omniture

China HGS Reports Second Quarter of Fiscal Year 2014 Results - Revenues Up by Approximately 157.5%

2014-05-09 19:00 1028

HANZHONG, China, May 9, 2014 /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 second quarter of fiscal 2014 ended March 31, 2014 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 second quarter of fiscal 2014 were approximately $49.9 million, an increase of 157.5% from approximately $19.4 million in the same quarter of fiscal 2013. Total revenues recognized from percentage of completion method were approximately $33.5 million, which accounted for 67.2% of total revenues in the second quarter of fiscal 2014.
  • Net income for the second quarter of fiscal 2014 totaled approximately $13.4 million, an increase of approximately $7.7 million from the net income of approximately $5.8 million in the same period of last year. The increased net income in this quarter compared to the same quarter of last year was primarily due to the significantly increased revenue.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the second quarter of fiscal 2014 were $0.30, increased by 130.8% from $0.13 for the same quarter last year.

"I am very pleased that the Company has delivered strong performance in this quarter," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "During the second quarter, we sold a significant portion of commercial units located in Yang County Pearl Garden Project and successfully delivered two municipal roads constructed for the local government. We also experienced significant sales progress in our newly constructed Mingzhu Beiyuan and Oriental Garden real estate projects. These strong results demonstrate that our growth strategy is working well and our execution is effective."

"As the government is cautiously implementing new policies and strategies to manage a stable economic growth in China, new catalysts will drive the growth. We have confidence that our strategy focusing on the real estate market in Tier 3 and Tier 4 cities and counties in China remains sound and effective going forward." Mr. Zhu continued. "For example, the new airport for the greater Hanzhong area is near its completion and is expected to be in operation in the second half of this year. The new airport will offer several direct flights daily from Tier 1 cities such as Beijing, Shanghai and Shenzhen, and many other regional flights, which we believe will add new catalysts to the economic growth in the greater Hanzhong area. We expect that the regional economy in the area which is our major market will get a boost with the new catalysts." concluded Mr. Xiaojun Zhu.

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, 2013, 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)



March 31


September 30



2014


2013

ASSETS

Current assets:







Cash


$

2,843,953


$

5,878,101

Restricted cash



1,483,280



1,332,807

Advances to vendors



-



109,134

Cost and earnings in excess of billings



5,744,960



2,178,270

Real estate property development completed



9,472,719



11,607,164

Real estate property under development



-



1,580,670

Other current assets



583,328



368,377








Total current assets



20,128,240



23,054,523








Property, plant and equipment, net



930,331



977,739

Real estate property development completed, net of current portion



2,183,887



7,619,811

Security deposits for land use right



3,245,752



3,259,240

Real estate property under development, net of current portion



199,704,185



142,916,601

Accounts receivable



3,161,946



-








Total Assets


$

229,354,341


$

177,827,914

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:







Bank loan - current portion


$

11,360,132


$

4,888,860

Accounts payable



25,424,259



22,527,686

Other payables



5,644,077



1,863,922

Construction deposits



370,131



357,447

Billings in excess of cost and earnings



8,745,055



5,109,758

Customer deposits



6,005,135



6,130,466

Shareholder loan



9,356,374



1,810,000

Accrued expenses



2,731,959



2,896,539

Taxes payable



9,177,823



6,612,707








Total current liabilities



78,814,945



52,197,385

Long-term bank loan, less current portion



12,983,008



11,407,340

Deferred tax liabilities



1,742,989



650,067

Customer deposits, net of current portion



19,681,160



13,410,081

Construction deposits, net of current portion



1,009,683



1,013,877








Total liabilities



114,231,785



78,678,750

Commitments and Contingencies







Stockholders' equity







Common stock, $0.001 par value, 100,000,000 shares







authorized, 45,050,000 shares issued and outstanding







March 31, 2014 and September 30, 2013



45,050



45,050

Additional paid-in capital



17,759,349



17,759,349

Statutory surplus



8,977,230



8,977,230

Retained earnings



79,763,614



63,257,918

Accumulated other comprehensive income



8,577,313



9,109,617

Total stockholders' equity



115,122,556



99,149,164








Total Liabilities and Stockholders' Equity


$

229,354,341


$

177,827,914

CHINA HGS REAL ESTATE, INC.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME


