Check on China: China Housing & Land Development, Inc.

The U.S. housing crisis has caused a global ripple effect that has reached
China's shores. A national credit crunch, plunging housing prices and unheard of drops in home sales is cooling some vital markets in the red-hot Chinese real estate
sector, proving that there are few places left untouched by the real estate
meltdown.
 
The real estate industry is a key driver of economic growth in China, and
although official figures for the first four months of this year show a 32%
rise in property investment compared to the same period last year (and a 10%
increase in the median property prices in 70 Chinese cities in April from a
year earlier), a recent slowdown is causing nervous jitters to spread across
the country.
 
In prosperous cities like Beijing, Shanghai and Hangzhou, which have
experienced a real estate boom over the past few years, property price
corrections are expected later this year. Prices are already falling in
southern China's Pearl River Delta, particularly in Shenzhen, a boomtown near
Hong Kong.
 
But while many Chinese cities are bracing for the worst, Xian, the capital
of Shaanxi Province, is looking toward to the future, which is good news for China Housing & Land Development, Inc. (Nasdaq:CHLN).

The largest private developer of residential and commercial property in
northwestern China, China Housing and Land Development is engaged in the
purchase, development, management and sales of medium-sized real estate
projects in Xian. The company is currently developing several combined-use
complexes that consist of residential apartment communities and office and
retail space. 

The Chinese government's "go west" policy is encouraging real estate investment in Xian, which is considered to be the gateway to the country's western regions.
Though China has been experiencing a property slump of sorts since the end
of 2007, long-term trends such as urbanization will defy the cyclical downturn
in the broader real estate market, according to the 2008 Annual Report on
the Development of China’s Real Estate, published by the China Academy of
Social Sciences.
 
With a population of 8 million, Xian is still growing as China pushes to
develop its vast and largely untapped western frontier. Over the course of
its growth, Xian's residents have seen their personal savings nearly triple,
increasing their disposable income by 50% and sparking a marked rise in
consumer and real estate spending.
 
Moreover, some $64 billion in projects are currently in the works to boost
economic and social development in the region. Official figures from the
National Development and Reform Commission show that real estate
investment in western China soared 42% in the first four months of this
year, outpacing all other regions.
 
Last month, China Housing & Land Development reported first-quarter 2008
revenues of $4.7 million, a 42% slide from the same period in 2007, and net
income of $47,686, compared with $792,502 in the year-ago period. Although
the company posted first-quarter losses, the numbers were above Wall
Street's forecasts.
 
Analysts at Roth Capital Partners remained optimistic, saying that the
financial results, which are heavily dependent on the completion of large
projects, are subject to change on a quarterly basis and the stock should be
valued on project revenue basis over the longer term. The firm also believes
China Housing & Land Development is undervalued, pointing to the fact that
shares are trading at 5 times 2008 EPS compared to its peer group, which trades
at 16.7 times in China and 17.5 times in Hong Kong.
 
On June 10, the company reported that Xian city officials will include the
Chanba District, the location of China Housing & Land Development, Inc.'s
Baqiao project, in its new city development plan. Under the plan, the city
will invest $7.2 billion over the next 10 years to transform the district
into what will be home to close to 1 million middle- and upper-income
residents. Located in the heart of the Chanba District, the 487-acre Baqiao
project will include about 20 million square feet of residential, retail
and  office space, as well as hotel, restaurant and community facilities.
The project is situated adjacent to the planned subway line that will
connect it with downtown, the Xian international airport, and the immensely
popular Terra Cotta Warrior display, which is visited by over 2 million
tourists annually.
 
Pingju Lu, chairman and chief executive officer of China Housing & Land
Development praised the new plan, saying modernization of Xian and the urban
expansion into rural areas surrounding the city was the "logical" thing to
do and that strong demand for large-scale residential and commercial
facilities in the city will "reinforce the growth and success we expect for
our Baqiao project."
 
The company has proven its ability to leverage established relationships
with the local government and, as a result, is one of Xian's most
well-respected real estate developers. This recognition, along with the
company's ambitious development of residential and commercial space to meet
growing demand in a city where new high-rise apartments, office buildings
and retail plazas are being built to cater to the expected onslaught of
tenants and tourists, should ultimately translate to long-term success for
this small cap.
 
CHLN shares closed at $4 on Wednesday. The stock has traded between $3.20
and 8.20 over the past 52 weeks. Analysts' consensus one-year target is
$10.

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