Xinyuan Real Estate Co., Ltd. (NYSE:XIN), a residential real estate developer with a focus on high growth, strategic Tier II & III cities in China, announced today that its Board of Directors has declared a cash dividend of US$0.05 per common share, or US$0.10 per American Depositary Share (ADS), payable on June 20, 2011 to shareholders of record on June 10, 2011.
Xinyuan also announced that its Board of Directors has approved a share repurchase program under which the Company may spend up to US$10 million to repurchase common shares, either in the form of common shares or American Depositary Shares in the open market or in privately negotiated transactions over the next 12 months at the discretion of management.
The shares will be purchased from time to time at such prices, and in such manner as are authorized by management depending upon market conditions. Under the program, the purchases will be funded from available working capital. There is no guarantee as to the exact number of shares that Xinyuan may repurchase and Xinyuan may discontinue purchases at any time that management determines additional purchases are not warranted. As of May 25, 2011, Xinyuan had approximately 153 million common shares, or 76.5 million ADSs, outstanding.
Mr. Yong Zhang, Xinyuan's Chairman and Chief Executive Officer commented, "These actions reflect our confidence in the future financial performance of our business and the prospects of China's real estate industry. For the past several years, our key priorities for using our cash were to invest in our development projects. We have made significant progress on these efforts, and they will continue to be a focus. However, given the weakness in our share price, we believe accelerating the repurchase of shares and the implementation of a dividend is a highly appropriate use of cash at this time. We are pleased to maximize value for our shareholders through these initiatives. We believe the company remains well positioned for future development, and will have a strong growth and solid profits this year."
A good sign of the company. I hope that more US-listed China companies follow this example. If they can distribute twice a year a dividend of $0.10 you have a potential cash cow. At the current stock price of $2.18 the company represents a 2011 PE of about 2 with a 67% discount to book value. The strong cash position makes regular cash dividends possible.