Bill Zima - ICR Yong Zhang - Chairman Helen Zhang - Interim CFO John Liang - VP

Matthew Lawson - Morgan Stanley Andrew Oksner - Campanile Mike Ronzio - Morgan Stanley Guy Delyn - uCratos

Good day everyone and welcome to the Xinyuan Real Estate Company Limited First Quarter 2014 Earnings Conference Call. Please note that today’s call is being recorded. I would now like to turn the conference over to Mr. Bill Zima of ICR. Please go ahead, sir.

Hello everyone, and welcome to Xinyuan’s first quarter 2014 earnings conference call. The Company's first quarter earnings results were released earlier today and are available on the Company's IR Web site, as well as on Newswire services. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our result would be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our registration statement and 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. Today, you will hear from Mr. Yong Zhang, the Company’s Chairman who will comment on our operating results and provide some perspectives on the property market environment. He will be followed by Ms. Helen Zhang, the Interim CFO, who will provide some additional color on Xinyuan’s performance, review the Company's financial results and discuss the financial outlook. Following management’s prepared remarks, we'll open the call to questions. During the Q&A session, Mr. Zhang will speak in Mandarin, and his comments will be translated into English. With that said, I will now like to turn the call over to Xinyuan’s Chairman, Mr. Yong Zhang. Please go ahead sir.

Thank you, Bill. Good morning and thank you all for joining us on our first quarter 2014 earnings conference call. Xinyuan is experiencing another strong quarter growth exceeding our contract sales and revenue forecast as market conditions were generally stable in the cities in which we operate. Among our five most active projects, we experienced increases in average selling prices. Well, our other two experienced ASP decreases as a result of change in product mix. During the quarter, we commenced pre-sales of one new project Beijing Xindo Park and we acquired three new land parcels in Chengdu, Sanya, and Changsha we make one additional land acquisition in April in Shanghai. We are excited about this move and the prospect in front of our eye. As we look to the remainder of the year, we feel good. We expect to accelerate as we generate many meaningful sales through our aggressive expansion efforts. We have six projects scheduled to commence pre-sales including four projects to launch pre-sales in the second quarter we expect the strong pipeline to build great levels of year-on-year. In the second half of the year, we are committed to investing in our business for future development and growth. Lastly we confirm with our full year schedule for cost. In the first quarter, we purchased shares and decided to distribute quarter dividend in order to maximize our shareholder value. Now please allow me to turn the call over to Helen Zhang, our Interim CFO.

