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SouFun Holdings Limited (ADR)
China will eventually be back on solid ground
Home buyer incentive will decrease SouFun's profitability. Net income is highly likely to decreased from 2014 Q2's $68.2 in the coming quarter. Q2 net income is higher compared to same quarter last year ($68.2 and $55.4 respectively). In a one-off promotion SouFun promised to pay out as much as 150,000 yuan ($24,431) to home buyers in assistance to cover their mortgage interest, renovation and management fees,100,000 home buyers have registered. Please find more details posted on the Beijing-based company’s website.The cash-to-debt ratio is very high at 1.60 consistently higher than the industry average, implying low risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 2.64, which clearly demonstrates solid ability to cover short-term cash needs.Return on equity has stayed high at 78%. This is a signal of efficient allocation of capital within the corporation. Compared to other companies in the Realty industry and the housing market, SouFun's return on equity significantly beats that of the industry average. Return on assets is roughly 23%.The net profit margin for SouFun is rather high, currently at 40.5%. It has increased slightly from 38.4% the same quarter previous year, and marginally from 34.3% in the previous quarter.It is worth to note that, shares outstanding (diluted) has increased to 462.5m from 415.5m in Q2 2013, while diluted earning per share grew from $0.13 to $0.15.Cash and cash equivalents totaled $927.3, slightly lower than last quarter's $943.7 but significantly higher than Q2 2013's $273.4. Long term debt ballooned from $80.8 to $580.8 in the same period.Asset turnover rate has decreased from 0.15 same quarter last year to 0.11, implying slower sales and building up of housing inventory. SouFun is positioned to withstand a short term correction in the Chinese housing market. A slowing Chinese housing market suggests falling house prices and house investors (house buyers collect rents rather than live on property) trying to get out of the market with discounted selling.The investor type of house owners will suffer the lion's share of the burst of housing bubble, rather than the internet retailer of houses. In addition to that, house prices will drop 5%-10% in the "first line cities" like Beijing and Shanghai, while it is "the second and third line" cities or outskirt cities that will suffer the most in a housing market downturn. There is Manhatten city hundred miles from Tianjing which is pretty much a ghost town, prices in such cities will go down 30%-50%. SouFun sales is slow because developers have not come to a point where they firmly grasp reality and decide to take painful losses. If SouFun drops to $4.90 it is a stock absolutely worthwhile to hold to profit in a longer trend of Urbanization in China (a large percentage of Chinese population will move to cities while farming will modernized, local governments are paying for John Deere tractors to replace ox and plow)(SFUN:US) $9.66 price, $1.35 book value, P/B 7, P/E 13.
china real estate. nice divined
Total land sales fell to 1,767 transactions in May in 300 Chinese cities, down 45% from a year ago and 19% lower than in the previous month, according to a survey published Friday on China’s leading real estate website Soufun.com.In the same month, the total transaction value for land sales dropped 38% year-on-year, marking a 30% drop from April, to 13.75 billion yuan ($2.2 billion).http://www.prosper.org.au/2014/06/16/china-watch-land-turnover-plunge-predictor/
I don't get it. To me this stock has looked better from growth and value perspective than other Chinese stocks with way more hype. Maybe I need to do some more research?
SoFun just starting out, looking to grow in several new areas, look for a move to $100, new base, then move to $125 in next 12-24 months!
SFUN is a very big and used platform , per the vast and growing Chinese Real estate market.
If I am looking at this correctly, 30% sales change from last year 0% debt/equity ratio and about a 95% ROI I am thinking, this is providing a useful service to the interested consumers, but it might take a little longer to catch on.
This company has amazing financials: nearly 60% Operating Income, 80%+ Gross Margins, growing in an extremely underpenetrated Chinese market where they are market leader, 79.2% ROE, 29.4% ROC, 18.3% ROA, PAYING 12% DIVIDEND YIELD and trading at 7.2x EV/EBITDA = an extremely profitable, well-run company with a ton of upside. Heck the dividends alone beat all my other holdings on total return. Add stock growth on top of that and you've got a winner. This company just needs more visibility!
Why is it paying dividends and issuing shares at the same time?
dominant position growing in very turbulent but hi demand market. In near chaotic times the strong get stronger.
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