Real estate remains a hot property in China, with E-House
Let's start with E-House. The real estate agency's fourth-quarter revenue more than tripled to $117.1 million. Even on an organic basis -- before E-House combined its real estate information and consulting services with SINA's
The gross floor area of sold properties during the quarter rose 137%, yet the value of those sales was up 154%. In other words, real estate prices continue to inch higher in China.
You already know about the 165% increase in organic revenue, so go ahead and peek on the bottom line to find non-GAAP earnings up 226% to $0.42 a share. E-House started with a big number, but made it even larger in the end.
China Real Estate Info also rocked. Revenue rose 203% to $41.3 million for the quarter, and would have still more than doubled if the company hadn't taken on SINA's online realty arm. The company's non-GAAP profit of $0.13 a share is a healthy improvement over the $0.08 a share it rang up a year ago.
Both E-House and China Real Estate Info are projecting a substantial quarter-to-quarter drop in revenue for the current quarter, but don't panic. Chinese real estate is very seasonal, and the $69 million to $71 million that E-House is targeting still represents an 89% to 92% increase over last year's showings (after backing out SINA's impact).
The market isn't giving the industry the respect it deserves. China Real Estate Info is trading for less than the $12 price it went public at back in October. It's not right. Real estate is languishing domestically, yet Web-savvy ZipRealty
Will the real estate bubble pop in China? It very well might, but the stocks are already discounting a pretty sudsy mess. I suggest that the improving Chinese economy -- with gradual improvement in the average Chinese citizen's earnings power -- will help soften the blow (if and when the bubble does burst).
There's a compelling foundation here. It's hard to ignore the growth.
What do you think of China's real estate opportunities? Share your thoughts in the comments box below.