China HGS Reports First Quarter of Fiscal Year 2016 Results

Feb 05, 2016, 07:00 ET from China HGS Real Estate Inc.

HANZHONG, Feb. 5, 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 first quarter of fiscal 2016 ended December 31, 2015 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 first quarter of fiscal 2016 were approximately $5.9 million, a decrease of 44.6% from approximately $10.6 million in the same quarter of fiscal 2015. Total revenues recognized from percentage of completion method were approximately $2.7 million, which accounted for 45.3% of total revenues in the first quarter of fiscal 2016.
  • Net income for the first quarter of fiscal 2016 totaled approximately $1.4 million, a decrease of approximately 12.2% from the net income of approximately $1.6 million in the same period of last year. The decreased profit margin 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 first quarter of fiscal 2016 were $0.03, compared to $0.04 for the same quarter last year.  

"The macro environment remains challenge given the weakening economy in China, coupled with depreciation of Chinese currency. These inevitably contributed to our weaker sales results," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "We have been focusing on factors that we have control to drive the sales and timely complete the constructions under development. In the meantime, the Company is executing strategies to develop more commercial and municipal projects and diversify its revenue streams. We remain confident in our ability to executive the strategies and create long-term shareholder value."

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)



December 31,



September 30,



2015



2015

ASSETS

Current assets:






Cash


$

1,182,817



$

1,333,919

Restricted cash



1,739,793




1,715,268

Advances to vendors



83,260




-

Cost and earnings in excess of billings



11,192,689




11,825,036

Real estate property development completed



71,696,324




75,391,512

Real estate property under development



53,361,785




55,154,153

Other current assets



1,512,819




228,223

Total current assets



140,769,487




145,648,111

Property, plant and equipment, net



743,955




780,038

Real estate property development completed, net of current portion



2,000,626




2,140,271

Security deposits for land use right



3,080,857




3,146,237

Real estate property under development, net of current portion



148,310,045




143,660,781

Due from local government for real estate property development completed



3,001,308




3,065,000

Total Assets


$

297,906,278



$

$ 298,440,438

LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Bank loan – current portion


$

6,161,714



$

6,292,474

Short-term loans - other



472,912




5,674,239

Accounts payable



32,262,036




41,501,682

Other payables



15,992,102




12,676,362

Construction deposits



1,501,141




1,959,706

Billings in excess of cost and earnings



3,367,321




3,315,302

Customer deposits



20,086,668




17,387,969

Shareholder loan



2,649,534




1,810,000

Accrued expenses



4,737,203




4,855,891

Taxes payable



15,530,542




15,830,886

Total current liabilities



102,761,173




111,304,511

Deferred tax liabilities



4,678,534




4,711,161

Customer deposits, net of current portion



7,903,239




8,246,004

Other long term loan payable, less current portion



26,060,283




15,731,186

Construction deposits, net of current portion



924,898




972,432

Total liabilities



142,328,127




140,965,294

Commitments and Contingencies








Stockholders' equity








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








authorized, 45,050,000 shares issued and outstanding








December 31, 2015 and September 30, 2015



45,050




45,050

Additional paid-in capital



17,779,216




17,764,316

Statutory surplus



16,439,333




16,439,333

Retained earnings



121,095,422




119,668,198

Accumulated other comprehensive income



219,130




3,558,247

Total stockholders' equity



155,578,151




157,475,144

Total Liabilities and Stockholders' Equity


$

297,906,278



$

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 December 31,




2015



2014


Real estate sales


$

5,856,607



$

10,565,687


Less: Sales tax



(411,988)




(670,550)


          Cost of real estate sales



(3,208,889)




(7,025,806)


Gross profit



2,235,730




2,869,331


Operating expenses









Selling and distribution expenses



90,153




375,166


General and administrative expenses



478,511




616,178


Total operating expenses



568,664




991,344


Operating income



1,667,066




1,877,987


Interest income



-




1,164


Interest expense



(104,046)




(18,100)


Income  before income taxes



1,563,020




1,861,051


Provision for income taxes



135,796




235,061


Net income



1,427,224




1,625,990


Other comprehensive income (loss)









Foreign currency translation adjustment



(3,339,117)




186,761


Comprehensive income (loss)


$

(1,911,893)



$

1,812,751


Basic and diluted income per common share









Basic


$

0.03



$

0.04


Diluted


$

0.03



$

0.04


Weighted average common shares outstanding









Basic



45,050,000




45,050,000


Diluted



45,050,000




45,122,819



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)



Three months ended December 31,



2015



2014

Cash flows from operating activities



Net income


$

1,427,224



$

1,625,990

Adjustments to reconcile net income to net cash used in operating
activities:








Deferred tax provision



66,304




223,803

Depreciation



20,187




21,015

Stock based compensation



14,900




-

Changes in assets and liabilities:








Due from local government for real estate property development
completed (accounts receivable long-term)



-




814,478

Advances to vendors



(84,577)




(269,993)

Cost and earnings in excess of billings



392,728




236,110

Real estate property development completed



2,258,837




435,511

Real estate property under development



(7,098,791)




934,562

Other current assets



(1,309,716)




386,470

Accounts payables



(8,509,618)




(10,093,427)

Other payables



3,635,725




132,328

Billings in excess of cost and earnings



122,823




1,172,034

Customer deposits



2,934,270




(1,884,242)

Construction deposits



(452,203)




-

Accrued expenses



(24,843)




326,052

Taxes payable



29,080




(699,456)

Net cash used in operating activities



(6,577,670)




(6,638,765)

















Cash flow from financing activities








Restricted cash



(61,120)




(13,160)

Proceeds from shareholder loan



852,802




2,068,775

Proceeds from bank loans



-




4,886,869

Proceeds from other loans



10,824,408




-

Repayment of other loans



(5,163,753)




-

Net cash provided by financing activities



6,452,337




6,942,484









Effect of changes of foreign exchange rate on cash



(25,769)




1,242

Net increase (decrease) in cash



(151,102)




304,961

Cash, beginning of period



1,333,919




1,125,545

Cash, end of period


$

1,182,817



$

1,430,506

Supplemental disclosures of cash flow information:








Interest paid


$

486,077



$

500,397

Income taxes paid


$

69,492



$

58,190









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

SOURCE China HGS Real Estate Inc.



RELATED LINKS

http://www.chinahgs.com
http://www.chinahgs.com