Tuesday, August 16, 2011

Chinese Real Estate Stocks SYSW, CHLN and EJ Head in Different Directions

China’s real estate market has long been predicted to be over due for a correction and yesterday’s performance by Syswin (NYSE: SYSW)China Housing & Land Development (NASDAQ: CHLN) and E-House China Holdings (NYSE: EJ) should leave investors more confused than ever as to when exactly the correction is coming. Specifically, SYSW fell 18%, CHLN fell 20.89% but EJ rose 10.59% – putting them among the top losers or gainers for Monday. Meanwhile, some analysts predict that a 20% to 30% price correction in major Chinese coastal cities (including Beijing and Shanghai) would not be unheard of as the government seeks to cool overheating real estate markets. Hence, here is a closer look at SYSW, CHLN and EJ to help you decide if they might warrant further due diligence at this time:
Syswin’s (NYSE: SYSW) Net Income Fell Hard Last Quarter
Syswin is a Chinese real estate service provider that primarily provides real estate sales agency services to property developers relating to new residential properties and general sales agency services. On Monday, Syswin fell 18% to $2.05 (SYSW has a 52 week trading range of $2 to $8.15 a share). Investors should note that last Wednesday, Syswin reported that 2Q2011 net revenue decreased 11.7% from 2Q2010 to RMB148.2 million while net income decreased 81.2% from to RMB10.8 million. Hence, Syswin fell from the $2.6 level to the $2.25 level but had risen back up to the $2.50 level on Friday.
China Housing & Land Development (NASDAQ: CHLN) Avoids a Property Bubble Burst as its Based in Western China
China Housing & Land Development is involved in the development, construction and sale of residential and commercial real estate properties along with land development in Western China. On Monday, China Housing & Land Development fell 20.89% to $1.25 (CHLN has a 52 week trading range of $0.85 to $3.64 a share). However, it should be noted that CHLN was trading at the $1 level before spiking to the $1.50 level on Friday. On Monday though, China Housing & Land Development announced that for fiscal 2011, the company expects total contract revenue to reach $180 to $200 million - 22%-35% higher than the $148 million reported in 2010. Moreover, total recognized revenue for fiscal 2011 is expected to rise from $140 million to reach $135 to $155 million. Hence, perhaps CHLN will escape the bursting of the Chinese property bubble on the coast.
E-House China Holdings (NYSE: EJ) Will Report Earnings on August 17
E-House China Holdings real estate services company in People’s Republic of China through its subsidiary, China Real Estate Information Corporation (NASDAQ: CRIC). On Monday, E-House China Holdings rose 10.59% to $7.10 on no apparent news (EJ has a 52 week trading range of $5.52 to $20.14 a share) but the stock will report earnings on Wednesday, August 17. Hence, there is a good chance for some movement by EJ later this week.

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