Xinyuan Real Estate Co., Ltd. Announces Fourth Quarter 2017 Financial Results

BEIJING, Feb. 9, 2018 /PRNewswire/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan" or the "Company") (NYSE: XIN), an NYSE-listed real estate developer and property manager operating primarily in China and also in other countries, today announced its unaudited financial results for the fourth quarter ended December 31, 2017.

Fourth Quarter 2017 Highlights

• Contract sales increased 72.4% to US$802.4 million from US$465.3 million in the fourth quarter of 2016 and increased 32.7% from US$604.5 million in the third quarter of 2017.
• Total revenue increased 44.3% to US$729.0 million from US$505.3 million in the fourth quarter of 2016 and increased 51.1% from US$482.4 million in the third quarter of 2017.
• Gross profit increased 40.3% to US$177.9 million, or 24.4% of total revenue, from US$126.8 million, or 25.1% of total revenue, in the fourth quarter of 2016 and increased 63.5% from US$108.8 million, or 22.6% of total revenue, in the third quarter of 2017.
• Selling, General and Administrative ("SG&A") expenses as a percentage of total revenue increased to 10.6% from 10.4% in the fourth quarter of 2016 and is the same with 10.6% in the third quarter of 2017.
• Net income increased 110.2% to US$35.1 million compared from US$16.7 million in the fourth quarter of 2016, and increased 112.7% from US$16.5 million in the third quarter of 2017.
• Diluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$0.47 compared to US$0.18 in the fourth quarter of 2016 and US$0.22 in the third quarter of 2017.

Full Year 2017 Highlights

• For the year ended December 31, 2017, contract sales increased 40.0% to US$2,466.0 million from US$1,761.7 million in 2016. GFA sales increased 21.1% to 1,363,600 square meters from 1,126,100 square meters in 2016.
• Total revenues increased 26.8% to US$1,980.2 million from US$1,561.6 million in 2016.
• Gross profit was US$457.3 million, or 23.1% of revenue in 2017, compared to a gross profit of US$358.0 million, or 22.9% of revenue in 2016.
• SG&A expenses were US$211.6 million, or 10.7% of revenue in 2017, compared to US$178.6 million, or 11.4% of revenue in 2016.
• Net income was US$79.8 million in 2017 compared to US$79.5 million in 2016. Diluted earnings per ADS were US$0.94 in 2017 compared to US$1.06 per ADS in 2016.

Mr. Yong Zhang, Xinyuan's Chairman, stated, "We are pleased to see strong growth in contract sales during the fourth quarter despite ongoing restrictive government policies impacting China's overall housing market. Thanks to steady demand at our active projects, contract sales in this quarter grew to US$802 million, or over RMB5.4 billion, above the high end of our guidance range of RMB4.6 billion to RMB 4.8 billion. This consequently drove our full-year contract sales growth to 40.0% from the previous year, above our guidance range of 35% to 37%."

"During the fourth quarter, we commenced pre-sales on two new projects in China -- Zhengzhou International New City III and Zhengzhou Fancy City II (North)," continued Mr. Zhang, "and we continued to take advantage of market conditions to increase our land bank with six projects for development and three construction management service projects are in the pipeline. These projects are mainly located in our existing markets, with solid track records, and we believe they will drive our long-term growth. Furthermore, our under planning stage projects in both China and the U.S. continue to proceed as expected."

"We remain cautious about the market as the government's restrictive policy continues, but we are optimistic about our ability to adjust to the environment and deliver strong financial results. We will continue to seek additional avenues of growth in our core development business as well as our new construction management service business. We remain committed to our shareholders and are proud to have achieved 24 consecutive quarterly dividends thus far," concluded Mr. Zhang.

Fourth Quarter 2017 Financial Results

Contract Sales

Contract sales in China totaled US$795.9 million in the fourth quarter compared to US$347.8 million in the fourth quarter of 2016 and US$597.5 million in the third quarter of 2017.

The Company's GFA sales in China were 443,600 square meters in the fourth quarter of 2017 compared to 222,000 square meters in the fourth quarter of 2016 and 369,500 square meters in the third quarter of 2017.

