 Good day fellow investors. In August I recommended a Chinese stock, UPI Holdings, which I was also long, and that stock did extremely well in the last few months. Since August the recommended price was about 12, now it's around 28, I think it dropped to day 227. Nevertheless the stock doubled. It was a cheap Chinese misunderstood stock because the fundamentals were extremely good, the growth was great and the only problem was that the market didn't recognize it because nobody believed a financial Chinese asset management company. As soon as Stiffing started unraveling the stock price reached a fair valuation. Today I want to recommend my first November stock to buy and that is another unrecognized stock from China that's traded in the US that nobody wants to touch because it's Chinese real estate. And I'm going to explain the real estate market, the company. China is so big there is so much real estate markets there and as you know it's all about location, location, location. So we have to dig into China and to see whether it is important. Price earnings ratio is below 7, dividend is above 7%. The company has bought back more than 25% of its shares in the last few years. Cash per share is three times the stock price so it's totally undervalued, under recognized because the market simply does not see it in the US. Competitors in China trading in Hong Kong are valued much much higher. So as soon as the market recognizes what's going on this stock will also explode. Plus there is also a blockchain technology lending business that they are starting in China which can also be a catalyst. I'll discuss the company, the fundamentals, the real estate market in China and the catalysts with finalizing it with the target price that will blow your mind in comparison to the current stock and we'll also discuss the risks of course. So let's immediately start with the company. Xinyuan real estate is a Chinese real estate developer founded in 1997 operating primarily in China but it has also projects in the US. So it's not just a Chinese real estate developer. Also something the market does not see. What does Xinyuan real estate do? Well they build huge apartments in China, they buy the land usually from the government, build the apartments and then sell those apartments to people. Similarly to what they do in China they have been doing in New York, here is the Austin project, Kent Avenue, Brooklyn, New York. Immediately sold out, they have still a few apartments left that I expect will be sold in this quarter so we can expect that to be closed. They still have two projects in New York so they are also working and showing what they can do in the US. This is just an example of the Xinyuan International City Garden what they are building in China. Their main city is Zengzhou, don't know how to pronounce it but it's very important to understand the location of where they're working, what's going on and if is that market in a bubble which we'll see later it's not. Here you can see where are the projects located. It is also focused on not top tier cities in China which could be a good thing as China is expanding and also the lower tier cities are growing. Now when you say Chinese real estate everybody around the world immediately says ooh that's too risky and when everybody thinks it's risky the stock is simply extremely cheap because nobody wants even to look at that. However we have to first understand the Chinese real estate market in order to understand the potential this company has and I think it's the perfect time to buy it in the Chinese real estate cycle which few understand it's a two free year cycle. So as we all know recently a year China started putting real estate sales constraints on developers, sales, whatever. So the Chinese government tried to tame the Chinese real estate market in order not to create extreme bubbles so they like it to grow but not at an extreme rate. So as it grows higher they put some breaks on it and when it slows down they unleash it again. These are the yearly changes in new houses built in China and you can see how 2011 the growth was high Chinese restrictions selling restriction 2013 bottom a little bit declined but the Chinese government doesn't like declines and then they eliminate the restrictions and then stock prices surge again because the demand is steady and strong similar pet 2015 drop lift lifted restrictions big sales restrictions and now again the sales are dropping and the sale prices are dropping. In this year I already expected in the cyclicality of the Chinese real estate I expect sales restrictions to be lifted and then stocks like Chinese real estate developers will shoot up. What is very interesting is that the Chinese government restrictions are not taming the real estate market there is huge demand prices are still going up so they dropped from a 6% growth to the current 4% growth which is still good consequently there have been new restrictions on companies foreign spending sprees so China wants to keep the money developing in China which is again a bonus for Chinese real estate further the curbs make the real estate market even hotter because buyers get confidence that the government will protect the real estate market and it's the safe investment and the government will do it they will protect the real estate market and therefore I see the let's so-called bubble continue to grow and you want to be invested in a bubble you don't want to again go against the trend you want to go along the trend and if you go want to go along the trend of real estate bubbles in china which has no sign of slowing down then you want to be invested