Big Profits from Chinese Real Estate: 1/3 Top Performer
The markets are truly off the starting blocks for 2018, and so far look to be establishing some bullish momentum. Solid earnings and continuing reassurance from macroeconomic data pushed stocks broadly higher on the session. Virtually every major index posted solid gains, with the Nasdaq leading the way.
Many analysts expect to see more of this bullish energy become focused on international equities as the year moves on. As US stocks reach toward higher and higher valuations, investors may begin looking abroad to find stronger upside potential.
Today’s Top Performer is our second stock in a row that suggests there may be something to this trend.
China HGS Real Estate is regional real estate developer based in Hanzhong City, Shaanxi (HGS). They chiefly focus on high-rise style residential complexes.
They reported their 2017 revenues today, generating $58.7 million—up 45% from FY16. What’s more, the income appears more solid than in the previous year—the portion of their earnings accounted based on a “completion method” is lower. The “completion” method refers to the real estate development practice of valuing projects at some percentage of their value based on the percentage of the project completed.
As more of HGSH’s revenue becomes actual cash flow rather than accounting profits, investors receive greater assurance of the ultimate financial viability of these projects.
Investors indeed appeared enthused about the financial potential of the stock, buying it on heavy volume. The stock was up 90% at the time of this writing—actually a consolidation from gains well over 200% earlier in the day.
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