Thank you, Chairman. I’d like to start by touching up on some of our key financial highlights for the first quarter 2014. First quarter contract sales totaled $273.9 million exceeding the midpoint of previous guidance of 227.5 million by 20.4%. Total first quarter revenues was $226.4 million exceeding the midpoint of previous guidance of $197.5 million by 14.6%. Net income was $10.1 million which also exceeded the midpoint of our guidance. In terms of new land acquisitions we acquired three parcels of land in Q1, in Chengdu, Sanya and Changsha and an additional parcel of land in April located in Shanghai. The total GFA of these four new projects are around 670, equivalent to US$473 million and we have paid US$472 million of the land premium as of the reporting date. One thing I will like to highlight is that we have been very selective on the market we are present in or decide to enter. Our criteria includes GDP growth higher than national average, population over 5 million, stable demand and sustainable land supply and healthy local supply and demand dynamics. Generally speaking, what we are seeing in the market now is that nationally there is some softening in momentum and pricing in some regions. But our active projects have not been negatively impacted and we continue to be very selective on the markets we enter and continue to carefully evaluate the possibility of each potential project on a risk adjusted basis. Against these backdrops, let me give you some color on the rationale of entering these three new cities. Sanya is a primary vacation destination in China and has been the most popular domestic tourist destination for four consecutive years. Our project on the seaside with an average unit size around 17 square meter we choose this product designed to meet the solid demand from customers who will like to have a small size vacation home along the seashore in the most popular tropical island in China. The floor price is around RMB3,000 square meter and we expect the average selling price to be around RMB15,000 square meter. Changsha is the capital city of central China’s Hunan province with high disposal income level and strong demand. The GDP of capital in Changsha is ranked No. 1 among China’s central provinces. We have been researching the Changsha market for several years. The project is near to Meixi Lake which has been the most important development area in Changsha over the past few years. The floor price is around RMB2,600 per square meter which is just quite reasonable in our opinion. The Chengdu project is located in the high growth area in Shanghai. The total sellable GFA is 63,000 square meters with a total land cost of US$146.5 million. We plan to build affordable housing for first home buyers as we did in Beijing. We believe the market conditions of Tier 1 cities are most favorable and these represent a good opportunity for the Company to enter the Shanghai market statistically by investing in the product of suitable project sites at a reasonable land price. As for our capital structure, as of March 31, 2014 the Company reported 655 million in cash and cash equivalents including restricted cash, compared to 837.2 million as of December 31, 2013. Total debt outstanding is 947.2 million, an increase of 136.2 million from 811 million at the end of fourth quarter of 2013. The cash decrease was largely due to 376.3 million of land acquisitions and deposit for negotiated land, partially offset by deposits from bank loans and other long-term loans totaling of 192.4 million. As we have discussed in our last quarter call the Company is on-track to scaling up our business and we will focus more on contract sales growth in 2014. In Q1 2014, we turned into net debt position from net cash position as of December 31, 2013 to fund our acquisition and to take advantage of market window for financing. Net gearing in Q1 was around 31% and is still among the lowest in the industry. The Company will closely monitor its gearing and debt level to ensure that the Company is growing with a manageable balance sheet. We are pleased to continue our quarterly dividend payment program. Xinyuan’s Board of Directors has approved the payment of a quarterly dividend of $0.05 per ADS payable on June 12, 2014 to shareholders of record as of May 30, 2014. As we continue to be confident about the Company’s future, we repurchased approximately 1.54 million ADSs in the market at a total cost of around 7.6 million in the first quarter. We will continue our repurchase program based on share price performances when the market commences. And now let me walk you through our Q1 financial results in greater detail. Contract sales totaled 273.9 million in the first quarter compared to 178.3 million in the fourth quarter of 2013, exceeding the midpoint of previous guidance of 227.5 million by 28.4%. The increase in contract sales was primarily due to pre-sales generated by our newly commenced Beijing Xindo project which contributed approximately 28.2% of XIN’s GFA sales and 44.6% of contract sales in the first quarter. Zhengzhou Xin City, Suzhou Xin City and Jinan Xinyuan Splendid are the other three major contributors to the first quarter contracts sales. Collectively they contributed 46.1% of the Q1 contract sales. The Company’s GFA sales were 127,100 square meters in the first quarter of 2014 versus 241,700 square meters in the first quarter of 2013 and 124,400 square meters in the first quarter of 2013. The average selling price per square meter sold was around RMB13,000, equivalent to a US$2,200 in the first quarter of 2014 versus RMB9,700 equivalent to US$1,600 in the first quarter of 2013 and RMB9,000 equivalent to US$1,100 in the first quarter of 2013. The quarterly ASP might saturate when commercial properties start pre-sale and they tend to have higher ASP versus residential properties. On the back of strong contract sales, we recorded total first quarter revenue of 226.4 million, a 33.6% increase from 169.4 million reported in the first quarter of 2013. First quarter revenue exceeded the midpoint of previous guidance of 197.5 million by 14.6%. Gross profit for the first quarter of 2014 was 59.4 million or 26.2% of revenue, compared to a gross profit of 94.9 million or 32.8% of revenue in the first quarter of 2013 and a gross profit of 55.7 million or 32.9% of revenue in the first quarter of 2013. Gross margin contraction in Q1, 2014, is mainly due to revenue mix shift rather than price cuts as follows. First, revenues from few higher margin legacy projects were recognized last year such as the Zhengzhou Modern City which was acquired over five years ago and has over 40% gross margin due to low land cost but they were mostly completed and delivered in 2013. Second, Chengdu Xinyuan Splendid and Huangshan City, two projects together contributed more than 35% of revenue in the first quarter of 2014, both have low gross margins. In addition, in the first quarter, we increased cost of two near completion projects as we are entering final settlement with the contractors. SG&A expenses were 24.3 million for the first quarter of 2014 compared to 35.1 million for the fourth quarter of 2013 and 12.4 million first quarter of 2013. As a percentage of total revenue, SG&A expenses were 10.7% compared to 12.1% in the fourth quarter of 2013 and 7.3% in the first quarter of 2013. The sequential SG&A decrease was primarily due to less promotion and setting expenses which is in line with our sales performance and less spending during Chinese New Year. The year-on-year increase of SG&A expenses was mainly due to an increase in personnel related to the rapid expansion of Siemens development project and higher promotional spending levels on a Company’s new project launch in the first quarter and other upcoming pre-sales projects. Taxation, the effective tax rate increased largely compared to Q4, 2013, however the domestic income tax and land value-added tax rate remains unchanged. The increase is mainly due to risk level expenses especially the interest expenses related to the US$400 million high yield bond and the TPG’s convertible notes. And the Company is working on tax planning to reduce tax liabilities at detainment level. Net income was 10.1 million, a 68% decrease from 31.6 million in the fourth quarter of 2013 and a 62% decrease from 26.6 million reported in the first quarter of 2013. The decrease of net margin was mainly due to a lower gross profit and higher interest expenses. The New York City project is on track, as of today, we have finished the 70% of the foundation work and related underground installation. This super structure will start early June with target Q4 2015 early stage of delivery and Q2 2016 full completion market is on a big upswing, so we expect our pre-sales to start in late May. As for Reno and airline projects we didn’t recognize revenue on both of the projects in the first quarter. Going forward we’ll continue to be very selective and focused on profitability and unit economics when evaluating potential project though that level is expected to grow during our expansion we’ll be carefully managing our balance sheet and be prudent about new land acquisition. As we have stated in our last call six new projects in China were launched in the eighth Q2 or in the second half of the year. We expect the sales revenue and profit recognition for the year to be back-end loaded. You may find the details of the new project launch in the press release. As margin tends to be lower in early stage of the project due to the percentage of completion calculation method, we expect a lower growth pace in profitability. Gross margins for the year would be in the range of mid to high 20s for 2014 as part of our re-expansion plan an increase in SG&A especially composition is expected and these costs are front loaded. When our new project mature and operational team becomes fully in place in 2015 we expect the profitability to pick up again. Now let us move to the second quarter 2014 outlook. The Company expects contract sales in the second quarter 2014 to reach approximately US$277 million. Revenue is expected to total 230 million in the second quarter while net income is expected to reach 23 million which includes certain tax expenses benefit to be realized in the second quarter. And this concludes our prepared remarks for today, and operator, we’re now ready to take questions.

