XIN PresentationMay17th 2012

8/13/2019 XIN PresentationMay17th 2012

http://slidepdf.com/reader/full/xin-presentationmay17th-2012 1/30

0

Xinyuan Real Estate

Investor Presentation



1

Disclaimer

This presentation has been prepared by Xinyuan Real Estate Co., Ltd. (“Xinyuan” or the “ Company” ) and has notbeen independently verified. No representations or warranties, express or implied, are made and no relianceshould be placed on the accuracy, fairness or completeness of the information presented or contained in thesematerials. Neither the Company nor any of its affili ates, advisers or representatives or the Bookrunner acceptany responsibilit y whatsoever for any loss howsoever arising f rom any information presented or contained in orderived from these materials. The information presented or contained in these materials is subject to changewithout notice and its accuracy is not guaranteed. None of the Company, any underwriter, or any of theirrespective directors, officers, employees, agents or advisors shall be in any way responsible for the contents ofthis presentation, or shall be liable for any loss arising from use of the information contained in this presentation

or otherwise arising in connection therewith.This presentation is st rictly confidential, is being given solely for use as a support for oral discussions at theroadshow presentations and may not be retained, copied, reproduced or redistr ibuted to any other person in anymanner. Unauthorized retention, copying, reproduction or redistr ibution of these materials to U.S. persons orother parties (including journalists) could result in a substantial delay to, or otherwise prejudice, the success ofthe offering. You agree to keep the contents of this presentation strictly confidential.

The information contained in this presentation does not cons titute or form part of any offer to sell or issue orsolici tation or invitation of an offer to buy or acquire securities of Xinyuan in any jurisdict ion or an inducement toenter into investment activity, nor may it or any part of it fo rm the basis of or be relied on in connection with anycontract or commitment whatsoever. Specifically, this presentation does not constitute a “ prospectus” withinthe meaning of the U.S. Securities Act of 1933, as amended. The company has filed a registration statement withthe U.S. Securities and Exchange Commission (“ SEC”) for the securities to be offered in the proposed offering .

Any decision to purchase secur it ies in the proposed o ffering should be made solely on the basis of theinformation contained in the prospectus included in the registration statement. This presentation does notcontain all relevant information relating to the Company or it s securities, particularly with respect to the risks anduncertainties involved wi thin an investment in the securities of the Company, and is qualified in it s entirety byreference to the detailed information appearing in the prospectus. Before you invest, you should read theprospectus supplement and prospectus in the registration statement and other documents the Company hasfiled with the SEC in connection with this proposed offering for more complete information about the Company

and this o ffering. You may get these documents for free by visiting the SEC Web site at www.sec.gov.



2

Agenda

Who are we

Who buys our apartments

Business model

Financial highlights

I

II

III

IV

AppendixV



3

3662

142

309356

449 450

2004 2005 2006 2007 2008 2009 2010

Company overview

A leading real estate developer operating in Tier II & III cities in China

Provides high-quality, affordable residential projects to middle income customers

Solid operational track record in 7 cities, covering 44.7 mill ion people

First Chinese real estate developer lis ted on NYSE in 2007

Project GFA(‘000M2) Unit

Completed 21 1,857,281 21,091

Under construct ion 8 1,804,721 20,737

Under planning 4 913,045

Total 33 4,575,047

Net Revenue (US$ mn)



4

Our history

Expanded in to 2 Tier II & III cities

- Chengdu and Kunshan

US$280 mil lion IPO in December

Expanded into 3 Tier II cities- Jinan, Suzhou and Hefei

Blue Ridge China and EquityInternational entered as strategicinvestors

Completed Zhengzhou Xinyuan Splendid,our flagship project with 386,322 m2 GFA

Ranked No.1 in Zhengzhou by residentialcontract sales

New land acquisition of approx 1 millionm2 through 5 auctions

Expanded in to Xuzhou ( a Tier III city)

