XI'AN, China November 14, 2011 /PRNewswire-Asia-FirstCall/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2011.
Highlights for Q3 2011:
Mr. Pingji Lu, China Housing's Chairman, commented, "We were pleased to see across-the-board improvement in our business as compared to last quarter as we enjoyed stronger levels of sales, gross margin, reduced operating expenses, and higher net income. Puhua Phase I and Puhua Phase II, which together comprised nearly 80% of our recognized revenue, both had strong average selling prices representing favorable increases over the prior quarter. These improvements helped increase our gross margin to 30% compared to the 25% from last quarter."
"As we evaluate our schedule of project activity going forward, we have an active lineup of projects expected to commence pre-sales activity over the next twelve months. While there are broader concerns about falling prices in the real estate market, particularly in Tier 1 cities, we currently remain comfortable with the market environment in Xi'an
We have five projects in the pipeline that together represent a total of nearly 1.4 million sq. meters of unsold GFA. As more of these projects are introduced into the market, we have the opportunity to significantly increase our performance over 2011 levels."
Total revenue in the third quarter of 2011 increased 58.5% to $32.1 million from $20.3 million in the second quarter of 2011 and decreased 5.7% from $34.0 million in the third quarter of 2010. In the third quarter of 2011, most of the Company's revenue came from its Puhua Phase I and Phase II. Third quarter 2011 contract sales totaled US$21.9 million representing a total GFA of 19,212 square meters. Third quarter 2011 contract sales represented a 34.6% decrease compared to US$33.5 million in the third quarter of 2010. Total gross floor area ("GFA") sales were 19,212 sq. meters during the third quarter of 2011, compared to 12,769 sq. meters in the second quarter of 2011 and 39,833 sq. meters in the third quarter of 2010. The Company's average residential selling price ("ASP") in the third quarter of 2011 was RMB 7,326, compared with RMB 6,551 in the second quarter of 2011, and RMB 5,694 in the third quarter of 2010.
Gross profit for the three months ended September 30, 2011 was $9.5 million, representing an increase of 86.3% from $5.1 million in the second quarter of 2011 and 12.7% decrease from $10.9 million in the same period of 2010. The gross profit margin for the three months ended September 30, 2011 was 29.7%, which is below the 32.0% in the same period of 2010 and above the 25.3% in the second quarter of 2011.
SG&A expense was $2.9 million in the third quarter of 2011, compared to $3.3 million in the second quarter of 2011 and $2.9 million in the third quarter of 2010. SG&A expenses as a percentage of total revenue decreased to 9.1%, compared to 16.4% in the second quarter of 2011 but increased from 8.4% in the third quarter of 2010. The increase in SG&A as a percent of total revenue is primarily due to reduced revenue.
Operating income in the third quarter increased to $6.1 million, or 19.0% of total revenue, from $0.9 million, or 4.2% of total revenue, in the second quarter of 2011, and decreased from $7.0 million, or 20.6% of total revenue in the third quarter of 2010 primarily due to reduced revenues.
Net income attributable to China Housing in the third quarter of 2011 was $4.4 million or $0.13 per basic share and $0.12 per diluted share. Excluding the $1.8 thousand gain associated with the revaluation of derivatives and warrants, net income was $4.3 million. This performance compares to a net income of $(0.1) million in the second quarter of 2011, which excludes a $0.7 million non-cash gain associated with the revaluation of derivatives and warrants in the second quarter of 2011.