The average selling price ("ASP") per square meter sold in China was RMB12,118 (US$1,794) in the fourth quarter of 2017 compared to RMB10,401 (US$1,566) in the fourth quarter of 2016 and RMB10,994 (US$1,616) in the third quarter of 2017.

Contract sales in the United States totaled US$6.5 million in the fourth quarter of 2017.

The Company commenced pre-sales of two new projects in the fourth quarter of 2017, Zhengzhou International New City III and Zhengzhou Fancy City II (North), which contributed 23.6% and 24.8% of total GFA sales and total contract sales, respectively.

Breakdown of GFA Sales and ASPs by Project in China

Revenue

In the fourth quarter of 2017, the Company's total revenue increased 44.3% to US$729.0 million from US$505.3 million in the fourth quarter of 2016 and increased 51.1% from US$482.4 million in the third quarter of 2017.

Gross Profit

Gross profit for the fourth quarter of 2017 was US$177.9 million, or 24.4% of revenue, compared to a gross profit of US$126.8 million, or 25.1% of revenue, in the fourth quarter of 2016 and a gross profit of US$108.8 million, or 22.6% of revenue, in the third quarter of 2017.

Selling, General and Administrative Expenses

SG&A expenses were US$77.2 million for the fourth quarter of 2017 compared to US$52.3 million for the fourth quarter of 2016 and US$51.0 million for the third quarter of 2017. As a percentage of total revenue, SG&A expenses were 10.6% compared to 10.4% in the fourth quarter of 2016 and 10.6% in the third quarter of 2017.

Net Income

Net income for the fourth quarter of 2017 was US$35.1 million compared to US$16.7 million for the fourth quarter of 2016 and US$16.5 million for the third quarter of 2017. Net margin was 4.8% compared to 3.3% in the fourth quarter of 2016 and 3.4% in the third quarter of 2017. Diluted earnings per ADS were US$0.47 compared to US$0.18 per ADS in the fourth quarter of 2016 and US$0.22 per ADS in the third quarter of 2017.

Balance Sheet

As of December 31, 2017, the Company's cash and cash equivalents (including restricted cash) increased to US$1,481.0 million from US$1,187.2 million as of September 30, 2017. The strong cash position is attributable to Xinyuan's solid cash collection ability, which helped the Company's cash collection rate (cash collected from contract sales/total 2017 contract sales) reach around 90%, higher than industry average, even under the current restrictive policies.

Total debt outstanding was US$3,311.8 million, which reflected an increase of US$819.4 million compared to US$2,492.4 million at the end of the third quarter of 2017. The balance of the Company's real estate properties under development at the end of the fourth quarter of 2017 was US$2,001.2 million compared to US$2,080.5 million at the end of the third quarter of 2017.

Real Estate Project Status in China

Below is a summary table of projects that were active and available for sale in the fourth quarter of 2017.

Xinyuan further enlarged its land bank in the fourth quarter to support its development in future years by acquiring six pieces of land with total GFA of 1,805,000 m², four of which are projects that will be developed through cooperation with other companies.

As of December 31, 2017, the Company's total saleable GFA was approximately 4,935,600 square meters for active projects and under planning stage projects in China, about 223% of the same period last year. Below is a summary of all of the Company's planning stage projects:

Update on Real Estate Projects in the United States

As of December 31, 2017, a total of 172 units out of 216 total units were sold and closed for the Company's Oosten project in Brooklyn, New York, with total revenue from this project reaching US$250.8 million. Number of units sold and revenue in 2017 were 66 and US$98.8 million respectively.

The Company expects foundation work to be completed in the first quarter of 2018 for its Hudson Garden project in Manhattan, New York. After optimizing the internal layout of the building, the Company now expects 87 units to be available for sale, an increase from the original 82.

The Company continues to execute on the planning, governmental approvals and pre-development activities of its ground-up development project in Flushing, New York. During the fourth quarter of 2017 and the beginning of 2018, the Landmark Protection Committee approved Xinyuan's landmark protection plan and awarded the Company a Certificate of Appropriateness. The Company expects to begin transferring and protecting crucial parts of the landmark RKO theater in the first quarter of 2018. The Company continues to follow the required governmental procedures for the future construction needs of this project.

