for this project are 10,200 yuan per square meter.  But the article also suggests that price discounts have been offered on this project in the amount of 500 yuan per square meter, and that a 2% discount may also be available for purchasers.  This suggests the actual ASP is probably closer to that stated in the Q4 earnings release, of 9,433 yuan per square meters.

So, using the number of 35 units sold in the past week, and a hypothetical ASP of 9,433 yuan per square meter, we can generate a hypothetical contract sales figure of RMB29,053,640.  This assumes an average unit size of 88 square meters, which may be a little on the conservative side depending on how many 3-bedroom units they sell.  Anyway, using these hypothetical numbers, we get a contract sales figure of approximately USD$4.6m. 

On first glance, this appears to be an exceptionally strong sales number for one week's business, especially when one considers that XIN reported USD$14m in contract sales in Kunshan in Q4 2011, USD$24m in Q3 2011, and USD$15m in Q2 2011.  If we assumed that XIN sold 35 units every week in Q1 2012, they would have contract sales of approximately USD$60m in Kunshan alone. 

But this is most definitely not the case, because January and February were probably significantly slower due to seasonality and the Chinese New Year. Also, the Kunshan project may bundle sales activity around particular events or dates, so one week's sales may not be representative of an average week.

Nevertheless, it certainly looks good if XIN did in fact have USD$4.6m in contract sales in one week at Kunshan, when they had USD$14m for the entire quarter at the same development in Q4.  This is all, of course, assuming that the information in the article is accurate and we are understanding it correctly.  So take the information with all these possible limitations.  Regardless, it is certainly interesting to see more real time reports of sales from XIN's properties, especially from a different city than we had previously seen.

Disclosure: Long $XIN

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