Xinyuan was founded in Zhengzhou

Chengdu Xinyuan Splendid

Zhengzhou Central Garden

Suzhou Colorful Garden

Zhengzhou City Manor

Zhengzhou Longhai Star

Zhengzhou splendid

Hefei Wangjiang Garden

Jinan City Family

Kunshan International City Garden

Source: Company Information

1997

2004

2005

2006

2007

2009

2010 Top 10 Regional Brand of ChinaReal Estate Company

Acquis it ion o f J iantou Xinyuan2010



5

Economic indicators 2010

Population (mn)GDP

Growth

Zhengzhou 7.5 13.00%

Jinan 6.7 12.7%

Kunshan 1.7 14.2%

Suzhou 6.3 13.0%

Hefei 5.1 17.5%

Chengdu 12.9 15.0%

Xuzhou 8.7 13.9%

Focus on high-growth Tier II & III cities withstrong economic fundamentals

Geographic focus on high-growth Tier II & III cities

Source: 2010 National Economicand Social Development StatisticalBulletin of various cities



Higher growth in XIN developed cities (GDP growth)

Continuous urbanization in China and highergrowth rate in XIN developed cit ies

Source: Development Centre of the State Council

China’s real estate industry benefits from continuously rising urbanization

10.1% 10.4% 11.1% 11.4%9.0% 8.7%

10.2%

15.6% 15.2% 15.7% 16.7%14.7% 13.9% 13.7%

0.0%

10.0%

20.0%

2004 2005 2006 2007 2008 2009 2010

China Average of XIN developed cities

43.0%43.9% 44.9% 45.7% 46.6% 47.1%

65%

0.0%

10.0%

20.0%

30.0%

40.0%50.0%

60.0%

70.0%

2005 2006 2007 2008 2009 2010 2030

2005 2006 2007 2008 2009 2010 2030



0.45

0.35 0.34

0.320.29

0.260.25

0.20

0.11

0.00

0.10

0.20

0.30

0.40

0.50

Business model:low-inventory and high asset-turnover

Landacquisition

Target mature land ready for immediatedevelopment

Focus on urban/city-fringe sites withtransportation and amenity support

Land acquisition via open auctions to

minimize title and relocation issues

Planning Early planning and design prior to land

acquisition to compress constructionlead times

Optimized product mix andstandardized designs to expeditedevelopment execution

Construction

Early product positioning and marketingto further minimize time-to-market

Marketing

The Xinyuan model Asset turnover – Total 2010



Pre-selling mitigates financingand overall development risks

Constructionloans

Bank loan is availableup to 65% of land cost

Full amount paid by

buyers at pre-salestage

Sales contractnon-recourse unlessdeveloper defaults ondelivery

Pre-saleproceeds

Equity

Land cost: 35% oftotal project cost

Land usepermit/Designpermit/Constructionpermit: 10% of totalproject cost

Funding sources

30%

Developmentphase

Sources offunding

Contractsales

Landacquisi-

tion

Construction

Equity Bank loans

1

Cash in flowCash ou tflow

Quarter

Average Development Process ( Project wi th GFA of 200,000sqm)

35%

Planning and

architecture design

Pre-sales

30%

• Construction starts within 2-3 quarters upon land acquisition

• Pre-sales starts within 3-4 months after construction commence

• 95% sales completed before project completion

• Cash flow becomes positive in the 4th

-5th

quarter

Deli-

very

2 3 4 5 6 7 8 9 10



Product positioned to cater mid-incomeend-users

Total transaction price distribution

(By GFA for available sale as of 31 Dec 2010)

11%9%

28%

32%

8%12%

0%

10%

20%

30%

40%

124.7

74.582.1

116.9

101.3

0

40

80

120

160

Shanghai Zhengzhou Chengdu Suzhou Jinan

Annual household income( in RMB‘000 as of 31 Dec 2010)

Note 1: 60sqm apartment, 4 people in a household2: Data from CRIC (NASDAQ: CRIC) and Economic and Social Development Statistics

Household income is less thanRMB120k/year in Tier II cities

50% of our product is betweenRMB 300-800k/apartment

Home price is between 5-8 times ofannual household income, stable inthe past 4 years in Tier II cities

4.00

6.00

8.00

10.00

12.00

14.00

16.00

2007 2008 2009 2010

Home price/ Household income

Shanghai Zhengzhou Chengdu Suzhou Jinan

Shanghai



Stable Sale/Rent rate in Tier II cities

200

250

300

350

400

450

500

550

600

2006 2007 2008 2009 2010

Sale/Rent Ratio

Chengdu Jinan Shanghai Zhengzhou

Sale/Rent ratio in Tier II cities is much lower than Tier I cities in the past four years. Stable Sale/Rent ratio indicates a reasonable ASP track in Tier II cities. XIN’s ASP increased by 4.2 % from RMB7,584 ($ 1,120) in Q4 2010 to RMB7,908 ($1,201)in Q1 2011, still reasonable and sustainable.