(Operator Instructions) We’ll go to our first question from Matthew Larson with Morgan Stanley.

Good morning. Couple questions, I didn’t hear any comment about hiring a new CFO? Morgan Stanley: Good morning. Couple questions, I didn’t hear any comment about hiring a new CFO?

Okay. Let me translate this question to our Chairman. The overall operation of the Company is running is a very good manner execution is good and we’re having a very healthy financial position. The Board of Directors pay a lot of attention to the CFO appointment and the Company and the Board is in the process of searching and evaluate, we don’t want investors to worry about the CFO candidate and also at the same time the Company thinks that Helen Zhang as the Interim CFO is doing a good job and we’ll keep our investors posted when we have something material to report.

Okay. Second question, I guess you could respond TPG, which is one of your largest shareholders. Presumably it’s taking a larger role in some of these financial decisions since they have a lot of money stake in there they have expertise in this are? And two, they invested 25% or 30% above the current stock price. I would assume that they have an interest in marking to the market there holding something close to what they paid for it. Are you going to continue to I would hope escalate your share purchase, repurchase buyback numbers at these extremely low levels because you have the capital from all the high cost money raise the two 30% debentures? And finally I heard that this year you have the extra expenses and things like that but 2015 we should really see the results. What sort of earnings do you think that you could be showing in revenues for 2015? Morgan Stanley: Okay. Second question, I guess you could respond TPG, which is one of your largest shareholders. Presumably it’s taking a larger role in some of these financial decisions since they have a lot of money stake in there they have expertise in this are? And two, they invested 25% or 30% above the current stock price. I would assume that they have an interest in marking to the market there holding something close to what they paid for it. Are you going to continue to I would hope escalate your share purchase, repurchase buyback numbers at these extremely low levels because you have the capital from all the high cost money raise the two 30% debentures? And finally I heard that this year you have the extra expenses and things like that but 2015 we should really see the results. What sort of earnings do you think that you could be showing in revenues for 2015?

