Good evening and thank you for standing by for your Xinyuan Real Estate Company Limited Third Quarter 2008 Earnings Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be question-and-answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time. I would like to turn the meeting over to your host for today’s conference, Mr. Jacky Zhang, Xinyuan's Deputy General Manager of Investor Relations. Please proceed.

Hello everyone, and welcome to Xinyuan's third quarter 2008 earnings conference call. The company's third quarter earnings results were released earlier today and are available on the company's investor relations website at ir.xyre.com, as well as our news/wire services. You can also download a short presentation regarding today's earnings results from our website. Today you will hear from Mr. Yong Zhang, our Chairman and Chief Executive Officer, who will discuss the business highlights for the third quarter of 2008 and a touch on some policy updates for the real estate industry. He will be followed by Mr. Frank Hin, our Chief Financial Officer, who will go over the company's financial results, and provide some color along with that. Following managements' prepared remarks, we will open the call to questions. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our registration statement, our Form 20-F, and other documents filed with the U.S. Securities and Exchange Commission. Xinyuan does not assume any obligation to update any forward-looking statements, except as required under applicable law. I will now turn the call over to Xinyuan's Chairman and CEO, Mr. Yong Zhang. Later during the Q&A session, Mr. Zhang will speak in Mandarin, and I will translate his comments into English. Please take note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollars. Please go ahead, Mr. Zhang.

Hello everyone, and thank you for joining us today. The third quarter of 2008 continued to be a very challenging period within China's real estate sector. But despite difficulties, we are still managing to generate fairly good revenue. Our total revenue for the quarter was $83 million and our net income was $7.8 million for the nine months ended September 30th, 2008. Our total revenues were $295.8 million, and our net income was $53.9 million. Starting in October, the Central government implemented a series of policy matters designed to stimulate real estate investment. These measures include reduction in dollar payment for owner occupied housing, a reduction also in office oriented rate, a reduction in income tax and the (inaudible). Also on November 9th, 2008 the State Council of the People's Republic of China announced $586 billion economic stimulus program to enhance and promote economic development and the total domestic demand to intensify stronger development of China real estate resources. As one of the 20 objectives of the plan and other significant development, China's Central Bank recently revised a legislation to remove credit limit for commercial type of lending and took measures to make [value] money, and obtaining mortgage immediately (inaudible) small to medium sized holdings for the growing middle income demographic which positions us well and to meet the future demand of the market. In the [fourth quarter], we will continue our efforts to maximize still and minimize inventory to ensure we decrease it very effectively. We will mostly [protect] the possible market changes. When the market rebounds, the company will generate impressive results. With that, I will now turn the call to our CFO, Mr. Frank Hin, who will give us an overview of financial highlights for the third quarter of 2008, and project the marketing update. Frank, please go ahead.