Note: Sale represents the total price of a 60 sqm apartmentRent represents the monthly rent of a 60 sqm apartment

Shanghai



EX-audit partner at PWC

Qualifiedaudit committeefinancialexpert underSEC rules

Tom Werheimer

Strong board and committees

Chairman & CEO

Over 20 years experience ofreal estate development

EMBA from TsinghuaUniversity

Zhang Yong34 yr experience in accounting,finance, and general management

BA from Stanford UniversityMBA from Santa Clara University

Audit committee member at 2US-listed Chinese companies

Thomas Gurnee (CFO)

Yuyan Yang (Director & VP) Yinfei Hao (Director & VP)

Senior Fellow atthe Finance

SecuritiesInstitute ofRenminUniversity

Executive president of BeijingHuiye Huacheng InvestmentConsulting Co.

Yong Cui

Director of thePolicyResearchCenter of theMOHURD

Former deputyDirector of

Institute of Market Research underthe PRC State Council’s D&R Center.

Huai Chen



Financial Highlights

Q1 2011 Q1 2010 YoY % Q1 2011 Q4 2010 QoQ %

Contract sales 98.0 110.7 -32% 98.0 194.1 -50%

GFA sales(‘000M2) 81.6 126.9 -36% 81.6 173.2 -53%

Revenue 91.8 110.7 -17% 91.8 137.2 -33%

Gross Margin 27.3% 22.3% 5% 27.3% 30.2% -2.9%

SG&A/Rev % 8.0% 7.1% 1% 8.0% 6.7% 1.4%

Operating Margin 20% 16.3% 3.7% 20% 24.9% -4.9%

Net Income 11.7 11.9 -2% 11.7 21.6 -46%

EPS ($/ADS) 0.16 0.14 0.16 0.28

Unit: in US$’mn



Financial highlights

Net income (USD million)

Revenue USD mil lion GFA sold ’000 m2

Net Earnings per ADS (USD)

126.9

86.2

137.5

173.2

81.6

0

100

200

1Q10 2Q10 3Q10 4Q10 1Q11

110.7

94.5107.6

137.2

91.8

0

40

80

120

160

1Q10 2Q10 3Q10 4Q10 1Q11

11.99.6

8.0

21.6

11.7

0.0

10.0

20.0

30.0

1Q10 2Q10 3Q10 4Q10 1Q11

0.16

0.120.10

0.28

0.16

0.00

0.10

0.20

0.30

1Q10 2Q10 3Q10 4Q10 1Q11



147%

111%

64%

43%

22% 19% 18% 16%

0%

40%

80%

120%

160%

Liquidity trends

Total debt (USD million)

Net gearing ratio (%)Total cash (USD million)

Net gearing comparison ( % ) as of 31/12/2010

15.1%

33.7%31.5%

16.0%14.0%

0%

20%

40%

1Q10 2Q10 3Q10 4Q10 1Q11

292

223264

295

349

0

100

200

300

400

1Q10 2Q10 3Q10 4Q10 1Q11

295

327

342

296

322

260

280

300

320

340

360

1Q10 2Q10 3Q10 4Q10 1Q11



Projects Pipeline

2011Q1 2011Q2E QoQ %

GFA sales(m2) 81,600

Contract sales 98.0 155-160 58%-63%Revenue 91.8 140-150 53%-63%

Net Income 11.7 20 71%

Unit: US$ mn

393

184

86110

453 468

410

462 443

318

157 171

246

0

100

200

300

400

500

600

A p r - 1 0

M a y - 1 0

J u n - 1 0

J u l y - 1 0

A u g - 1 0

S e p - 1 0

O c t - 1 0

N o v - 1 0

D e c - 1 0

J a n - 1 1

F e b - 1 1

M a r - 1 1

A p r - 1 1

M a y - 1 1

J u n - 1 1

J u l - 1 1

A u g - 1 1

S e p - 1 1

O c t - 1 1

N o v - 1 1

D e c - 1 1

Contract sales for 2011

Sales curve from Jan to Apr in 2011 similar to, but milder than that in Apr to Jul2010, impacted by additional restrictive government policies Full year outlook remains strong with health sales growth and solid profits

