Xinyuan(US:XIN)2019-04-29 12:37Company Operations - The company operates in 18 markets in China and three locations in the United States, with a total of 96 projects and a total GFA of approximately 15,369,375 square meters as of December 31, 2018[103][105]. - The company aims to expand its operations globally, seeking high-growth opportunities beyond China and the U.S.[100]. - The company has multiple projects in Zhengzhou, including Zhengzhou International New City II and III, contributing significantly to the total units and GFA[107]. - The company has several projects in major cities like Beijing, Xi'an, and New York, indicating a diverse geographical presence[108]. Financial Performance - Revenue for the years ended December 31, 2016, 2017, and 2018 was US$1,561.6 million, US$1,976.9 million, and US$2,217.6 million respectively, with net income of US$79.5 million, US$80.1 million, and US$106.0 million for the same periods[100]. - Total revenue for the year ended December 31, 2018, was $2,217.6 million, an increase from $1,976.9 million in 2017, reflecting a growth rate of approximately 12.1%[209]. - Gross profit for 2018 was US$615.5 million, which is 27.8% of total revenue, compared to 23.2% in 2017[235]. - Net income attributable to shareholders for 2018 was US$73.0 million, a slight increase from US$63.6 million in 2017[235]. - The company recognized real estate management services income of $63.4 million in 2018, which is 2.9% of total revenue, up from $41.7 million in 2017[209]. Project Development - The company completed 52 projects with a total GFA of approximately 7,824,687 square meters, with over 97.4% of the units sold as of December 31, 2018[100]. - The company has 29 projects under construction with a total GFA of 4,480,111 square meters as of December 31, 2018, and 13 additional projects under planning with a total GFA of 3,061,712 square meters[100][105]. - The largest project under construction is the Zhengzhou International New City I, with a total GFA of 360,714 m² and 3,135 units planned, of which 3,046 units have been sold[107]. - The company has a total of 44,036 units planned, with 26,367 units already sold, resulting in a GFA sold of 2,375,857 m²[108]. Sales and Marketing - The total number of units sold across all projects is 26,367, which represents approximately 59.8% of the total planned units[108]. - The pre-sale commencement dates for many projects are set for 2018, suggesting an aggressive timeline for market entry[107]. - The company maintains an internal marketing and sales force and utilizes outside sales agencies for its projects, focusing on customer demographics to tailor advertising and selling plans[141]. Costs and Expenses - The cost of real estate sales increased to $1,543.9 million in 2018, representing 96.3% of total costs, up from $1,474.1 million in 2017[212]. - Land use rights costs rose to $676.3 million in 2018, accounting for 42.2% of the cost of real estate sales, compared to 39.7% in 2017[212]. - Construction costs for the company were $860.7 million in 2018, which is 54.1% of the cost of real estate sales, down from 57.4% in 2017[212]. Regulatory Environment - All land in the PRC is either state-owned or collectively-owned, with urban land generally being state-owned and rural land collectively-owned[154]. - Developers must have a registered capital of not less than RMB1 million and employ at least four full-time professional real estate/construction technicians[157]. - Real estate developers must use proceeds from pre-sales of properties exclusively for construction-related expenses, including purchasing materials and paying construction fees[176]. Cash Flow and Financing - Customer deposits increased significantly to US$1,921.9 million by December 31, 2018, reflecting the importance of pre-sales for cash flow[284]. - Net cash used in operating activities was US$22.9 million for the year ended December 31, 2018, primarily due to an increase in deposits for land use rights of US$452.1 million[284]. - The company issued US$300 million in February 2021 Senior Secured Notes, which bear interest at 7.75% per annum, with a maturity date of February 28, 2021[297]. Market Trends - The company expects continuing economic growth in China and rising disposable income levels to support demand for residential properties over the next several years[199]. - The company has experienced volatility in demand due to strict mortgage policies and other government measures aimed at controlling housing prices[199]. - The overall market momentum in high-growth tier I and tier II cities positively influenced the average selling prices across multiple regions[254].