Thank you, Mr. Zhang. Hello to everyone on the call, and thank you for listening today. This quarter I would like to briefly run through some of the financials and spend a certain amount of time discussing strategy, while leaving more time to add color during the Q&A. As a reminder all of the following numbers are stated in U.S. dollars unless noted. Please note that there are certain figures I would talk about are non-GAAP, including all measures that are giving excluding share based compensation expenses. You can find a reconciliation of these figures in the financial table at the end of our press release. Total revenue for the third quarter of 2008 decreased 5.4% sequentially to $83 million. For nine months ended September 30, 2008, total revenues increased 35.5% to $295.8 million, compared to the same period in 2007. Our Chengdu and Kunshan projects launched at the end of the September got off to a slow start, but we did witness solid sales in Zhengzhou and Jinan during the quarter and those two cities make up around 63% of our total revenues. Our gross profit margin for the third quarter of 2008 was 20.2%, a drop of around 1.5% from Q2. For the first nine months of 2008, our gross margin was 25.6%, down from 32.7% for the same period in 2007, due to the lower margins on the newly launched projects compared to 2007. Selling, general and administrative expenses as a percentage of the total revenue increased to 16.3% compared to 14.2% for the second quarter of 2008. For the nine months ended September 30, 2008, SG&A expenses as a percentage of the total revenue were 12.4%, compared to 6.3% for the same period in 2007. The higher SG&A expenses were mostly due to the increased selling and marketing activities, salaries, stock-based compensation, amortization and professional fees associated with being a [listed] company. The Renminbi appreciation was mainly against the dollar during the third quarter resulting in a foreign exchange gain of around $700,000 for us. We also recognized a gain of just over $2 million from a decrease in fair value of the warrants issued with the floating rate notes during the quarter. This gives us a gain of approximately $16.1 million from a decrease in fair value of the warrants for the first nine months of 2008. Income tax expenses for the third quarter of 2008 was $3.5 million compared to $4.3 million and $9.7 million for the second quarter of 2008 and third quarter of 2007, respectively. Net income for the third quarter of 2008 was $7.8 million, down from $13.2 million in Q2 and $16 million in Q3 '07. For the nine months ended September 30, 2008, net income increased 43.7% to $53.9 million, compared to the same period in 2007. Our basic and diluted earnings per share for the third quarter of 2008 were both $0.05, which is a difference of $0.10 basic and diluted earnings per ADS. For the first nine months of 2008, basis and diluted earnings per share were $0.36 and $0.27 respectively or a difference of $0.72 and $0.54 basic and diluted earnings per ADS. Now I would like to step back on the numbers and provide some insight into the current operating and sales environment. Selling prices remained relatively stable in our market. Although sales volumes had decreased, depending on the future market conditions we may face additional pressures and the need to adjust our pricing to store sales which could impact our margin. To have a leeway, possible margin compressions, we are actively taking additional cost measures to have to reduce SG&A expenses as a percentage of revenue. And we are aiming for those for this to help to mitigate any potential decrease in ASPs during the four quarters of 2008 and into early 2009. As Chairman Zhang mentioned, under the persistently challenging market conditions, our top priorities are to maintain strong balance sheet and to [serve] liquidity. We are dividing our projects into development phases and we are using part of each development slowly into the marketplace to avoid over subscription. In addition, we are restructuring development trends and where necessary, slowing the construction on existing future projects, while we wait for the market conditions to improve. These strategies help us to effectively control our cash flows while maintaining higher level capital efficiency, enabling us to quickly respond to any changes in the market conditions while we wait for the market to rebound. In the meantime, we will continue to see new housing unit into the market, interpreting relatively higher levels of demand. Xinyuan remains in a competitively strong position. In fact, we have about $180 million in cash on our balance sheet. Our net gearing ration is below 40% which allow us the possibility to capitalize on any commercially and financially sound business opportunities we come across. Looking ahead to the remainder of 2008, we believe the tough market condition and the difficult sales environment to persist as we close out what has been one of the most challenging years in the recent memory for Chinese real estate developers. Given the highly volatile and difficult conditions experienced at the end of the third and into the fourth quarter, we have determined that near-term revenue visibility is limited and providing forward guidance is not prudent at this time. Nonetheless, we will remain optimistic about [recently] an asset policy by central and municipal governments will lead to higher consumer settlements and rejuvenate the real estate setup on a national level. We will continue our due-diligence efforts to deliver above industrial average EPS and long-term value to our shareholders. With a strong balance sheet and disciplined land acquisition strategy and intensive focus on capital management, Xinyuan will remain well positioned to capitalize on opportunities as they arrive. At this time, we are happy to take your questions. Operator, please proceed.

(Operator Instruction). Your first question comes from the line of Kun Tao with Roth Capital.

Good morning everyone. My first question is, you just mentioned on the SG&A cost expenses, you try to lower that cost in terms of revenue. In this quarter actually that cost would be I believe it is increasing. So, what is sort of expectation in Q4 and going forward? Do you have a specific target?

