Kirin Development China, Inc. (KIRI) is a U.S. corporation which controls Huaxia Kirin Real Estate Co., Ltd., the largest non-government developer of residential mixed-use properties in the southern Hebei Province city of Xingtai, North China's oldest city with a population of 7 million.
For 17 years Kirin has specialized in master-planned real estate development in China's Third Tier cities such as Xingtai, where GDP has grown at a double-digit rate for the past four years, and is now the sixth largest economy in Hebei Province.
Kirin Development has recorded a CAGR of 65% since 2004, culminating in profits of USD$8 million in 2009 and projected earnings of USD$20 million in 2010 and USD$35 million in 2011. Kirin became a U.S. public company and completed a USD$1.4 million equity financing in Q1 '11.
Kirin is led by a strong and experienced management team, with a proven record for profitably developing properties with a gross floor area ("GFA") of over 3.5 million square feet ("SF"). Kirin's established brand name has been recognized with numerous honors, and the Company will utilize proceeds from its investment offering to expand its local expertise from Xingtai into a regional reach targeting Third Tier cities of the Greater Bohai Sea Area for future projects.
Kirin's Target Market: 'Move Up' Housing For China's 3rd Tier Cities
Kirin's residential projects target mid-range and high-end customers in Xingtai for "move up" housing needs and master-planned communities in redevelopment areas of the city's 600,000 center core population base.
Current Kirin projects include No. 79 Courtyard and Kirin Bay, with recent first phases selling 50% and 70%, respectively, on their opening weekends. Kirin's estimated average selling prices for these two projects range from USD$70 to USD$86 per SF, compared to prices in Beijing and Shanghai that have reached as high as USD$350 to USD$500 per SF.
The Company's home market of Xingtai demonstrates the real estate development potential of China's Third Tier cities: continued urban migration, a balanced and growing economy, the need for trade up housing from an emerging middle class eager and willing to improve itself economically, and much greater relative affordability than the PRC's First Tier and megacities. Xingtai's historical economy of agriculture and iron and steel has given way to services and energy companies, and was named a National Green Model City since 2006.
With a 4% unemployment rate and multinational companies like Siemens, Cabot and SMI investing in projects in the city, growth prospects are excellent for Xingtai. Its comprehensive transportation system revolves around the north-south Beijing-Guangzhou Railway and the east-west Xingtai-Jinan Highway.
Kirin's Competitive Strengths In Real Estate Development
Kirin has a proven track record of successful large-scale mixed use property development since 2000. Kirin has sold several major completed projects which have a GFA of over 3.5 million SF. Kirin's ability to cater to its customers' preferences has been a major factor in the growth of its business. By leveraging the Company's experience and track record, management believes it can penetrate into the real estate markets in other adjacent Third Tier cities in China's Greater Bohai Sea Area.
Kirin has a widely recognized brand name in an attractive provincial market. The Company has received many awards that acknowledge the quality of Kirin real estate developments, including the "Construction Energy Preservation Award" from the Hebei Bureau of Construction. Management believes that the quality of its real estate developments and the recognition of the Kirin brand name by its customers are major factors in the Company's success.
Kirin has an experienced management team with extensive operating experience and industry knowledge. Kirin's Chairman, Mr. Jianfeng Guo, started his property investing career at age 19, has many years of experience in working in the real estate development business in China, and excellent government contacts. Kirin's CEO Longlin Hu took his last publicly-traded Chinese real estate company from $100 million market cap to over $2 billion. Kirin Chief Operating Officer Junfei Hou is experienced in real estate project cost control and project supervision.
Kirin has substantial premium land reserves at premier locations for use as new development projects, giving Kirin an advantage over its competitors who must acquire land before commencing their next projects. Kirin has a strong financial profile and excellent credit record, including credit facilities with top Chinese banks, who have given the Company a high rating. This allows Kirin to prudently leverage its business and take advantage of development opportunities.
Kirin has a compelling growth strategy to achieve higher returns on projects, continue development of large middle-income residential projects, and expand operations to other Third Tier cities in China.