For the important role that TPG is playing with regard to the operation of the Company, yes TPG is helping the Company to grow and we have a lot of discussions especially with regard to the investment decision from bigger project and overall expenses and also the Company repurchased 1.54 million ADSs in Q1 at a total cost of US$7.6 million and we’ll continue to buyback our shares after this earnings release when market permits that’s for the share buyback. And with regard to the forecast for 2015 I believe it’s too early to talk about it but I think I can give some clue to the investors one, the Company is brilliant and it is our goal that in the future coming three years we would like to grow around 30% for the top-line or probably even more depending on the market situation. And in 2014 the net income level is comparatively lower because 2014 is an year for investment and building but we believe that when the project gets mature and other resources are in place for 2015 net margin will grow to normal levels meaning that could be in the range of 10% to 15% of total revenue.

Okay, thank you. Morgan Stanley: Okay, thank you.

You’re welcome.

We’ll take our next question from Andrew Oksner with Campanile.

Yes. Thank you very much. By almost any metric price earnings or book value the stock appears to be dramatically undervalued. Is there any are you allowed to provide any insight or guidance as to why that might be the case, is it more market driven are there some aspects of this in your opinion that are unique to your Company? Look forward to your comments. Thank you. Campanile: Yes. Thank you very much. By almost any metric price earnings or book value the stock appears to be dramatically undervalued. Is there any are you allowed to provide any insight or guidance as to why that might be the case, is it more market driven are there some aspects of this in your opinion that are unique to your Company? Look forward to your comments. Thank you.

Let me put it this way, I believe the current calculation of the stock price probably is more related to the overall market situation there is some media coverage talking about the potential slowdown of China economy and the softening market situation, I think that might give some negative impact to the Company stock price. And another thing is we are the only real estate developer in China which listed in the U.S. stock market and probably it’s a little bit different when we’re communicating with U.S. investors and low listed factors sometime is policy sensitive. So we need to have more communication with the capital market. And at the same time the Company is very confident for future and that is why we kept buying back our shares and also continue to maintain the long-term dividend payment policy.

Thank you. Just as a follow-up are any new specific actions contemplated to help boost the price or is it just the current actions focused on share buyback and implementing your projects and maintaining profitability and growth? Campanile: Thank you. Just as a follow-up are any new specific actions contemplated to help boost the price or is it just the current actions focused on share buyback and implementing your projects and maintaining profitability and growth?

Based on SEC regulation the Company can resume share buyback right after the earnings release and also TPG were actively working with the Company’s team to do some more IR activities in the future and letting investor to know more about the Company and also the future development of the Company.

Thank you very much. Campanile: Thank you very much.

You’re welcome.

We’ll take our next question from Mike Ronzio with Morgan Stanley.

Hi. Thanks for the call. Two lines of questioning, first I’d like to start with getting a bit more detail on some specific projects, for example looking at three of your projects that are currently doing pre-sales. We saw some pretty significant sales growth decreases that would be the Jinan, Shinan, Splendid, the Xuzhou Colorful City and the Kunshan Royal Palace I was hoping you could comment on those and then I’d like a bit more detail on your Shanghai project where you see average selling prices there? Morgan Stanley: Hi. Thanks for the call. Two lines of questioning, first I’d like to start with getting a bit more detail on some specific projects, for example looking at three of your projects that are currently doing pre-sales. We saw some pretty significant sales growth decreases that would be the Jinan, Shinan, Splendid, the Xuzhou Colorful City and the Kunshan Royal Palace I was hoping you could comment on those and then I’d like a bit more detail on your Shanghai project where you see average selling prices there?