in Xinyuan real estate but as I said it's not just China the austen project two new projects are in queens and midtown Manhattan they acquired 135 northern boulevards and flashing queens for 66 million they plan to develop 269 modern condos then the second is between 44th street and 45th street for 55 million acquired 75 to 91 bedrooms condo residences and they have already leased the retail space to target for more than 20 years 200 square feet so those are very very interesting projects so it's not just a Chinese real estate development company as I was saying it's all about location location location this is my table where I put in all the projects Xinyuan was doing and I was looking at the percentage sold and every quarter you can see how what are what is selling what's not selling are there any issues is there any build-up in inventory if you see a real estate company you don't want it to have a lot of inventory because that could lead to impairments costs and for future failure and a few months ago there was one project that was having difficulties to be sold and that was the Xinyuan Zhou bay number one here in red which was sold only in 11 percent and that was my concern that it won't be sold and some other projects will go the same paths however that didn't happen because recent results immediately shown that the Sanya Yang Zhou bay number was sold and now it's 37 percent sold which is an excellent point and is in relation to what the management is saying they are waiting for the prices to be higher they have that benefit for the prices to be higher in order to sell what's going on if you look here now the Xinyuan Splendid III is the lowest sold project with only 11 percent sold but that's the newest project so they first need to book sales they need to get 30 percent of the value of the apartment to book it as sold nevertheless was very important they really they recently released the Xeng Zhou Xinyuan international new town projects and it was sold completely sold out in three minutes so that's how strong is the demand for Xinyuan's properties the Changsha Xinyuan Mangliang family garden house was sold in 30 minutes and was six times overbooked which means there is strength there is demand and there is nothing to worry for now with Xinyuan which means there is a lot of money to be made as long as the trend is strong Yinan Xinyuan family mansion was also sold in only three minutes as there was huge demand so there is no worries about what the company is doing they seem to know what they're doing they have been doing it very very well over the past years feel free to read the company's report they are very very detailed everything is open the company's investor relation page you can really see everything the company is doing it's one of the most transparent chinese companies that is traded on the new york stock exchange and when i would discuss the fundamentals you will see that that's also shareholder friendly not only to the owners but to everybody else that's also a shareholder and that's what i like very much because they haven't lowered my value in the last five years and that's very important Xinyuan's new projects are mostly focused on Zhengzhou so it's important to see what is going on in the city what's going on there will it be a bubble city will it be a ghost time of not let me immediately tell you that Zhengzhou is the iphone city so yes the city where iphones are produced rail lines build new railway station because Zhengzhou is becoming the passage and terminal that will connect 31 provinces center so it's really developing into central china also air hub and cargo traffic so it's a very very interesting company here you can see very very interesting city here you can see Zhengzhou is rankling by cargo traffic so it's really exploding and alongside the city is exploding Zhengzhou GDP is also growing at the rate of above 10 a little bit slowdown nevertheless is very very good per capita disposable income is growing which is excellent and then if you look at the new projects Zhengzhou and Xi'an for Xinyuan holdings you can see here in this Bloomberg table that the price to income ratio is the best in Xi'an and fourth best in Zhengzhou which means that Xinyuan is focused on the cities where real estate prices are not extreme like in Shenzhen or Shanghai so a very important fact to measure and you can see that prices in Zhengzhou haven't been growing really explosively as in other bubble cities so everything is growing steadily the projects are made as you can see demand there is huge there are restrictions of course by the government so prices are limited prices will explode when those restrictions are left until then Xinyuan will continue with the healthy margin it has had in the past and it has now discussing the fundamentals you can see revenue it's growing Xinyuan is expanding investing in new projects constantly getting higher revenues as prices real estate prices go up net income is volatile is volatile in relation to government restrictions which have been low in 2012-2014 high profits lower restrictions 2014-15 then a little bit left 2016 and now again higher restrictions lower net income as soon as the restrictions are lifted we can expect the net income to go back to previous years levels especially with the huge growth in revenue but that's already science fictions the important thing with Xinyuan is that you are buying value now earnings per share 0.86 price earnings ratio below 7 dividend is 40 cents per share which is a dividend yield above 7% and they are paying quarterly what's very important is that the company is shareholder friendly