China HGS Reports Third Quarter of Fiscal Year 2016 Results

2016-08-09 19:00 1914

HANGZHOU, China, August 9, 2016 /PRNewswire/ -- China HGS Real Estate Inc. (NASDAQ: HGSH) ("China HGS" or the "Company"), a leading regional real estate developer headquartered in Hanzhong City, Shaanxi Province, China, today reported its financial results for the third quarter of fiscal 2016 ended June 30, 2016 with the U.S. Securities and Exchange Commission. An electronic copy of the quarterly report on Form 10-Q can be accessed on the SEC's website at www.sec.gov.

Highlights for the Quarter

Total revenues for the third quarter of fiscal 2016 were approximately $12.5 million, a decrease of 52.0% from approximately $26.0 million in the same quarter of fiscal 2015. Total revenues recognized from percentage of completion method were approximately $9.2 million, which accounted for 73.4% of total revenues in the third quarter of fiscal 2016.
Net income for the third quarter of fiscal 2016 totaled approximately $2.4 million, a decrease of approximately 82.2% from the net income of approximately $13.7 million in the same period of last year. The decreased profit in this quarter compared to the same quarter of last year was primarily due to a slowdown of contracted sales achieved in the current quarter.
Basic and diluted net earnings per share ("EPS") attributable to shareholders for the third quarter of fiscal 2016 were $0.05, compared to $0.30 for the same quarter last year.

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China HGS Real Estate Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the uncertain market for the Company's business, macroeconomic, technological, regulatory, or other factors affecting the profitability of real estate business; and other risks related to the Company's business and risks related to operating in China. Please refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2015, as well as the Company's Quarterly Reports on Form 10-Q that have been filed since the date of such annual report, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

About China HGS Real Estate, Inc.

China HGS Real Estate, Inc. (NASDAQ: HGSH), founded in 1995 and headquartered in Hanzhong City, Shaanxi Province, is a leading real estate developer in the region and holds the national grade I real estate qualification. The Company focuses on the development of high-rise, sub-high-rise residential buildings and multi-building apartment complexes in China's Tier 3 and Tier 4 cities and counties with rapidly growing populations driven by increased urbanization. The Company provides affordable housing with popular and modern designs to meet the needs of multiple buyer groups. The Company's development activity spans a range of services, including land acquisition, project planning, design management, construction management, sales and marketing, and property management. For further information about China HGS, please go to www.chinahgs.com.

Company contact:

Randy Xiong,
President of Capital Market
China Phone: (86) 091-62622612
Email: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
	June 30				September 30
	2016				2015
ASSETS
Current assets:
Cash	$		2,085,365		$				1,333,919
Restricted cash			1,498,730						1,715,268
Cost and earnings in excess of billings			10,647,842						11,825,036
Real estate property development completed			65,629,882						75,391,512
Real estate property under development			48,766,106						55,154,153
Other current assets			5,509,313						228,223
Total current assets			134,137,238						145,648,111
Property, plant and equipment, net			695,857						780,038
Real estate property development completed, net of current portion			1,896,673						2,140,271
Security deposits for land use right			2,932,377						3,146,237
Real estate property under development, net of current portion			182,557,600						143,660,781
Due from local government for real estate property development completed			3,010,099						3,065,000
Total Assets	$		325,229,844			$	$ 298,440,438
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loan		$		-				$		6,292,474
Other loans				6,149,632						5,674,239
Accounts payable				24,877,120						41,501,682
Other payables				9,810,636						12,676,362
Construction deposits				896,572						1,959,706
Billings in excess of cost and earnings				1,680,886						3,315,302
Customer deposits				19,508,249						17,387,969
Shareholder loan				1,810,000						1,810,000
Accrued expenses				3,440,961						4,855,891
Taxes payable				15,448,779						15,830,886
Total current liabilities				83,622,835						111,304,511
Deferred tax liabilities				4,882,100						4,711,161
Customer deposits, net of current portion				10,149,810						8,246,004
Other loans, less current portion				70,212,895						15,731,186
Construction deposits, net of current portion				700,921						972,432
Total liabilities				169,568,561						140,965,294
Commitments and Contingencies
Stockholders' equity
Common stock, $01 par value, 100,000,000 shares
authorized, 45,050,000 shares issued and outstanding
June 30, 2016 and September 30, 2015				45,050						45,050
Additional paid-in capital				17,809,016						17,764,316
Statutory surplus				16,439,333						16,439,333
Retained earnings				124,839,624						119,668,198
Accumulated other comprehensive income				(3,471,740)						3,558,247
Total stockholders' equity				155,661,283						157,475,144