Let me try to talk about overall picture for 2014 with regard to the top-line. Due to the low inventory for the first six months, we are running out inventory and at the same time we are implementing the loan acquisition, so with regard to the sales or revenue, first six months will come for about 30% of the overall contract sales of revenue, meaning that for the total sales, this year will be a backend loaded year. And in Q2, we believe that in Q2, 2014, five existing project that just Mike mentioned, would continue to be the major majority for sales and at the same time the three projects in China will be launched and contribute to the contract sales and our revenue. And let me try to talk about the newly launched project from Q2 and the later part of the year. Zhengzhou Xindo Park is our first commercial project and will contribute about RMB650 million in contract sales in 2014 and Suzhou new project and Xingyang project will also be launched in Q2, 2014. This is Suzhou new project which is named Suzhou Lake Royal Palace will contribute about RMB800 million and this Xingyang Splendid the new project will have about RMB500 million in contract sales in 2014. And also we have new project in Jinan and new one in Chengdu these two projects are scheduled to be launched in Q3 2014 and Q4, 2014. Jinan Royal Palace which is the name of new project is expected to contribute RMB820 million in contract sales this year. As we have talked about the four new land acquisitions early in Q1 this year, we have listed all the details of the pre-launch date in our press release I can read it to you. The newly acquired Sanya land and the Shanghai land and Changsha land, the three of them, the pre-sales launch date will be sometime in Q1, 2015. So, we don’t believe that Shanghai land will make contribution to the sales for year 2014. With regard to the overall market of Shanghai when we’re evaluating the project and made decision of the investment, we also evaluate the possibility of this project as we talk about a criteria when we evaluating the project, the gross margin is no less than 25% and with the net margin no less than 10%.

Okay. So, you expect to achieve at least 25% gross margin on the Shanghai project? Morgan Stanley: Okay. So, you expect to achieve at least 25% gross margin on the Shanghai project?

Yes, this is our target.

Okay, even with over RMB14,000 square meter land cost I am assuming? Morgan Stanley: Okay, even with over RMB14,000 square meter land cost I am assuming?

Because the pre-launch date is sometime next year, so we will see where there is some market saturation. It’s too early to predict it but that’s our goal.

Okay, okay. Thanks and sorry just to get back to for example your Jinan project that has already started pre-sales and by the end of last year you’d sold 80% of the GFA there. However in this quarter, you’d only sold 84%, so I mean the sales growth pace has really slowed down, I am just curious if you could comment on that specifically? Morgan Stanley: Okay, okay. Thanks and sorry just to get back to for example your Jinan project that has already started pre-sales and by the end of last year you’d sold 80% of the GFA there. However in this quarter, you’d only sold 84%, so I mean the sales growth pace has really slowed down, I am just curious if you could comment on that specifically?

Well, it really depends on the product portfolio. In the past, most of the products are high rise building apartment and from the beginning of this year, we start to sale some of the multi-layer product which are comparatively of higher price in that project. So, the run rate is getting slower which is very natural when you are running a project.

Okay, thanks. Okay, that’s very helpful. I didn’t realize the project mix there. And sorry, second line of question, just a couple of queries on specific balance sheet items. It looks like short-term bank loans increased quite a bit about US$90 million. I am just curious if you comment on the use of proceeds in general terms, average interest rate lender type that sort of thing. Morgan Stanley: Okay, thanks. Okay, that’s very helpful. I didn’t realize the project mix there. And sorry, second line of question, just a couple of queries on specific balance sheet items. It looks like short-term bank loans increased quite a bit about US$90 million. I am just curious if you comment on the use of proceeds in general terms, average interest rate lender type that sort of thing.

The short-term loan actually is from the construction loan and at a same time we have successfully applied for some track loan from the market. So, with respect to the funding cost for the construction loan is in the range of 5.8% to 8%. And with regard to the track loans the cost for us is in the range of 8.5% to 11%.

Okay, thank you. Morgan Stanley: Okay, thank you.