[Foreign Language] Some expenses have increased while the SG&A expenses however remain reasonably stable on absolute dollar value. And the increase is mainly due to the increased selling and marketing activities to promote new projects and as well as other expenses. And in Q4, we will do something to cut the expense as well as selling and in promotion expense for the marketing activities. [Foreign Language] And you know that [ex that] sales for Q4 comparing with the former original expectation has decreased. So, we have no need to maintain a very large headcount. And in Q4, we will cut salaries and other expenses and we will go in and continue to cut the SG&A piece into Q4. [Foreign Language] And as you know, comparing with original expectations for the sales volume, and right now our strategy is to sit part our liquidity and to make sure that the sales volume is as per expectation. [Foreign Language] And our base expectation for the sales volume in Q4 and next year 2009 will replace our, I mean the selling and general and administrative fees in our next year's budget.

All right. Thanks. For you cash flow, do you, what's your cash flow from operation in the quarter and what's your cash flow from the investment this quarter?

[Foreign Language] Okay. Frank will revert to this question.

For the financial activities, firstly for the investment folks, I mean, mainly we get the monies in from the bank borrowings. From September, I mean from Jan to September, talking borrowings we have, I was talking about sometimes RMB1.3 billion in abandonment that we have. And as the rest, okay, operational wise, I don't have the exact numbers with me because, on our quarterly we don't immediately clarify the comparison in the cash flow statement. But roughly we are talking about borrowings in the range of RMB4 billion to RMB5 billion unrealized from the operational wise. But I have to check on that in response to your question. As far as for financing activities, I've just told you, okay, there will be RMB1.3 billion, of income that we have drawn down from Jan to November.

You just mentioned from operation, 4 billion to 5 billion of what?

Renminbi, that also RMB.

The 4 billion to 5 billion is cash outflow right?

No, inflow.

Operation?

Yes.

Okay. In the first nine months?

Yeah. What I mean is that all we are talking about is cash inflow.

Okay. So you mentioned in the conference, you have RMB1.2 billion payment deal in 2009. What's your expectation in that we can borrow from the banks in 2009? I mean, like in how much?

[Foreign Language] Right, okay, I've got the numbers. I mean with assets that are doing well we still have only $480 million on [draw] bank loan this year. For the next year, okay then we have to apprise I mean right up to today, there we are talking about RMB370 million that are already approved, but we haven't drawn that yet. Then we add up together. So for this year that we already apprised we've drawn down with approval and without approval. All including we are talking about RMB850 million bank loan available, not including the existing one of course.

Okay. So you just say you have 480 million on draw bank loan in 2008 and you have 470 million in 2009, is that right?

[RMB480] million loans.

In 2009?

No, in 2009. That means up till now, because we cannot adjust our revenue for 2009. What we see is we have already approved. We are talking about 480 million bank loans approved at the (inaudible), and then another 370 million in bank loans we have already submitted our application. That's where we get high chance, and we get an approval as well.

Okay, you submit application. All right, my last question goes back to your guidance. Your previously provided guidance for 2008, was 450 million to 540 million in revenue or $0.74 to $0.80 per ADS. Is that still intact or still your formal guidance?

[Foreign Language] Okay, regarding the [technical] 2008 records, first I will call for 2008. I think the total market area has decreased and it is a tough market as well as comparing between the Q3, 2008 versus Q4, 2008. And we think that maybe we can reach the bottom line for financial guidance on that income but not the sales volume.

All right. Thanks.

(Operator Instruction). Your next question comes from the line of Hao Hong with Brean Murray.

Hi, Yong Zhang and hi, Frank. Just one more question on your cash positions. I remember you mentioned in your last conference call that your construction cash payments amounted, about 120 million to 150 million. But given now you have reduced your construction schedules, I'm just wondering, what is the cash payment per month now the new cash payments per month.

