Xinyuan Real Estate Co., Ltd. Announces Second Quarter 2019 Financial Results

BEIJING, Aug. 16, 2019 /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 in other countries, today announced its unaudited financial results for the second quarter ended June 30, 2019.

Highlights

• First half contract sales of 2019 increased 3.4% to RMB6,676.3 million from RMB6,457.0 million in the first half of 2018.
• Contract sales decreased 20.0% to US$507.4 million from US$633.9 million in the second quarter of 2018 and increased 5.8% from US$479.7 million in the first quarter of 2019.
• Total revenue increased 71.3% to US$609.4 million from US$355.8 million in the second quarter of 2018 and increased 30.0% from US$468.9 million in the first quarter of 2019.
• Gross profit increased 45.5% to US$159.2 million from US$109.4 million in the second quarter of 2018 and increased 21.5% from US$131.0 million in the first quarter of 2019.
• Selling, General and Administrative ("SG&A") expenses as a percentage of total revenue decreased to 10.3% from 13.2% in the second quarter of 2018 and decreased from 12.0% in the first quarter of 2019.
• Net income was US$19.8 million compared to net loss of US$9.3 million in the second quarter of 2018 and net income of US$18.2 million in the first quarter of 2019.
• Current debt outstanding decreased 33.8% to US$1,207.2 million, or 33.6% of the total debt, from US$1,823.7 million, or 51.9% of the total debt, in the first quarter of 2019.
• Diluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$0.19 compared to diluted net loss of US$0.10 per ADS in the second quarter of 2018 and diluted net earnings of US$0.33 per ADS in the first quarter of 2019.

Mr. Yong Zhang, Xinyuan's Chairman, stated, "In the first half of 2019, Xinyuan maintained stable growth and commenced pre-sales of three new projects in China. The total value of contracts signed in the first half was RMB7,323.2 million, representing a 12.0% increase compared to RMB6,537.4 million in the first half of 2018. Thanks to the outstanding sales performance, the company has achieved top- and bottom-line growth despite downward pressure on sales across the industry. In the first half of 2019, total revenue increased 103.5% year over year. Moreover, we were able to reduce SG&A expenses as a percentage of total revenue to 11.0% in the first half from 16.4% in the first half of 2018. As a result, gross profit increased by 96.0% year over year, and net income was US$38.0 million compared to a net loss of US$22.0 million in the first half of 2018. Furthermore, our overseas projects continued to proceed as planned, and presales of our Manhattan project are expected to launch at the end of the fourth quarter of 2019.

"At the same time, we are seeing a lasting impact from changes in the macro-economic environment and stringent government restriction policies on the Chinese housing market. However, we believe that our strategic focus on high quality tier-one and tier-two city projects as well as our strong execution capabilities enable us to further solidify our leading market position and deliver sustainable long-term growth. We remain committed to controlling our financial leverage and maximizing Xinyuan's financial health. We are also pleased to offer another quarterly dividend payment to our shareholders," concluded Mr. Zhang.

Second Quarter 2019 Financial Results

Contract Sales
Contract sales in China totaled US$507.4 million in the second quarter compared to US$630.3 million in the second quarter of 2018 and US$478.9 million in the first quarter of 2019.

The Company's GFA sales in China were 233,200 square meters in the second quarter of 2019 compared to 282,900 square meters in the second quarter of 2018 and 211,400 square meters in the first quarter of 2019.            

The average selling price ("ASP") per square meter sold in China was RMB14,755 (US$2,176) in the second quarter of 2019 compared to RMB14,173 (US$2,226) in the second quarter of 2018 and RMB15,269 (US$2,264) in the first quarter of 2019.

The Company commenced pre-sales of two new projects in the second quarter of 2019, Xinyang Splendid V, Suzhou Gusu Shade II. The presales contributed 5.9% and 3.6% of total GFA sales and total contract sales, respectively.

Breakdown of GFA Sales and ASPs by Project in China

Revenue
In the second quarter of 2019, the Company's total revenue increased 71.3% to US$609.4 million from US$355.8 million in the second quarter of 2018 and increased 30.0% from US$468.9 million in the first quarter of 2019.