So, overall refinancing cost in domestic China is about 9%.

Sure, sure, understood. And then finally last balance sheet item, other receivables went up about US$130 million, just curious if you could explain about how these came about and who the counterparties are? Morgan Stanley: Sure, sure, understood. And then finally last balance sheet item, other receivables went up about US$130 million, just curious if you could explain about how these came about and who the counterparties are?

This is mainly where the increase actually is mainly related to the Shanghai land parcel we acquired this land parcel by acquiring 100% of the equity interest of this Company actually it’s kind of shale Company because there is only one project there. So by the end of Q1 we first of all we give a shareholder loan for that Company before the transaction was completed.

Okay. And is that repayable on demand or anything else? Morgan Stanley: Okay. And is that repayable on demand or anything else?

Well by the end of Q1 we haven’t fully paid the deal consideration and in April we completed everything meaning that a share contract has been completed and then that number will be transferred to the real estate under development.

Okay. Thanks very much. Morgan Stanley: Okay. Thanks very much.

You’re welcome.

(Operator Instructions) We’ll go to our next question from Guy Delyn with uCratos.

Yes. Good evening I guess. First of all I think Helen Zhang is doing a fine job and she is still Interim CFO but as an investor we wouldn’t mind seeing Helen Zhang as a CFO but that’s your own business that was my first remark. Secondly… uCratos: Yes. Good evening I guess. First of all I think Helen Zhang is doing a fine job and she is still Interim CFO but as an investor we wouldn’t mind seeing Helen Zhang as a CFO but that’s your own business that was my first remark. Secondly…

[Indiscernible]

Sorry? uCratos: Sorry?

Thank you very much and…

No, no I am knocking the Xinyuan management but I think if you communicate in a more open way to a market perhaps it will certainly help there is long-term investors as we are to remain confident and of investors like us long-term investors could join the Company as a shareholders. Another point is regarding your full year guidance which you stated in your press release on year-end 2013. Do you confirm this revenue run 1.230 billion, 1.280 billion for revenue and net income of around 120, 125 for the full year? uCratos: No, no I am knocking the Xinyuan management but I think if you communicate in a more open way to a market perhaps it will certainly help there is long-term investors as we are to remain confident and of investors like us long-term investors could join the Company as a shareholders. Another point is regarding your full year guidance which you stated in your press release on year-end 2013. Do you confirm this revenue run 1.230 billion, 1.280 billion for revenue and net income of around 120, 125 for the full year?

Yes. Actually the Company is ahead of Q1 budget and it’s now on track for our Q2 performance so at this stage we’re comfortable with the full year guidance announced last quarter.

Okay. Now regarding you make a huge plan of recruitments if I understand well back last summer in 2013 in order to prepare for the future growth and future development large acquisition construction and so on, planning and so on. Do you see your budget in terms of general and administrative expenses I am not talking of selling expenses just general administrative expenses we see your budget on a quarterly basis being more or less stable now but you have done the recruitment in the coming quarters? uCratos: Okay. Now regarding you make a huge plan of recruitments if I understand well back last summer in 2013 in order to prepare for the future growth and future development large acquisition construction and so on, planning and so on. Do you see your budget in terms of general and administrative expenses I am not talking of selling expenses just general administrative expenses we see your budget on a quarterly basis being more or less stable now but you have done the recruitment in the coming quarters?

Okay. As we’re expanding with in terms of the absolute amount that really is going to go up however I would like to analysis in term of the percentage of revenue and percentage of sales. We believe that in Q2 heavily G&A in term of revenue will be around 9% and the in term of percentage of sales will be around 8%. And I believe that as time goes by as our sales pick up in the second half of the year the SG&A as percentage of both revenue and sales will gradually go down.

Okay, understood. Okay. And the last point if you can make a kind of summary where do you stand regarding land acquisitions so far you mentioned in your last press release and last conference call in February about to where are looking for acquiring something like run $900 million of land in 2014. How much have you done and you still confirm this budget or it depends on the macroeconomics and local conditions? uCratos: Okay, understood. Okay. And the last point if you can make a kind of summary where do you stand regarding land acquisitions so far you mentioned in your last press release and last conference call in February about to where are looking for acquiring something like run $900 million of land in 2014. How much have you done and you still confirm this budget or it depends on the macroeconomics and local conditions?

