Good day everyone and welcome to the Xinyuan Real Estate Company Limited Third Quarter 2019 Earnings Conference Call. Please note that today's call is being recorded. I would now like to turn the conference call over to Mr. Bill Zima of ICR. Please go ahead sir.

Hello everyone and welcome to Xinyuan's third quarter 2019 earnings conference call. The company's third quarter earnings results were released earlier today and are available on the company's IR website 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 results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in our Form 20-F and other documents filed with 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, company's Chairman and Chief Executive Officer who will comment on our operating results. He'll be followed up Brian Chen, the company's Chief Financial Officer 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 will open up the call to questions. With that said, I would now like to turn the call over to Xinyuan CEO, Mr. Zhang. Please go ahead.

Thank you, Bill. Good morning and thank you for joining our third quarter 2019 earnings conference call. During this quarter, we are happy to see that Xinyuan demand profitable despite some tough season in the macroeconomic environment. This quarter we were seeing continued demand for our domestic project. We commenced pre-sales of two new projects in the third quarter in Zhengzhou and Huzhou to 7.3%. and 9.1% of total GFA sales, while the total contract sales respectively. Our RFEs progressed as planned. Hard costs of Hudson Garden project in the Hell's Kitchen area of Manhattan remain on budget and on track. We received temporary certificate of occupancy for Target's ground floor occupancy. We also leased an additional 1910 square feet of the deal. Commercial space for [indiscernible]. We engaged GKV Architects for the development of new architectural plan and schematic design has already been finished. We are also pleased to see successful listing of our [indiscernible] property management company. Our Hong Kong Stock Exchange in October releasing our such high-quality platform, the result of repeat growth of our property management business. We believe releasing, we will benefit our shareholders in the future. Going forward, we have full confidence in our long-term strategy despite the participants in the market, we remain committed to our focus of enhancing those strength core real estate business and at the same time leveraging our auxiliary business to further improve our product of offering. As we remain profitable, revenue continue to deliver value to our shareholders through our quarterly cash dividend program. Now please allow me to turn the call to our CFO, Brian Chen. Brian?