Update on Construction Management Service Business

Leveraging its experience and resources in the industry to provide value to companies that would like to own buildings but have no property development expertise, Xinyuan started its construction management service business in the third quarter of 2017 with its first project in Guangzhou. Another three projects were added to the pipeline of this business section.

Under this asset-light business model, Xinyuan will charge a service fee for providing the construction management service. Xinyuan may also charge an interest spread if it provides financing support by means including, without limitation to, holding minority interest in the project through limited partnerships with financial institutions. This business section will supplement Xinyuan's core traditional project development business for future growth. Below is a summary of the Company's construction management service projects:

Business Outlook

For 2018, the Company expects an increase in contract sales of about 10% and an increase in consolidated net income of 15%-20% over 2017. For first quarter of 2018, contract sales are expected to be on par with the prior year first quarter period and the Company expects significant pressure on earnings in the first quarter due to slower sales associated with Chinese New Year and increased interest expense associated with new debt from land acquisitions in late 2017.

Conference Call Information

The Company will hold a conference call at 8:00 am ET on February 09, 2018 to discuss fourth quarter 2017 results. Listeners may access the call by dialing:

US: 1-888-394-8218
International: 1-323-794-2149

A webcast will also be available through the Company's investor relations website at http://ir.xyre.com.

A replay of the call will be available through February 16, 2018 by dialing:

US: 1-844-512-2921
International: 1-412-317-6671
Access code: 8795287

About Xinyuan Real Estate Co., Ltd.

Xinyuan Real Estate Co., Ltd. ("Xinyuan") is an NYSE-listed real estate developer and property manager primarily in China and recently in other countries. In China, Xinyuan develops and manages large scale, high quality real estate projects in over ten tier one and tier two cities, including Beijing, Shanghai, Zhengzhou, Jinan, Xi'an, and Suzhou. Xinyuan was one of the first Chinese real estate developers to enter the U.S. market and over the past few years has been active in real estate development in New York. Xinyuan aims to provide comfortable and convenient real estate related products and services to middle-class consumers. For more information, please visit http://www.xyre.com.

Forward Looking Statements

Certain statements in this press release constitute "forward-looking statements". These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements includes statements about estimated financial performance and sales performance and activity, among others, and can generally be identified by terminology such as "will", "expects", "anticipates", "future", "intends", "plans", "believes", "estimates" and similar statements. Statements that are not historical statements are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including, but not limited to, our ability to continue to implement our business model successfully; our ability to secure adequate financing for our project development; our ability to successfully sell or complete our property projects under construction and planning; our ability to enter successfully into new geographic markets and new business lines and expand our operations; the marketing and sales ability of our third-party sales agents; the performance of our third-party contractors; the impact of laws, regulations and policies relating to real estate developers and the real estate industry in the countries in which we operate; our ability to obtain permits and licenses to carry on our business in compliance with applicable laws and regulations; competition from other real estate developers; the growth of the real estate industry in the markets in which we operate; fluctuations in general economic and business conditions in the markets in which we operate; and other risks outlined in our public filings with the Securities and Exchange Commission, including our annual report on Form 20-F for the year ended December 31, 2016. Except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statement is made.

Notes to Unaudited Financial Information

This release contains unaudited financial information which is subject to year-end audit adjustments. Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between our audited financial statements and this unaudited financial information.

For more information, please contact:

In China:

Xinyuan Real Estate Co., Ltd.

Mr. Joe Xu
Investor Relations Director
Tel: +86 (10) 8588-9376
Email: irteam@xyre.com

ICR, LLC
In U.S.: +1-646-308-1472
In China: +86 (10) 6583-7511
Email: William.zima@icrinc.com

Media:
Edmond Lococo
In China: +86 (10) 6583-7510
Email: Edmond.Lococo@icrinc.com

View original content:http://www.prnewswire.com/news-releases/xinyuan-real-estate-co-ltd-announces-fourth-quarter-2017-financial-results-300596339.html