Total Liabilities and Stockholders' Equity		$		325,229,844				$		298,440,438

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)


	Three months ended June 30,				Nine months ended 31,
	2016		2015		2016		2015

Real estate sales	$	12,497,413	$	26,014,516	$	25,205,879	$	60,138,945
Less: Sales tax		(847,938)		(1,655,046)		(1,741,251)		(3,892,435)
Cost of real estate sales		(8,183,462)		(9,347,052)		(15,520,371)		(27,702,998)
Gross profit		3,466,013		15,012,418		7,944,257		28,543,512

Operating expenses
Selling and distribution expenses		71,959		211,558		288,138		804,700
General and administrative expenses		609,428		427,363		1,668,790		1,636,889
Total operating expenses		681,387		638,921		1,956,928		2,441,589

Operating income		2,784,626		14,373,497		5,987,329		26,101,923

Interest expense		(29,917)		(22,540)		(203,057)		(54,300)
Income before income taxes		2,754,709		14,350,957		5,784,272		26,047,623

Provision for income taxes		310,548		641,368		612,846		1,441,943
Net income		2,444,161		13,709,589		5,171,426		24,605,680

Other comprehensive income (loss)
Foreign currency translation adjustment		(4,745,409)		306,940		(7,029,987)		1,086,967

Comprehensive income (loss)	$	(2,301,248)	$	14,016,529	$	(1,858,561)	$	25,692,647

Basic and diluted income per common share
Basic and diluted	$	0.05	$	0. 30	$	0.11	$	0.55

Weighted average common shares outstanding
Basic		45,050,000		45,050,000		45,050,000		45,050,000
Diluted		45,050,000		45,075,821		45,050,000		45,089,819

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CHINA HGS REAL ESTATE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
	Nine months ended June 30,
	2016			2015
Cash flows from operating activities
Net income	$	5,171,426	$		24,605,680
Adjustments to reconcile net income to net cash providing by (used in) operating activities:
Deferred tax provision		383,850	1,369,997
Stock based compensation		44,700			-
Depreciation		59,658			63,137
Changes in assets and liabilities:
Due from local government for real estate property development completed		-			815,661
Cost and earnings in excess of billings		681,609			942,175
Real estate property development completed		6,811,151			1,915,343
Real estate property under development		(42,105,175)			6,547,520
Other current assets		(5,418,847)			955,405
Accounts payables		(15,187,183)			(25,674,976)
Other payables		(2,373,223)			886,212
Billings in excess of cost and earnings		(1,526,997)			4,786,440
Customer deposits		5,257,341			(7,585,864)
Construction deposits		(1,236,962)			12,902
Accrued expenses		(1,248,883)			1,126,826
Taxes payable		310,218			2,471,784
Net cash (used in) providing by operating activities		(50,377,317)			13,238,242

Cash flows from investing activities
Purchase of fixed assets		(8,010)			-
Net cash used in investing activities		(8,010)			-

Cash flow from financing activities
Restricted cash		145,758			(181,039)
Proceeds from shareholder loan		840,077			10,500,816
Repayment of shareholder loan		(840,077)			(12,084,829)
Repayment of bank loans		(6,165,703)			(6,525,285)
Proceeds from other loans		62,793,918			9,787,928
Repayment of other loans		(5,559,922)			(12,094,617)
Net cash provided by (used in) financing activities		51,214,050			(10,597,026)

Effect of changes of foreign exchange rate on cash		(77,277)			17,623
Net increase in cash		751,446			2,658,839
Cash, beginning of period		1,333,919			1,125,545
Cash, end of period	$	2,085,365	$		3,784,384
Supplemental disclosures of cash flow information:
Interest paid	$	2,843,145	$		1,355,741
Income taxes paid	$	369,885	$		102,337

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.