RMB:mn

0

200400600800

1,0001,2001,4001,6001,8002,000

Contract sales for 2011/2012



Listing on NYSE in 2007

Ticker XIN (NYSE)

Price $2.25(as of May.11, 2011)

Shares Out. 76.5 million ADS

Market Cap. $172.1 million

5.38 5.22 5.43 5.66.06 6.24 6.4

6.8 7.0

3.74

6.48

4.64 4.473.99

2.38 2.46 2.63 2.35

0

1

2

3

4

5

6

7

8

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11

Book value v.s. Stock price (US$/ADS)

Book Value/ADS Stock Price



Xuzhou Colorful Garden

Xinyuan’s first development in Tier III cities

in China, attracting large number of middle

income customer.

Located in downtown business centre withrich supporting facilities.

Project highlights

Total GFA: 102,096 m2Presale Date: August 2010Expected 04/10-03/12Construction Period:% of GFA Sold: 74%

Master Planning: Multi-layers and High rise



Yipinxiangshan II

Located in the north of Zhengzhou with

convenient transportation condition and

good environment

Project highlights

Total GFA: 198,638 m2Presale Date: March 2011Expected 01/11-06/13Construction Period:% of GFA Sold: 2%




20

Chengdu Xinyuan Splendid II

Total GFA: 219,500 m2Presale Date: Q2 2010ExpectedConstruction Period: 02/2010-10/2012% of GFA Sold: 53%


15-minute drive from downtown Chengdu

Designed as a “park” community leveraging

prox imi ty to a 300,000sqm ecological park,

combined wi th 80% landscaping ratio

Wide variety of sports facilit ies including

golf course, basketball courts, etc around

the project

Project highlights



21

Jinan Xinyuan Splendid

Along the Xiaoqing He River wi th great v iew

Located in the core area of Binhe New

District in Jinan city with great price increase

potential

Project highlights

Total GFA: 520,990 m2Presale Date: May 2011Expected 02/11-12/13Construction Period:Master Planning: Multi-layers and High rise



22

Zhengzhou Royal Palace

Located in business centre of Zhengzhou,

next to former “ Land King” with rich

education resources around the program

5 minutes drive to the political centre of

Zhengzhou, attracting number of civilservants there

Project highlights

Total GFA: 134,180 M2Presale Date: Q3 2011Expected 03/11-04/13Construction Period:Master Planning: Multi-layers and High rise



23

Appendix I

Financial statements



24

P & L

(All US$ amounts and number o f shares data in thousands, except per share data)

P&L summary

Three months ended

Mar 31, Dec 31, Mar 31,

2011 2010 2010

Revenue 91,784 137,191 110,744

Cost of revenue (66,711) (95,806) (86,032)

Gross profit $25,073 41,385 24,712

Selling and distribution expenses (1,887) (3,328) (2,390)

General and administrative expenses (5,501) (5,817) (5,220)

Operating income $17,685 32,240 16,802

Interest income 604 655 650

Share of income in an equity investee 1,273 562

Exchange gains/ (losses) 33 1 20

Change in fair value of warrant liabilities

Income from operations before income taxes $18,322 34,179 18,034

Income taxes (6,661) (12,572) (6,134)

Net income $11,661 21,625 11,900



25

Balance sheet summary

As o f Mar,31

2011

As o f Dec 31,

2010

As o f Mar 31,

2010

As o f Mar,31

2011

As o f Dec 31,

2010

As o f Mar 31,

2010

($'000) ($'000) ($'000) ($'000) ($'000) ($'000)

Cash and cash equivalents 348,593 295,631 291,744 Short-term bank loans 210,478 108,566 53,763

Receivables & other prepayment 88,767 66,696 73,287 Accounts payable & other payables 173,880 194,371 245,072

Real estate property under development 674,401 710,585 655,401 Customer deposits 41,904 22,789 13,231

Real estate property for sale 9,231 1,470 1,019 Tax payable 39,530 39,681 10,154

Other current assets 595 663 2,598 Deferred tax liabilities 22,333 19,945 17,693

Total current assets 1,121,587 1,075,045 1,024,049 Warrant liabilities 0 0 0

Other current debt 0 0 106,790

Real estate property under development Total current liabilities 488,125 385,352 446,703

Real estate properties held for lease, net 19,755 19,876 17,063 Long-term bank loans 74,107 148,277 136,287

