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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (49071)	8/11/2012 6:47:12 AM
From: rllee	Respond to of 78644

XIN - Interested because of their good numbers but apprehensive due to economy slow down in China and credibility in accounting accuracy. Any comments?

To: Spekulatius who wrote (49071)	8/12/2012 2:29:49 PM
From: NikhilJog	Respond to of 78644

clown - interesting comments on XIN.

To: Spekulatius who wrote (49071)	8/12/2012 2:53:19 PM
From: Jurgis Bekepuris	1 Recommendation Read Replies (1) \| Respond to of 78644

3 x the amount of debt (why having debt at all with so much cash?) Funny, you don't ask this question about MSFT, GOOG, etc. :) Companies with tons of cash have debt because: - Debt is cheap now - You cannot get debt on moment's notice - it's better to get it beforehand - Debt might be covering levered assets (think mortgage) - For multinationals, debt is usually in one country while cash is in another and neither are easy to move. (Chinese companies get debt in USA to pay US divvies, since exporting yuan cash is not so easy...). For Chinese stocks there was an argument some time ago that they look more credible if they have debt, since banks may do better DD than investors. Now you are complaining about the opposite. So damned if you do, damned if you don't? :) I'm not saying XIN is not a fraud. It may be. However, there are tons of legit reasons to have tons of cash and some debt. :)

To: Spekulatius who wrote (49071)	8/12/2012 6:08:50 PM
From: MCsweet	Read Replies (1) \| Respond to of 78644

Clownbuck, XIN is in a cash-intensive business -- cash is required to bid for lots from the government. Also, some of the debt (and there is one particularly high interest debt that rolls off in one year) was taken when they thought they'd need the further money to expand but decided to hold back. That particular debt is hard to justify, but overall the debt seems reasonable to me. And of course the company has done better than expected and generated a lot of cash recently. The $425M revenue is 6-month, not quarterly revenue, quarterly is $253M in revenue, some of which I attribute to a growth sales in Q2 as China lowered its borrowing rates and there was a pick-up in sales countrywide. They have spent $10 million on a buyback, plus significant money on dividends, and have just started another $20 money on buyback, which will restart in 3 days. It doesn't make sense for me for a total fraud to be spending so much money on its shareholders. Their auditor is Ernst & Young, and they have beefed up their cash verfication procedures given the recent spectacular files such as Longtop, but nothing over there is certain ... MC