Sequential Quarterly Revenue Breakout Comparison
Project | Q3 2011 | Q2 2011 | |||||||||
Recognized Revenue | Contract Sales | GFA Sold | ASP | Unsold GFA | POC | Recognized Revenue | Contract Sales | GFA Sold | ASP | ||
| ($) | ($) | (m2) | (RMB) | (m2) |
| ($) | ($) | (m2) | (RMB) | |
Projects Under Construction | |||||||||||
Puhua Phase One | 12,852,050 | 5,806,231 | 4,829 | 7,712 | 18,099 | 74.6% | 7,703,630 | 4,952,039 | 4,291 | 7,500 | |
Puhua Phase Two | 12,588,905 | 14,859,498 | 13,534 | 7,045 | 193,142 | 49.6% | 4,975,580 | 5,686,955 | 6,717 | 5,502 | |
Projects Completed | |||||||||||
JunJing II Phase One | 1,118,044 | 1,118,044 | 624 | 4,091 | 2,913 | 100% | 193,138 | 193,138 | 125 | 9,992 | |
JunJing II Phase Two | 107,068 | 107,068 | 168 | 11,500 | - | 100% | 1,988,513 | 1,325,792 | 966 | 8,923 | |
Tsining-24G | - | - | - | - | 71 | 100% | - | - | - | - | |
JunJing I | 45,789 | 45,789 | 57 | 5,200 | 998 | 100% | 672,697 | 672,697 | 587 | 7,450 | |
Additional Project | - | - | - | - | 100% | 39,698 | 39,698 | 83 | - | ||
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Other Income | 5,387,137 | - | - | 4,678,936 | - | - | |||||
Total | 32,098,993 | 21,936,630 | 19,212 | 7,326 | 215,223 | - | 20,252,192 | 12,870,319 | 12,769 | 6,551 | |
Q-o-Q Change | 58.5% | 70.4% | 50.50% | 11.8% |
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As of September 30, 2011, China Housing reported $74.1 million in unrestricted cash, compared to $72.7 million as of June 30, 2011 and $46.9 million as of December 31, 2010. Total debt outstanding as of September 30, 2011 was $172.4 million compared with $167.0 million on June 30, 2011 and $143.9 million on December 31, 2010. Net debt outstanding (total debt less cash) as of September 30, 2011 was $57.6 million compared with $54.2 million on June 30, 2011 and $62.3 million on December 31, 2010. The Company's net debt as a percentage of total capital (net debt plus shareholders' equity) was 46.4% on September 30, 2011 and 31.5% on June 30, 2011 and 38.0% on December 31, 2010. The increase in this figure was primarily due to additional bank loans and employee loans.
Q3 2011 | |||
Projects in Planning | Unsold GFA | First Pre-sales Scheduled | |
(m2) | |||
JunJing III | 49,636 | Q4 2011 | |
Park Plaza | 141,822 | Q2 2012 | |
Golden Bay | 252,540 | Q3 2012 | |
Puhua Phase Three | 130,000 | Q2 2012 | |
Puhua Phase Four | 161,107 | Q4 2013 | |
Textile City | 630,000 | Q4 2012 | |
Total projects in planning | 1,365,105 | ||
2011 Outlook
Total contract sales in 2011 are expected to reach $120 to $130 million, a 12.2%-18.9% decrease compared to $148 million in 2010. Total recognized revenue in 2011 is expected to reach $110 to $120 million, compared to $140 million in 2010. Gross margin in 2011 is expected to reach 30%-35%. The Company is reporting contract sales estimates compared to revenue as they are not subject to percentage of completion alterations.
Conference Call Information
Management will host a conference call at 9:00 am ET on the date of this press release. Listeners may access the call by dialing #1-913-312-0684. To listen to the live webcast of the event, please go to http://www.viavid.net. Listeners may access the call replay, which will be available through November 21st, 2011, by dialing #1-858-384-5517; passcode: 5844807.
About China Housing & Land Development, Inc.
Based in Xi'an, the capital city of China's Shaanxi province, China Housing & Land Development, Inc., is a leading developer of residential and commercial properties in northwest China. China Housing has been engaged in land acquisition, development, and management, including the sales of residential and commercial real estate properties through its wholly-owned subsidiary in China, since 1992.
China Housing & Land Development is the first Chinese real estate development company traded on NASDAQ. The Company's news releases, project information, photographs, and more are available on the internet at www.chldinc.com.
Safe Harbor
This news release may contain forward-looking information about China Housing & Land Development, Inc. which is covered under the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward- looking terminology such as believe, expect, may, will, should, project, plan, seek, intend, or anticipate or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and China Housing & Land Development's future performance, operations, and products.
Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Actual performance results may vary significantly from expectations and projections. Further information regarding this and other risk factors are contained in China Housing's public filings with the U.S. Securities and Exchange Commission.