Thank you, Chairman Mr. Zhang. Hello everyone and welcome to Xinyuan's third quarter 2019 earnings conference call. Allow me to take you through first of all the financial results for the quarter. And then, we will further discuss our latest operations initially. Last but not least we will conclude by updating you on our financial outlook for the remaining of the year. So please note that all figures in my speech is in U.S. dollar term unless otherwise stated. Overall, we had a pretty good year-to-date financial results compared to the same time last year. However, facing the headwind coming from the uncertainty in the macro environment and the stringent government restriction on Chinese housing market. We saw more challenging in the Q2 financial results. The total revenue was increased by 40% to about 1.57 billion for the nine months ended through September 2019 from the 1.25 billion in the same period of 2018. However, for the quarter to-date the revenue decreased by about 15.4% to 497.6 million in the third quarter from the 595.5 million in the third quarter of 2018, compared to the quarter before the revenue decreased by about 18.3% from 609.4 million. Net income was 43.5 million for the nine months ended September 30, 2019, compared to only 1.8 million in the same period of 2018. For the quarter, net income was only -- what was 5.4 million compared to 23.9 million for the quarter in the -- for the prior quarter -- for the same quarter of 2019. In terms of the contract sales, it decreased by a small percentage of 5.4% to 1.5 billion U.S. dollar for the first three quarters this year from 1.56 billion in the same period of 2018. That being said, for the quarter it was 504.8 million comparing to [574 million] [ph] in the third quarter of 2018 and 507.4 million in the prior quarter. It’s noteworthy that on a year-to-date basis, the contract sales decreased by the 5.4% as mentioned earlier, most of these was actually due to the FX fluctuation. If you are comparing to RMB in our base currency, the contract sale is actually flat at the -- or more or less the same amount compared to the year before. The total GFA sales in China were above 255.6000 square meter in the third quarter compared to 277.5000 square meter in the same quarter last year and 233.2000 square meter compared to last quarter which is about 10% increase quarter compared to the prior quarter. In terms of the average selling price per square meter, the latest price is about RMB13.5000 in the third quarter of 2019 comparing to about RMB14.8000 in the quarter before which is a 9% decrease. Compared to the same price same-time last year though it may flat. SG&A expense were about 57.6 million for the third quarter of 2019 comparing to 47.7 million for the third quarter of 2018 and 63 million for prior quarter this year, which is actually a 9% reduction in terms of the absolute dollar amount. The SG&A expense as a percentage of total revenue increased to about 11.6% from 8% in the same quarter last year and 10.3% in the second quarter this year. This quarter was about 31.3 million comparing to 28.4 million last quarter and 21.8 million in the same quarter last year. Due to the FX exchange translation exchange lost in this quarter was about 7.7 million comparing to about 4.4 million loss same time on last quarter. And for this quarter though we actually had FX hedge program in price which had an offset the loss of by about 3.7 million which brought the net FX loss for the quarter back to about U.S.$5 million. Diluted net earnings per ADS attributable to the shareholder were about $0.60 for the nine months ended September 30, 2019 comparing to $0.04 only in the same period of 2018. Diluted net earnings per ADS contributable to shareholder was $0.07 in the third quarter comparing to $0.31 per ADS in the third quarter of 2018. For the quarter, the common repurchase about 1 million ADS this quarter. And we already repurchased about 8.69 million ADS which comprised about 13.5% of our total Ads for the company. If we move to balance sheet as of September 30 this year, the company's cash and cash equivalence including restricted cash were about 688.4 million compared to around 1 billion as of June 30, 2019. Majority of these reduction of debt was used to filing the settlement or the debt. So, you can see that our total debt outstanding for now is was around 3.2 billion is also decreasing from about 3.6 billion at the end of the second quarter. So, the quarter to-date reduction or the total debt is around U.S.$400 million. The balance of the company's real estate property under development at the end of this quarter was about 3.6 billion compared to about 3.8 billion at the end of the second quarter of the year. Shareholder equity at the end of the third quarter was about 710 million comparing to about 763 million at the end of the second quarter. Overall, the shareholders equity reduced by 43 million about 37 million of them actually contributed by the CTA, the FX translation. If we move to the project updates, as of the September 30, 2019, our total unsold land bank was above 5 million square meter which would translate to about [70] [ph] billion Chinese Yen land bank which all can translate to about U.S.$10 billion land bank. If we move to the U.S. project update, as of September 30, 2019, our Houston project in Brooklyn New York has recognized total revenue of about 260 million from the sales of 177 units out of the total 216 units. The second project which is the Broome on 50 Avenue which is we call Hudson Garden project in Manhattan, New York, complete the superstructure construction. And as well as the precast the concrete for window installation and received permanent power from the electric utility provider. During the past year, projects designed [indiscernible] were optimized and the total number of units subsequently increased from 82 to 92. 29,000 square foot or the project 38,000 square absolute or the total retail space has been leased to U.S. department store retailer target for 20 years term and another 1910 square foot that's been leased to [indiscernible] office also 15-years. Residential unit sales are expected to be open in the first quarter next year. We continue to execute on the pending governmental approval and predevelopment activity for the third project in New York which is the RKO, our grounds up development project in fraction New York. Transfer work or the size landmark artifacts was completed at the end earlier this year and is currently store in a warehouse for restoration work. As of September 30, 2019, GKV architect was engaged to develop and deliver the new architectural plan and [indiscernible] drive is a 100% completed. If you look at our project in U.K. in the third quarter of 2019 the construction remain on track on the Madison project which is expected with the completion time of 2020. By the end of the third quarter all of the 104 affordable housing apartment of the projects has been pre-sold, of the remaining 319 apartments, 134 apartments have been sold. In terms of the dividend, we announced a cash dividend for the third quarter of 2019 or the $0.10 per ADS which will be paid before January 16, 2020 to shareholders of record as of December 18, 2019. And for onto our full-year 2019 financial forecast, for the whole year the company expects consolidated net income and the contract sales to be close to those of the 2018. This concludes my prepared remarks for today's call. Operator, now we are ready to take some questions.

[Operator Instructions] Thank you. We will take our first question today from George Grow, Private Investor. Please go ahead.

Hi. Thank you for taking the call. I have a question about the guidance. If you see the net income will be similar to 2018 but your share counts also dropped 11% to 12%. Does that mean we will have earnings-per share increase of about 13%?

Yes. The share purchase was purchased in the last few years is not as happened in this quarter and for the 13.5%, we bought it back but they haven't been cancelled. So for the calculation we still go by the full shares outstanding out there.