Yes. With regard to the land acquisition first of all I would like to reiterate that the company will be very selective and prudent and careful when we’re evaluating land acquisition opportunities and with regard to the budget for land acquisition for year 2014 the budget would be around RMB7 billion which is around US$1.1 billion and in the Q1 and also in April we’ve acquired four parcels of new land and the total land cost is around US$2.9 billion and so we have already paid almost all of them. With regard to the land acquisition for the second half of the year we’ll be very selective -- continue to be very selective and careful. And also we’ll carefully evaluate the market situation to see if it is necessary for us to make any adjustment.

Okay. Thank you very much. uCratos: Okay. Thank you very much.

You are welcome.

We will take our next question from Matthew Larson with Morgan Stanley.

Hi, thanks for taking my follow-up call. The decline in the local currency the yen of say 3% from year-to-date, has that helped you out considering you raised close to 400 million in U.S. dollars through a couple of large offerings. Have you been able to I guess reduce the cost of that financing by converting some of those proceeds into your local currency to make some of these land purchases? Morgan Stanley: Hi, thanks for taking my follow-up call. The decline in the local currency the yen of say 3% from year-to-date, has that helped you out considering you raised close to 400 million in U.S. dollars through a couple of large offerings. Have you been able to I guess reduce the cost of that financing by converting some of those proceeds into your local currency to make some of these land purchases?

We believe that exchange rate fluctuation of U.S. dollar against RMB probably will be kind of regular in the future. And also talking about our band, depending on five years and plus and that the short on time exchange, exchange rate fluctuation will not have negative impact on our onshore loan and part of the U.S. dollar has been transferred into domestic China. So, probably we will consider hedging our foreign exchange position if the long-term foreign exchange market trend is exposed we will see.

I see, I guess I was just saying that you raised a money recently and then subsequent to the large raising of capital here in the U.S., you made a number of large purchases in the PRC and it would have translated quite nicely because of the decline in the local currency in the PRC, so the dollar would buy won that’s number one. And the second question I have pertains to your primary U.S. development in Williamsburg Brooklyn that you state that you are going to begin pre-sales this month. You bought that for 58 million or so a couple of years ago, if you get your pre-sales numbers and what have you, what sort of return do you expect to get on that investment? Morgan Stanley: I see, I guess I was just saying that you raised a money recently and then subsequent to the large raising of capital here in the U.S., you made a number of large purchases in the PRC and it would have translated quite nicely because of the decline in the local currency in the PRC, so the dollar would buy won that’s number one. And the second question I have pertains to your primary U.S. development in Williamsburg Brooklyn that you state that you are going to begin pre-sales this month. You bought that for 58 million or so a couple of years ago, if you get your pre-sales numbers and what have you, what sort of return do you expect to get on that investment?

And by answering that question please allow me to pass this question to the VP of the Company Mr. John Liang, John please.

Hi Matt, this is John Liang, I run the U.S. business, I am answering your question from New York.

Okay. Morgan Stanley: Okay.

We are targeting to start to the pre-sale process toward the end of this month and have a full launch of our marketing efforts sometime in June. Right now, we are working on the model unit and showrooms, construction is on pace. In terms of the numbers on pre-sale, just ba minor correction, we bought the land for $54.4 million.

Okay. Morgan Stanley: Okay.

And our projected sales number, very conservatively is well north of $300 million. Our total projected development cost is in the $240 million to 250 million range, so right now that’s our projection obviously the market is red hot right now in New York and there is a constraint supply of condo units especially new products in the entire city of New York. So, we are reasonably optimistic on the profit we will generate from this project.

Let me ask then you paid 54 and it’s just gotten even redder and hotter since you made that purchase couple of years ago. Morgan Stanley: Let me ask then you paid 54 and it’s just gotten even redder and hotter since you made that purchase couple of years ago.

Yes.