All information provided in this news release and in any attachments is as of the date of the release, and the companies do not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.
China Housing contacts
Mr. Cangsang Huang
Chief Financial Officer
Tel: +86-29-8258-2648 in Xi'an
Email: chuang@chldinc.com
Ms. Jing Lu
Chief Operating Officer, Board Secretary, and Investor Relations Officer
+86 29.8258.2639 in Xi'an
jinglu@chldinc.com / English and Chinese
Mr. Shuai Luo
Investor Relations
+86 29.8258.2632 in Xi'an
Laurentluo@chldinc.com / English and Chinese
Mr. Bill Zima, ICR
+86 10 6583 7511
William.Zima@icrinc.com
China Housing Investor Relations Department
+1 646. 308.1285
(Financial Tables on Following Pages)
Item 1. Financial Statements
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES Interim Condensed Consolidated Balance Sheets As of September 30, 2011 and December 31, 2010 (Unaudited) | |||||||||
September 30, | December 31, | ||||||||
2011 | 2010 | ||||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 74,098,123 | $ | 46,904,161 | |||||
Cash - restricted | 40,701,899 | 34,756,450 | |||||||
Accounts receivable, net of allowance for doubtful accounts of $272,121 and $266,493, respectively | 13,910,436 | 9,297,505 | |||||||
Other receivables, prepaid expenses and deposits, net | 3,930,649 | 7,653,925 | |||||||
Real estate held for development or sale | 148,442,048 | 104,586,550 | |||||||
Property and equipment, net | 31,587,601 | 29,735,836 | |||||||
Advance to suppliers | 844,374 | 1,223,366 | |||||||
Deposits on land use rights | 63,508,273 | 74,938,729 | |||||||
Intangible assets, net | 53,488,970 | 51,846,410 | |||||||
Goodwill | 1,869,798 | 1,806,905 | |||||||
Deferred financing costs | 290,894 | 401,703 | |||||||
Total assets | $ | 432,673,065 | $ | 363,151,540 | |||||
LIABILITIES | |||||||||
Accounts payable | $ | 29,523,570 | $ | 22,542,083 | |||||
Advances from customers | 69,581,165 | 52,229,189 | |||||||
Accrued expenses | 2,307,947 | 2,507,638 | |||||||
Payable for acquisition of businesses | - | 2,363,385 | |||||||
Income and other taxes payable | 13,584,230 | 15,429,752 | |||||||
Other payables | 6,039,241 | 5,663,222 | |||||||
Loans from employees | 12,213,860 | 8,787,879 | |||||||
Bank loans | 105,275,231 | 82,971,074 | |||||||
Deferred tax liability | 14,712,954 | 14,344,712 | |||||||
Warrants liability | 86,886 | 2,766,382 | |||||||
Fair value of embedded derivatives | 504,789 | 2,027,726 | |||||||
Convertible debt | 8,939,523 | 16,251,840 | |||||||
Mandatorily redeemable noncontrolling interests in Subsidiaries | 45,890,236 | 33,535,969 | |||||||
Total liabilities | 308,659,632 | 261,420,851 | |||||||
SHAREHOLDERS' EQUITY | |||||||||
Common stock: $.001 par value, authorized 100,000,000 shares | |||||||||
issued and outstanding 33,083,354 and 31,884,969, respectively | 35,079 | 32,685 | |||||||
Additional paid in capital | 48,865,219 | 38,996,078 | |||||||
Treasury Stock | (167,357) | - | |||||||
Common stock subscribed | - | 59,606 | |||||||
Statutory reserves | 6,654,715 | 6,654,715 | |||||||
Retained earnings | 48,975,756 | 41,528,907 | |||||||
Accumulated other comprehensive income | 19,650,021 | 14,458,698 | |||||||
Total China Housing & Land Development, Inc. shareholders' equity | 124,013,433 | 101,730,689 | |||||||
Noncontrolling interests | - | - | |||||||