and they are using their money they have more than a billion dollars on the balance sheet just more than 10 dollars per share on the balance sheet even if the price is 5.6 they're using to buy back shares so but shares in 2014 was where 89 million now they are 67 million the company bought 25% of itself in the last few years the book value is just increasing when you do buybacks at below book value you are increasing shareholder value unlike 99% of SAP 500 companies do book value per share 14.13 stock price 5.6 there is value it's important to know that the company has a very large amount of debt but that debt is growing as their projects are growing as the projects are mostly financed by debt and this is important to know Xinyuan had two extremely expensive loans of a more than 13% interest rate and those were exchanged with an interest rate of 8% which will lower Xinyuan's interest cost and increase earnings in the coming years so to conclude the price target catalysts Xinyuan is extremely undervalued fundamentals dig into them you will really like them as I mentioned something dividend 7% and so the company is growing focused on shareholders buying back shares huge buybacks project so with the dividend and the buybacks the yield is above 10% so that's what you have now what can happen we'll discuss in the catalysts also the company is focused on Zhengzhou interesting cities no bubble territory cities so there is good income growth developing GDP growing at 10% prices growing at 10% so we have a healthy real estate market and as you have seen the properties are snapped immediately so there is healthy demand very important if you dig deeper into the Chinese market you will see that you cannot get married in China if you don't have an apartment and Chinese people cannot invest in many other investment vehicles so they are forced to invest in real estate and that's very important in the culture so I think the Chinese real estate growth market growth trend is there to stay especially as the government continually balances out the growth and when it slows down it push pushes the growth higher because the government wants real estate to grow catalysts continuing with the buybacks perhaps increasing the dividend as the cash is there as the New York Austin project has been completely sold so there is money there is plenty of money interest rates have been lowered the cost of the debt so there is money for more more dividends and more buybacks I think the company always does a combination so the yield is already more than 10% if we go to average market yield then we're looking at 5% stock price should immediately double as it is now second catalyst when the first government selling restrictions being local or globally in China are lifted we can expect those stock prices to shoot up the cycle is every two three years the cycle goes up and down and up and down we are now in the middle of the downward cycle 2017 2018 expect a shoot up expect Xinyuan stock price to shoot up third catalyst Xinyuan is undervalued when compared to peers if we go to the Hong Kong stock exchange and look at future land development holdings price to book is 2 Xinyuan is 0.4 price earnings is 15 Xinyuan is below 7 dividend is 1.5 Xinyuan is 7% and you see here that future land was 1.3 Hong Kong dollars per share now it's up close to the upper 52 week limit so Xinyuan hasn't appreciated like other companies have similarly CFI holdings 1.7 price to book price earnings is in line with Xinyuan that's okay however also the stock price appreciated more than double Xinyuan hasn't dividend yield is just 4% Xinyuan is 7% plus buybacks now that's not all Xinyuan has launched a Chinese landing blockchain project it's still small but it could explode and those are the catalysts I like something that could explode it costs nothing to the company they are in the business they just expand that with technology and for now it's doing well here is the project I don't know how it goes mortgage loans to people not that high nevertheless they are doing it in collaboration with IBM so it's a very interesting project for now it's from zero last year with million renminbi so it's still project starting to grow but it could be significant for the company in the future so it's still small nevertheless you never know the second catalyst Xinyuan is also owner 75% of a property management company in China and just listed on a domestic stock exchange on a higher valuation it's still around 100 million for Xinyuan that's one point something dollars per share but nevertheless it shows how the valuation in China is much higher than the valuation in the US therefore again another catalyst when the valuations equalize so if you want another undiscovered Chinese company and wait for it to be discovered on the stock price to be three times higher like it was the case for upi then we'll take a look at Xinyuan holdings the risks are always the same risks what if the Chinese real estate bubble bursts well what if the european bubble bursts what if the US bubble bursts those are the risks that can happen I cannot say that it won't happen will it happen in the next 20 years tomorrow nobody knows so be exposed to the risks especially when the interest when the investing yield is also above 10 percent now if no bubble bursts in the next 10 years you will have twice your money so that's it there will be more free stocks coming up in the next few days to buy for November I have to prepare the video so thank you for watching be patient it's a long video however a very very interesting stock thank you for watching and I'll see you in the next video