Property and equipment, net 2,598 2,687 4,728 Unrecognized tax benefits 13,272 13,153 12,760

Interests in an equity investee-

- 1,458 Warrant liabilities 0 0 0

Other non-current assets 5,466 9,109 8,131 Other long-term debt 38,939 39,018 0

Total non-current assets 27,819 28,920 31,380 Total liabilities 614,443 585,800 595,750

Total Shareholder's Equity 534,580 518,165 459,679

TOTAL ASSETS 1,149,406 1,103,965 1,055,429Total liabilities& shareholder's Equity

1,149,406 1,103,965 1,055,429



26

Appendix II

Project summary



27

Project Summary

As o f Mar 31, 2011

Chengdu Hefei Jinan Kunshan Suzhou Xuzhou Zhengzhou Total

Completed Projects

No. of Projects 1 3 2 18 24

No. of Units 1,649 6,584 3,296 16,112 27,641

GFA(Sq.m) 145,455 425,272 279,619 1,478,465 2,328,810

Project Under Construction

No. of Projects 2 1 1 1 3 8

No. of Units 6,851 5,103 2,436 858 5,774 21,022

GFA(Sq.m) 450,373 496,866 205,591 102,096 541,185 1,796,111

Project Under Planning

No. of Projects 1 4 5

No. of UnitsGFA(Sq.m) 526,990 584,694 1,111,683

Total No. of Projects 2 1 4 1 3 1 25 37

Total Units 6,851 1,649 6,584 5,103 5,732 858 21,886 48,663

Total GFA(Sq.m) 450,373 145,455 952,262 496,866 485,210 102,096 2,604,344 5,236,605



28

Projects Under Construction / Planning

As of Mar 31, 2011

Chengdu Xinyuan SplendidKunshan International City GardenZhengzhou Commercial Plaza Suzhou Lake SplendidJinan International City Garden

1. “M” refers to multi-layer buildings, “H” refers to high-rise buildings and “S” refers to sub-high-rise buildings

2. Suzhou International City Garden was previously being developed under the name Suzhou Xinyuan Splendid

Project Name LocationType of

Products¹

EstimatedConstruction

Period

Pre-saleCommencement

TimeTotal Site

Area (Sq.m)

TotalResidentialGFA (Sq.m) Total Units Units Sold

Unsold GFA(Sq.m)

Suzhou International City Garden²

Suzhou H 2008.02 - 2011.04 2008.05 119,089 205,591 2,436 1,206 105,372Kunshan International City Garden

Kunshan M/H 2008.07 - 2012.12 2008.09 200,008 497,041 5,103 3,753 149,464

Chengdu Xinyuan Splendid I Chengdu H 2007.11 - 2010.12 2008.09 34,007 230,942 4,069 2,935 46,604

Zhengzhou Modern City Zhengzhou H/S 2010.02-2012.07 2010.05 60,556 256,905 2,562 1,387 122,826

Chengdu Xinyuan Splendid II Chendu H 2010.02-2012.10 2010.04 30,497 219,480 2,782 1,160 131,645

Xuzhou Xinyuan Colorful Garden Xuzhou M/H 2010.04-2012.03 2010.08 46,777 102,097 858 469 48,461

Zhengzhou Yipinxiangshan Phase I Zhengzhou M/H 2008.04-2009.12 2008.08 57,289 94,252 979 952 3,214

Zhengzhou Yipin xiangshan Phase II Zhengzhou M/S 2011.03 81,345 198,638 1,948 0 198,638

Total 629,568 1,804,946 20,737 11,862 806,224

Project Under Planning

As of Mar 31, 2011

Zhengzhou Century East A Zhengzhou H 2011.06 22,418 77,825

Zhengzhou Century East B Zhengzhou H 2011.07 51,372 174,050

Zhengzhou Royal Place Zhengzhou H 2011.07 45,716 134,180

Jinan Xinyuan Splendid Jinan H 2011.05 200,180 526,990



Thank you!

Q&AContact information:

Ms. Helen ZhangInvestor Relation DirectorXinyuan Real Estate Co., Ltd.

Phone: +86 (10) 8588-9255E-mail: [email protected]

Mr. Tom GurneeChief Financial Officer Xinyuan Real Estate Co., Ltd.Phone: +86 (10) 8588-9390E-mail: [email protected]

XIN PresentationMay17th 2012

Documents

Transcript of XIN PresentationMay17th 2012