Total shareholders' equity | 124,013,433 | 101,730,689 | |||||||
Total liabilities and shareholders' equity | $ | 432,673,065 | $ | 363,151,540 | |||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES Interim Condensed Consolidated Statements of Income For The Three and Nine Months Ended September 30, 2011 and 2010 (Unaudited) | |||||||||||||||||
3 Months | 3 Months | 9 Months | 9 Months | ||||||||||||||
September 30, 2011 | September 30, 2010 | September 30, 2011 | September 30, 2010 | ||||||||||||||
REVENUES | |||||||||||||||||
Sale of properties | $ | 26,711,856 | $ | 31,455,921 | $ | 61,941,929 | $ | 99,067,368 | |||||||||
Other income | 5,387,137 | 2,592,853 | 12,966,952 | 5,148,115 | |||||||||||||
Total revenues | 32,098,993 | 34,048,774 | 74,908,811 | 104,215,483 | |||||||||||||
COST OF SALES | |||||||||||||||||
Cost of sales of properties | 18,829,374 | 22,568,245 | 46,618,588 | 74,821,470 | |||||||||||||
Cost of other income | 3,743,196 | 571,224 | 7,927,620 | 1,684,851 | |||||||||||||
Total cost of sales | 22,572,570 | 23,139,469 | 54,546,208 | 76,506,321 | |||||||||||||
Gross margin | 9,526,423 | 10,909,305 | 20,362,673 | 27,709,162 | |||||||||||||
OPERATING EXPENSES | |||||||||||||||||
Selling, general, and administrative expenses | 2,913,008 | 2,873,590 | 9,667,449 | 9,170,039 | |||||||||||||
Stock based compensation | 96,438 | - | 114,258 | - | |||||||||||||
Other expenses | 54,267 | 232,493 | 444,745 | 420,525 | |||||||||||||
Interest expense | 148,739 | 433,666 | 1,111,347 | 1,038,732 | |||||||||||||
Accretion expense on convertible debt | 217,391 | 363,624 | 761,195 | 1,038,732 | |||||||||||||
Total operating expenses | 3,429,843 | 3,903,373 | 12,098,994 | 12,017,462 | |||||||||||||
NET INCOME FROM BUSINESS OPERATION | 6,096,580 | 7,005,932 | 8,263,679 | 15,691,700 | |||||||||||||
CHANGE IN FAIR VALUE OF DERIVATIVES | |||||||||||||||||
Change in fair value of embedded derivatives and warrants from modification | - | - | - | 2,180,492 | |||||||||||||
Change in fair value of embedded derivatives | (60,705) | (958,688) | (1,522,937) | (2,832,023) | |||||||||||||
Change in fair value of warrants | 58,937 | (405,821) | (1,055,337) | (3,203,085) | |||||||||||||
Total change in fair value of derivatives | (1,768) | (1,364,509) | (2,578,274) | (3,854,616) | |||||||||||||
Income before provision for income taxes and noncontrolling interest | 6,098,348 | 8,370,441 | 10,841,953 | 19,546,316 | |||||||||||||
Provision for income taxes | 1,758,024 | 1,926,345 | 3,529,614 | 4,467,337 | |||||||||||||
Recovery of deferred income taxes | (62,542) | (31,370) | (134,510) | (82,367) | |||||||||||||
NET INCOME | 4,402,866 | 6,475,466 | 7,446,849 | 15,161,346 | |||||||||||||
Charge to noncontrolling interest | - | - | - | (14,229,043) | |||||||||||||
NET INCOME ATTRIBUTABLE TO CHINA HOUSING & LAND DEVELOPMENT, INC. | $ | 4,402,866 | $ | 6,475,466 | $ | 7,446,849 | $ | 932,303 | |||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||||||||||
Basic | 35,071,915 | 33,082,573 | 34,683,383 | 32,911,414 | |||||||||||||
Diluted | 36,687,624 | 37,374,784 | 36,299,092 | 35,636,354 | |||||||||||||
NET INCOME (LOSS) PER SHARE | |||||||||||||||||
Basic | 0.13 | 0.20 | 0.22 | 0.03 | |||||||||||||
Diluted | 0.13 | 0.15 | 0.19 | (0.05) | |||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