But the numbers you just gave me had development cost of 240 plus the land purchase. Morgan Stanley: But the numbers you just gave me had development cost of 240 plus the land purchase.

That includes everything.

240 include the land purchase? Morgan Stanley: 240 include the land purchase?

Yes.

Alright, so then whatever you earn above that is why you guys are in business which is the profit, so you said most conservatively as 300 which should give you a profit of 60 million which would more than a double on your original investment, okay. I look forward to find, I am in New York and it’s an interesting project for me and one of the reasons I got involved in a big way in your company because many people had doubted whether there was the cash on the balance sheet that XIN had stated for many years because the stock is so low it didn’t seem to support that when you started making investments that required cash. And by the way raise your dividend, have bought back shares over the years you put focus such as Anthony Walton on the Board, people who I would assume to advantage your company and then finally the TPG involvement. You pretty much done everything you can in my mind, the only thing that I should follow ironically is the stock price, it went up for quite a while and then it’s given back. I know that developers are under pressure in China but the irony is you done I think everything you could do within reason and as investors were hoping to see higher stock prices but that hopefully will come in the future. Thanks so much. Morgan Stanley: Alright, so then whatever you earn above that is why you guys are in business which is the profit, so you said most conservatively as 300 which should give you a profit of 60 million which would more than a double on your original investment, okay. I look forward to find, I am in New York and it’s an interesting project for me and one of the reasons I got involved in a big way in your company because many people had doubted whether there was the cash on the balance sheet that XIN had stated for many years because the stock is so low it didn’t seem to support that when you started making investments that required cash. And by the way raise your dividend, have bought back shares over the years you put focus such as Anthony Walton on the Board, people who I would assume to advantage your company and then finally the TPG involvement. You pretty much done everything you can in my mind, the only thing that I should follow ironically is the stock price, it went up for quite a while and then it’s given back. I know that developers are under pressure in China but the irony is you done I think everything you could do within reason and as investors were hoping to see higher stock prices but that hopefully will come in the future. Thanks so much.

Thank you.

(Operator Instructions) We will go again to Guy Delyn with uCratos.

Yes, hi, it’s me again. The question I forgot to ask you on last conference call. Given the help of TPG and you seem to have a very experienced CEO, management team, what about gear on diversification a bit outside housing by that I mean why not niches like retirement homes, hospital, warehousing niches in the China economy where building is needed but where there is huge demand because there is of course not enough supply unlike housing where we can see from here and there perhaps too much housing being build. So, my question is, are you thinking of doing that sort of diversification? I know you have started already with Sanya project which is vacation but are there other sectors in construction where you could perhaps start some new business? Thank you for answering. uCratos: Yes, hi, it’s me again. The question I forgot to ask you on last conference call. Given the help of TPG and you seem to have a very experienced CEO, management team, what about gear on diversification a bit outside housing by that I mean why not niches like retirement homes, hospital, warehousing niches in the China economy where building is needed but where there is huge demand because there is of course not enough supply unlike housing where we can see from here and there perhaps too much housing being build. So, my question is, are you thinking of doing that sort of diversification? I know you have started already with Sanya project which is vacation but are there other sectors in construction where you could perhaps start some new business? Thank you for answering.

We believe we are professionals of the real estate sector especially for residential development.

Okay. uCratos: Okay.

And of course according to the government policy, we need to build some public facilities like kindergarten or a school in our community and also some small shops. So, the public facilities that you are talking about, is not required by the local government. And we don’t have any to go into other areas because we believe that by developing residential and some of the commercial building is our expertise and this is something that we are doing good.

Okay. I hope in the future if you can do other projects like the Sanya project that will be a very good thing I think anyway. Thank you very much. uCratos: Okay. I hope in the future if you can do other projects like the Sanya project that will be a very good thing I think anyway. Thank you very much.

Thank you for suggestion.

Thanks. uCratos: Thanks.

There are no other questions in the queue at this time. I will turn the call back over to management for closing remarks.

Well thank you very much for joining us today. If you have any further questions, feel free to contact us. Have a nice day.

And that concludes today’s conference call. Thank you for your participation.