Also no new land purchase, is that to preserve cash?

For the quarter we didn't acquire a lot of land. To some extent is our cash management, but next year with also have some land acquisition plan in place. Also you look at our overall land bank, asset at this point, we have about 668 billion Chinese Yuan was for the land bank which is sufficient for our development and growth for the next two to three year.

Also last question is, do you expect any policy change in China that to help the developers. That's what I have heard from accounts in Europe, real estate loses a policy. Is that true or not?

At this point we causes automates that somewhere middle next year. There might be some loss of the restriction but not really in recent weeks and the next quarter. We are more focused on our own operation and efficiency than betting and gambling, on the lose of these governmental policies.

Thank you.

[Operator Instructions] We will take our next question from Terry Chen. Go ahead.

Hi. Good morning. Thank you for the presentation and I have two questions mainly regarding your cash bonds and your [indiscernible]. So the first one is, it’s like your cash leverage getting pretty low in the end of fourth quarter. So, do you have any target like what will be your cash level by the end of this year? And also like we're looking at just short-term debt beside your outstanding short-term debt is why is almost a billion dollars. So, like -- so what is like -- what is your plan and what kind of measure that you're thinking about taking to address this why short-term by that repayment pressure and where the comment you consider in the asset disposal to alleviate some of their pressure that we are seeing right now. Thank you.

Thank you. First of all, for the cash position we forecast that by the end of the year the cash position would be improved to about 1 billion. And typically in a business like us For is the largest quarter with most of the pre-sales and recognized for the quarter and cash collections from the operation. We expect that the cash position will improve. In terms of the short-term debt, you are right there, at its high, we had about 1 billion. But again, we see cash collect for the quarter and the next 12 months to come we actually expect that we could have about 18 billion cash can collect for the next 12 months. This is should be sufficient to helping us to cover the short-term debt. The other things is that as mentioned earlier, we had about U.S.$10 billion land bank outdoor debt like 40%, we could bring it to the market and push for the presale for the next 12 months. And certainly, we are also working on certain refinancing for the next 12 months. And we saw our credit and reputation, we are confident that we can refinance certain fund for the next 12 months. So overall, we are confident that Xinyuan had very good liquidity -- capability to deal with the short-term debt. As a matter of our fact, for these the 1 billion short-term debt, certain percentage of them is negotiable. We saw our lender to renew or extend for another one year or two. So I hope I answered your question from those three or four points.

But, will the company consider like any like major like asset disposal at all?

No. As far as we don't have that intention. We believe that we saw our organic growth and push for the trending process and bringing more land bank on the sales, we should be able to recover sufficient funds to pay for these short-term debt.

Okay. Thank you very much.

Thank you. We now move to [Chris Don of CKD Analysis] [ph]. Please ahead.

Yes. Can you hear me?

Yes. Please go ahead.

Please comment on your dividend policy, or do you foresee a change in that, you have been consistently paying a dividend? And then, the second part of my question, I'll ask you now. You distributed your property management operation and listed it separately onto the Hong Kong Exchange. I would like to know, is there any benefit involved there for shareholders, the stock price went down.

Yes. Okay. First of all, the dividend policy, we evaluate the dividend policy every quarter. At this point because we are confident to achieve more or less similar net income compared to year before. In the near future we intend to keep this dividend to be consistent with before. Obviously, we see uncertainty of this macro-environment, is the environment change or the other financial, it may be more challenging in the future. We will always review these on a quarterly basis and adjusted accordingly. But at this point, we mean to keep it consistent. To come to your second question about the property management company got leased in Hong Kong Stock Exchange. Yes, currently the share price thing are dropping. But, we believe that these temporary change is the share price does not reflect the true value on our property management company and we are more focused on how to grow and long-term growth instead of the win, these share prices. We believe that we saw time passing by, when our property management company does deliver the performance as what we forecast. The investor will recognize the value and the share price will go back to a reasonable level. And in terms of the benefit to our shareholder, although we split it out, the property management company still fully consolidated in Xinyuan's financial statement. The change of the share price won't be referred into our financial number, but the way that we lease it on the market, can help in last bring in additional capital for that operation as well as to increase the credibility of that operation and bringing a lot more partner and the coordinator that can help and can walk together, we see our property management company also can push this business to improve their operation. So in the near future, we believe that by bringing on these platform, the property management company will have the opportunity and have the capability and we have confident that they will deliver and will grow way faster and more profitable than a real estate private leading the group.