Gross Profit
Gross profit for the second quarter of 2019 was US$159.2million, or 26.1% of total revenue, compared to a gross profit of US$109.4 million, or 30.7% of total revenue, in the second quarter of 2018 and a gross profit of US$131.0 million, or 28.0% of total revenue, in the first quarter of 2019.

Selling, General and Administrative Expenses
SG&A expenses were US$63.0 million for the second quarter of 2019 compared to US$47.0 million for the second quarter of 2018 and US$56.1 million for the first quarter of 2019. As a percentage of total revenue, SG&A expenses were 10.3% compared to 13.2% in the second quarter of 2018 and 12.0% in the first quarter of 2019.

Net Income
Net income for the second quarter of 2019 was US$19.8 million compared to net loss of US$9.3 million for the second quarter of 2018 and net income of US$18.2 million for the first quarter of 2019. Net margin was 3.3% compared to negative 2.6% in the second quarter of 2018 and 3.9% in the first quarter of 2019. Diluted net earnings per ADS were US$0.19 compared to diluted net loss of US$0.10 per ADS in the second quarter of 2018 and diluted net earnings of US$0.33 per ADS in the first quarter of 2019. 

Balance Sheet
As of June 30, 2019, the Company's cash and cash equivalents (including restricted cash) decreased to US$1,021.8 million from US$1,127.2 million as of March 31, 2019.

Total debt outstanding was US$3,595.0 million, which reflects an increase of US$81.2 million from US$3,513.8 million at the end of the first quarter of 2019. The balance of the Company's real estate properties under development at the end of the second quarter of 2019 was US$3,844.0 million compared to US$4,002.0 million at the end of the first quarter of 2019.

Real Estate Project Status in China

Below is a summary table of projects that were active and available for sale in the second quarter of 2019.

As of June 30, 2019, the Company's total saleable GFA was approximately 5,224,600 square meters for active projects and under planning stage projects in China. Below is a summary of all of the Company's projects in China:

Update on Real Estate Projects in the United States

As of June 30, 2019, a total of 177 units out of 216 units were sold and closed at the Company's Oosten project in Brooklyn, New York City, with total revenue from this project reaching US$260.1 million.

During the second quarter, the Company completed superstructure construction and closed out 90% of the external wall and windows for the Hudson Garden project, BLOOM ON FORTY FIFTH, in the Hell's Kitchen area of Manhattan, New York City. During the past year, the design drawings were optimized, increasing the number of units from 82 to 92. Of the 38,000 square feet of retail/commercial space, a total of 29,000 square feet have been leased to the U.S. department store retailer Target for a 20-year term. The offering plan was approved in the first quarter of 2019, and the launch of presales is expected to begin in the end of the fourth quarter of 2019.

The Company continued to execute on the planning, governmental approvals, and pre-development activities of its ground-up project, the RKO, in Flushing, New York City. During the past year, the Landmark Preservation Committee approved the Company's landmark protection plan relating to the landmarked theater on site and awarded the Company a Certificate of Appropriateness. Landmark artifact removal was completed at the end of February 2019, and the artifacts are currently stored in a warehouse for restoration work.

Real Estate Project Update in the United Kingdom

During the second quarter of 2019, the structural frame of the Company's Madison project in London was completed, reaching a significant milestone for the delivery of the project. Construction remains on track for completion in 2020.

Of the 423 residential units in The Madison, all of the 104 Affordable Housing apartments have been pre-sold to a regulated affordable housing provider. Of the remaining 319 apartments, 134 apartments have been sold.

Business Outlook

For the full year of 2019, the Company expects an increase in contract sales of about 10% and an increase in consolidated net income of 15% to 20% over 2018.

Conference Call Information
The Company will hold a conference call at 8:00 am ET on August 16, 2019, to discuss its second quarter 2019 results. Listeners may access the call by dialing:

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 August 23, 2019, by dialing:

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, 2018. 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. Charles Wang
Investor Relations Director
Tel: +86 (10) 8588-9376
Email: irteam@xyre.com

ICR, LLC
Mr. William Zima
In U.S.: +1-646-308-1472
Email: William.zima@icrinc.com

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

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