(Unaudited)



















Three months ended March 31,



Six months ended March 31,









2014



2013



2014



2013

























Real estate sales


$

49,907,770



$

19,382,960



$

64,048,333



$

30,386,375







Less: Sales tax



3,007,183




1,148,725




3,953,871




1,859,442







Cost of real estate sales



31,392,779




10,678,011




40,538,620




14,508,255







Gross profit



15,507,808




7,556,224




19,555,842




14,018,678





























Operating expenses






















Selling and distribution expenses



253,916




297,914




368,266




459,008







General and administrative expenses



586,245




1,117,545




1,126,474




1,678,516







Total operating expenses



840,161




1,415,459




1,494,740




2,137,524





























Operating income



14,667,647




6,140,765




18,061,102




11,881,154





























Interest income



4,446




-




9,005




-







Interest (expense)



(128,411)




(18,100)




(146,511)




(36,200)







Other income (expenses) - net



-




7




-




7,959







Income before income taxes



14,543,682




6,122,672




17,923,596




11,852,913





























Provision for income taxes



1,095,103




355,952




1,417,900




577,116







Net income


$

13,448,579



$

5,766,720



$

16,505,696



$

11,275,797





























Other comprehensive income






















Foreign currency translation

adjustment



(939,669)




468,723




(532,304)




677,708





























Comprehensive income


$

12,508,910



$

6,235,443



$

15,973,392



$

11,953,505





























Basic and diluted income per common share






















Basic


$

0.30



$

0.13



$

0.37



$

0.25







Diluted


$

0.30



$

0.13



$

0.37



$

0.25





























Weighted average common shares

outstanding






















Basic



45,050,000




45,050,000




45,050,000




45,050,000







Diluted



45,126,214




45,116,695




45,126,214




45,090,074






























CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



Six months ended



March 31,



2014



2013

Cash flows from operating activities



Net income


$

16,505,696



$

11,275,797

Adjustments to reconcile net income to net cash used in operating

activities:







Deferred tax provision



1,103,204



-

Depreciation



43,661




44,671

Stock based compensation



-




5,512

Changes in assets and liabilities:








Restricted cash



(157,070)




(127,177)

Accounts receivable



(3,183,853)




(4,030,621)

Advances to vendors



109,435




(1,475,065)

Loans to outside parties



-




15,917

Security deposits for land use rights



-




(398,329)

Cost and earnings in excess of billings



3,681,777




-

Real estate property development completed



7,542,703




7,834,524

Real estate property under development



(56,191,546)




(16,983,329)

Other current and non-current assets



(217,975)




(56,762)

Accounts payables



3,010,516




1,302,987

Other payables



3,814,113




652,305

Billings in excess of cost and earnings



(3,600,479)




-

Customer deposits



6,269,755




401,479

Construction deposits



14,260




95,605

Accrued expenses



(154,580)




184,157

Taxes payable



2,610,444




857,617

Net cash used in operating activities



(18,799,939)




(400,712)

















Cash flow from financing activities








Proceeds from shareholder loan



7,598,660




-

Proceeds from bank loan



8,170,602




-

Net cash provided by financing activities



15,769,262




-









Effect of changes of foreign exchange rate on cash



(3,471)




8,219

Net decrease in cash



(3,034,148)




(392,493)

Cash, beginning of period



5,878,101




1,104,686

Cash, end of period


$

2,843,953



$

712,193

Supplemental disclosures of cash flow information:








Interest paid


$

751,584



$

-

Income taxes paid


$

244,997



$

37,408




















Source: China HGS Real Estate Inc.
collection