Are you saying that you are consolidating all the property management or it's just a part of it being consolidated in your -- like your quarterly reports and earnings reports?

Currently, Xinyuan own about 50% of -- on the property management company. So, based under the U.S. accounting guidelines we fully consolidate each line. And then in the minority interest, we will deduct the net income or the 40% minority interest.

Is that reflected in your third quarter, number have been higher and have spun off property management?

For the quarter we just -- this listing event happened -- it is a Q4 event. We just listed in October 11. So in this quarter you won't see any change, but based on our three-years forecast this business supposed to be grow by about 30% to 40% each year. And we believe that by going on this platform, they will have better results and better chance to grow even better than what we forecast. And the value will show on our financial statement. Don't forget that, property management is powered [indiscernible] business, senior auxiliary business is not a standalone business all of these auxiliary they had a lot of synergy effect with our main business line. Each business grow they will continually help to the other business lines and how Xinyuan as a whole.

[Technical Difficulty]

I'm sorry I can't hear your voice is a little bit trembling. Can you repeat your question?

[Technical Difficulty] especially taking into account your growth expectations for property management.

We still missed the first-half of your question, the second half is fine. Can you repeat the first half?

Yes. It's a very nice return on capital business and property management business is a good business. So, I'm just saying to the record that that's a better way of realizing value for shareholders I guess on a longer-term basis or even on a shorter-term basis?

In the shorter term probably not that direct.

Okay. Thank you.

Thank you. [Operator Instructions] We do have a follow-up question from George Grow. Please go ahead.

Have a few more questions. First one is that, the tax rate seems to be very high this quarter. Is there an explanation for that?

Yes. On our board, on our tax is actually had two components. One is the land appreciation tax, the other is corporate income tax. It's way higher this quarter due to two reasons. First reason is that for the company we according to our broken down analysis, the effective tax rate in our Chinese domestic market is actually stayed very healthy and reasonable 25%. And for the corporate income tax rate for our U.S. operations, it also we may end reasonable 35% which is the federal and state tax. The issue is coming from the offshore senior notes, the interest or the senior notes, it cannot transfer back to the domestic market to be used to deduct the taxable income. And for this quarter because the denominator which is our taxable income is smaller compared to the quarter before, so it looks a little bit high in this quarter, but on a year-to-date basis, it stay in the reasonable level.

Okay. The next question is, you have a new President and a new Board of Director. Can you tell us more above that?

Yes. We had a new CEO who is also joining our Board this quarter and joining the Board. This gentleman has over 25 years of experience in the finance and accounting. We believe that Mr. Li joining the company, Xinyuan's overall performance and the finance and accounting capability will move up to the to another level. Yes, sure. And but just to clarify this gentleman, he is joining us as the President. And the CEO, we may ask Mr. Zhang still taking the CEO role.

Last question for me is, can you update support of the [indiscernible] effort. It seem to be very hot in China.

Yes. It's high in China and so… [Foreign Language] So, let me translate that was coming from our Chairman and CEO Mr. Zhang. Now let me translate, I will correspond to your question on the blockchain. Yes, we believe that blockchina is a technology that had a great future and can make a lot of change for the induction. Since three-years ago, we started to look into this opportunity by working with IBM and some big law firm, we already clarify and accomplished a lot of achievement in terms of the technology and legal compliance. For the quarter we launched tier and trying to security ties about ten unit at our property by means of the blockchain technology or what we call it FTO. We hope that this trial can deliver the value for the future, for the company. [Foreign Language] Xinyuan is a company believe in technology can change life and change the industry by bracing this new technology and combine it with innovation in the fundraising and financing. We believe that the benefit will realize in the future.

Okay. Thank you. That's all my questions.

Thank you. Ladies and gentlemen over time I would like to turn the call back over to management for any closing remarks.

We thank you all for joining us on today's call. And we appreciate your ongoing support. We look forward to updating you on our progress in the weeks and months ahead. Thank you again everyone. Have a good day.

Thank you. Ladies and gentlemen that will conclude today's conference call. Thank you for your participation. You may now disconnect.