China HGS Reports Second Quarter of Fiscal Year 2015 Results

News provided by

China HGS Real Estate Inc.

May 11, 2015, 07:00 ET

HANZHONG, China, May 11, 2015 /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 2015 ended March 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 second quarter of fiscal 2015 were approximately $23.6 million, a decrease of 53% from approximately $49.9 million in the same quarter of fiscal 2014. Total revenues recognized from percentage of completion method were approximately $20.9 million, which accounted for 88.6% of total revenues in the second quarter of fiscal 2015. The year-over-year decrease of revenue was primarily due to limited inventory on completed projects.
  • Net income for the second quarter of fiscal 2015 totaled approximately $9.3 million, a decrease of approximately $4.2 million from the net income of approximately $13.4 million in the same period of last year. The decreased net income in this quarter compared to the same quarter of last year was primarily due to less contracted sales achieved in the current quarter.
  • For the six months ended March 31, 2015, the Company achieved a positive operating cash flow of approximately $4.5 million, compared to negative operating cash flow of approximately $18.8 million in the same period of last year.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the second quarter of fiscal 2015 were $0.21, decreased by 31% from $0.30 for the same quarter of last year.

"The Company had a positive operating cash flow during the six months ended March 31, 2015" said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "Additionally, the Company achieved higher gross margin compared to the same period of last year. In the second half of fiscal 2015, we expect that the completion of several real estate projects currently under development will increase our contracted sales. Meanwhile, we will focus on increasing our marketing efforts to sell our completed real estate properties. Given recent more relaxed central government policy on the real estate industry to bolster economic growth in China to a targeted rate, we are positive about the outlook for the local real estate market in a long term," 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, 2014, 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) 91-6262-2612
Email: [email protected]

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


March 31

September 30

2015

2014

ASSETS




Current assets:




Cash

$

1,018,455

$

1,125,545

Restricted cash

1,629,017

1,589,887

Advances to vendors

65,353

-

Cost and earnings in excess of billings

11,097,577

12,332,396

Real estate property development completed

4,576,372

6,050,263

Real estate property under development

130,182,807

140,313,127

Other current assets

237,031

1,409,367

Total current assets

148,806,612

162,820,585

Property, plant and equipment, net

852,297

889,497

Real estate property development completed, net of current portion

2,413,376

2,572,215

Security deposits for land use right

3,267,653

3,249,549

Real estate property under development, net of current portion

139,339,801

128,516,074

Due from local government for real estate property development completed

2,366,367

3,165,644

Total Assets

$

297,046,106

$

$301,213,564

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Bank loan – current portion

$

11,436,787

$

12,998,197

Short-term loans - other

11,373,068

15,290,753

Accounts payable

40,362,754

57,317,877

Other payables

14,404,395

13,777,853

Construction deposits

359,312

367,133

Billings in excess of cost and earnings

5,972,193

2,960,452

Customer deposits

28,188,991

31,100,334

Shareholder loan

11,362,985

5,465,743

Accrued expenses

4,591,043

3,801,567

Taxes payable

13,657,327

12,579,071

Total current liabilities

141,708,855

155,658,980

Long-term bank loan, less current portion

1,633,827

6,499,098

Deferred tax liabilities


3,746,058

2,992,459

Customer deposits, net of current portion

6,042,496

3,829,870

Construction deposits, net of current portion

1,009,959

1,004,364

Total liabilities

154,141,195

169,984,771

                     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, 2015 and September 30, 2014

45,050

45,050

Additional paid-in capital

17,759,349

17,759,349

Statutory surplus

12,845,197

12,845,197

Retained earnings

102,730,799

91,834,708

Accumulated other comprehensive income

9,524,516

8,744,489

Total stockholders' equity

142,904,911

131,228,793






Total Liabilities and Stockholders' Equity

$

297,046,106

$

301,213,564

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

(Unaudited)


Three months ended March 31,

Six months ended 31,

2015

2014

2015

2014












Real estate sales

$

23,558,742

$

49,907,770

$

34,124,429

$

64,048,333

Less: Sales tax

1,566,839

3,007,183

2,237,389

3,953,871

Cost of real estate sales

11,330,140

31,503,090

18,355,946

40,648,931

Gross profit

10,661,763

15,397,497

13,531,094

19,445,531












Operating expenses










Selling and distribution expenses

217,976

253,916

593,142

368,266

General and administrative expenses

593,348

586,245

1,209,526

1,126,474

Total operating expenses

811,324

840,161

1,802,668

1,494,740












Operating income

9,850,439

14,557,336

11,728,426

17,950,791












Interest income

3,276

4,446

4,440

9,005

Interest expense

(18,100)

(18,100)

(36,200)

(36,200)

Income before income taxes

9,835,615

14,543,682

11,696,666

17,923,596












Provision for income taxes

565,514

1,095,103

800,575

1,417,900

Net income

9,270,101

13,448,579

10,896,091

16,505,696












Other comprehensive income (loss)










Foreign currency translation adjustment

593,266

(939,669)

780,027

(532,304)












Comprehensive income

$

9,863,367

$

12,508,910

$

11,676,118

$

15,973,392












Basic and diluted income per common share










Basic

$

0. 21

$

0.3

$

0.24

$

0.37

Diluted

$

0. 21

$

0.3

$

0.24

$

0.37












Weighted average common shares outstanding










Basic

45,050,000

45,050,000

45,050,000

45,050,000

Diluted

45,120,699

45,126,214

45,120,699

45,126,214












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)


Six months ended March 31,

2015

2014

Cash flows from operating activities

Net income

$

10,896,091

$

16,505,696

Adjustments to reconcile net income to net cash provided by (used in) operating activities:


            Deferred tax provision

734,407

1,103,204

      Depreciation

42,012

43,661

Changes in assets and liabilities:



      Restricted cash

(30,168)

(157,070)

      Due from local government for real estate property development completed

814,120

(3,183,853)

      Advances to vendors

(65,130)

109,435

      Cost and earnings in excess of billings

1,299,070

3,681,777

      Real estate property development completed

1,675,022

7,542,703

      Real estate property under development

801,585

(56,191,546)

      Other current assets

1,176,152

(217,975)

      Accounts payables

(17,215,394)

3,010,516

      Other payables

547,901

3,814,113

      Billings in excess of cost and earnings

2,985,006

(3,600,479)

      Customer deposits

(890,271)

6,269,755

      Construction deposits

(9,832)

14,260

      Accrued expenses

767,099

(154,580)

      Taxes payable

1,004,726

2,610,444

Net cash provided by (used in) operating activities

4,532,396

(18,799,939)





Cash flow from financing activities



      Proceeds from shareholder loan

5,856,780

7,598,660

      Proceeds from bank loan

-

8,170,602

      Repayment of bank loan

(6,512,961)

-

      Proceeds from short-term loan -others

4,884,721

-

      Repayment of short-term loan -others

(8,873,910)

-

Net cash (used in ) provided by financing activities

(4,645,370)

15,769,262





Effect of changes of foreign exchange rate on cash


5,884

(3,471)

Net decrease in cash


(107,090)

(3,034,148)

Cash, beginning of period

1,125,545

5,878,101

Cash, end of period

$

1,018,455

$

2,843,953

Supplemental disclosures of cash flow information:



Interest paid

$

1,056,229

$

751,854

Income taxes paid

$

72,089

$

244,997





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

SOURCE China HGS Real Estate Inc.

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