[Foreign Language] Currently we plan paid consulting costs of RMB100 million per month.

How much, I didn't hear that?

100 million per month.

Right. And then also could you remind us how does your restricted cash work, because now you have 80 million restricted cash and 100 million in cash, so I'm just wondering the restricted cash are they all spoken for?

The restricted cash flow level release, I mean the 100% restricted cash that means we have to place a deposit in order to get the bank loans or to get the mortgage. There we are talking about less than RMB200 million. For the rest, okay then well they have these projects where we do some lease with restricted cash because they only allow for the restricted purpose. First time we'll get the bank loans from Commercial Bank of China and then allow for using in the Kunshan project. In the partnership, well okay, they were still traded as restricted cash, but they can still allow us I mean to pay up the construction say or whatever for the respective projects. That means, okay, we'll not treat this as restricted cash.

Right. Okay. And then the construction costs are paid out of your restricted cash, or is it paid out of your cash reserves?

That we will pay up those with, I will just say okay, within [10 weeks] the restricted one, okay, because then we will we get a bank financing. Of course, they allow us to spend the payment on the respective projects for the construction payment. Just like, I told you as an example, we get bank loans, the bank finance from commercial bank A to finance our Kunshan project, of course, the Kunshan project construction cost will be paid off by this loan.

Okay. Also I just wanted to follow-up on one question. Just now you were asked, basically there’s 1.2 billion bank loan due in 2009, and you mentioned that you have RMB735 million credit available. So, can we say then there is a gap of over RMB400 that you need to figure out how to finance?

I would say, we're already submitted and taken approval one. But that just needs to on an approved one. Of course, we still get a very good chance to move forward. I will just repeat for those we have approved for (inaudible), we are talking about RMB480 million. For those we have submitted our application, we are talking about RMB370 million and that together we are talking about RMB850 million. Okay, there have been more than 60% already approved. The other 40%, okay they are waiting for the approval. Of course, moving forward we still get a chance to get any additional to those, I mean, negotiation with the bank to get additional financing of course is feasible. In the numbers, wise, okay, you can say that, yes, but we'll still get a chance to talk with them. We are talking about $1.2 billion with (inaudible) for the next year. Only talking about 30% okay we will be doing the second half of 2009 but throughout okay, the deals will be in November and December of 2009.

Right. Okay. And I also want to ask about your SG&A reduction, and obviously this quarter SG&A as a percentage of sales has increased dramatically. I am just wondering what would be a realistic percentage we could use in our forecast for the next quarter.

[Foreign language] The average we are liable for this year 2008, we hope that our SG&A average of percentage can reach 13%. And for next year and we will show that to endeavor to cut our salaries, our headcount and some other expenses to reduce average percentage for the actual on debt.

Right. Also, one more question on your tax rate. I noticed that your tax rate is extremely high at 41%. Given that in China they had implemented a uniform tax rate of 25%, I am just wondering why your tax rate is so high.

The income tax expense is not just for corporate income tax. In fact we have these even for the land appreciation tax also, they will be incorporated in numbers. Unlike with the other companies, they were treated; they are now in the cost of revenue. That’s why they will mess up the numbers and provide a wrong guidance on that. Okay that will be up to 41%. In fact the [two salient] (inaudible) the tax law, the corporate income taxes on these will be 25%.

Right. Okay. Thank you.

(Operator Instruction). And I am sure we have no further questions. We are now approaching the end of the conference call. I will now turn the call over to Xinyuan’s Chief Financial Officer, Mr. Frank Hin for closing remarks.

Thank you again for joining us on today’s call. Although the market conditions remain challenging, we'll continue to rely on our experience and expertise as well as our strong cash position and balance sheet to take advantage of the market opportunities as they arise. If any of you have any questions, please feel free to contact us at anytime. Thank you.

Thank you, for participation in today’s conference. This concludes the presentation, you may now disconnect. Good day.