China Housing & Land Development Inc. Announces Second Quarter 2013 Financial Results

-- Company Beats 2Q13 Forecast --

Aug 14, 2013, 07:00 ET from China Housing & Land Development, Inc.

XI'AN, China, Aug. 14, 2013 /PRNewswire/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended June 30, 2013.

Highlights for Q2 2013:

  • Total revenue in the second quarter of 2013 was $59.7 million, a 9.9% increase from $54.4 million in the first quarter of 2013 and a 70.6% increase from $35.0 million in the second quarter of 2012.  Second quarter recognized revenue significantly exceeded the Company's second quarter revenue outlook of $34 to $36 million.
  • Total gross floor area ("GFA") sales were 48,439 sq. meters during the second quarter of 2013, compared with 89,691 sq. meters in the first quarter of 2013 and 25,908 sq. meters in the second quarter of 2012.
  • Average residential selling price ("ASP") in the second quarter of 2013 was RMB 7,499, compared with RMB 5,695 in the first quarter of 2013, and RMB 5,705 in the second quarter of 2012.
  • Gross profit increased $18.3 million in the second quarter of 2013, a 101.9% increase from $9.0 million in the first quarter of 2013 and a 125.3% increase from $8.1 million in the second quarter of 2012. Second quarter 2013 gross margin was 30.6%, compared with 16.6% in the first quarter of 2013 and 23.2% in the second quarter of 2012.
  • SG&A expenses as a percentage of total revenue increased to 8.2%, from 5.8% in the first quarter of 2013 and decreased from 11.3% in the second quarter of 2012.
  • Operating income was $9.2 million in the second quarter of 2013, a 113.9% increase from $4.3 million in the first quarter of 2013, and a 199.4% increase from $3.1 million in the second quarter of 2012.
  • Net income attributable to the Company in the second quarter of 2013 was $6.4 million, or $0.18 per diluted share, a 107.0% increase from $3.1 million, or $0.09 per diluted share, in the first quarter of 2013.

Mr. Pingji Lu, China Housing's Chairman, commented, "We are pleased to report another strong quarter as our second quarter top line results once again exceeded our guidance forecast. Our strong project development efforts combined with continued strength in the Xi'an residential housing market led to higher average selling prices compared to the last quarter and prior year periods. Four projects contributed the majority of our revenue during the second quarter of 2013, which include our Puhua Phase Two and Three, Park Plaza and Ankang projects."

"We experienced a notable increase in gross profit and a higher gross margin than both the previous quarter and the same period last year, as a result of a considerable increase in revenue and average selling prices while costs remained relatively flat. Furthermore, our Ankang project, which began pre-sales in the fourth quarter of 2012, began to contribute to our revenue during the second quarter."

"As we enter the second half of the year, our current four projects provide us with solid sales and profit opportunities. Additionally, we will initiate marketing for Golden Bay in the third quarter and adjust our sales strategy based on market feedback on the project. We anticipate that official pre-sales will start in the fourth quarter. We remain optimistic about our opportunities in the Xi'an real estate market and continue to focus on the execution of our development project plan. We believe our financial performance in the second half of the year will be strong and that our commitment to providing the highest quality residential properties will continue to drive our growth forward."

Total revenue in the second quarter of 2013 increased 9.9% to $59.7 million from $54.4 million in the first quarter of 2013 and increased 70.6% from $35.0 million in the second quarter of 2012. Other revenue in the second quarter of 2013 decreased to $7.0 million from $11.1 million in the first quarter of 2013 and increased from $4.9 million in the second quarter of 2012. The year-over-year increase was caused by the recognition of interest income on deposits based on the Company's borrowing activity from several overseas banks.

In the second quarter of 2013, the majority of the Company's real estate revenue came from its Puhua Phase Two and Three projects, Park Plaza and Ankang projects. Second quarter 2013 contract sales totaled $59.0 million compared with $82.4 million in the first quarter of 2013 and $24.8 million in the second quarter of 2012. Total gross floor area ("GFA") sales were 48,439 sq. meters during the second quarter of 2013, compared with 89,691 sq. meters in the first quarter of 2013 and 25,908 sq. meters in the second quarter of 2012. The Company's ASP in the second quarter of 2013 was RMB 7,499, compared with RMB 5,695 in the first quarter of 2013, and RMB 5,705 in the second quarter of 2012.

Gross profit for the three months ended June 30, 2013 was $18.3 million, representing an increase of 101.9% from $9.0 million in the first quarter of 2013 and a 125.3% increase from $8.1 million in the second quarter of 2012. Gross profit margin for the three months ended June 30, 2013 was 30.6%, which is above the 16.6% in the first quarter of 2013 and the 23.2% in the second quarter of 2012. The increase in gross profit margin was mainly due to a combination of increased sales volume, increased average selling prices, and sales of Puhua Phase Two commercial units, which had higher gross margin. The Company continues to expect full year gross margin to be in the 25% to 30% range in 2013.

SG&A expense was $4.9 million in the second quarter of 2013, compared with $3.2 million in the first quarter of 2013 and $4.0 million in the second quarter of 2012. SG&A expense as a percentage of total revenue was 8.2%, compared with 5.8% in the first quarter of 2013 and 11.3% in the second quarter of 2012. The year-over-year increase in SG&A expense was due to increased selling expenses during the second quarter of 2013 associated with new projects commencing pre-sales activity. 

Operating income in the second quarter of 2013 was $9.2 million, or 15.3% of total revenue, compared with $4.3 million, or 7.9% of total revenue, in the first quarter of 2013, and $3.1 million, or 8.7% of total revenue in the second quarter of 2012. The year-over-year increase in operating income was mainly due to increased sales revenue and improved gross profit margin.

Net income attributable to China Housing in the second quarter of 2013 was $6.4 million, or $0.18 per diluted share. This performance compares with net income of $3.1 million, or $0.09 per diluted share, in the first quarter of 2013 and net income of $1.9 million, or $0.06 per diluted share, in the second quarter of 2012.

Sequential Quarterly Revenue Breakout Comparison

Project

Q2 2013

Q1 2013

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

Park Plaza

21,709,086

25,098,516

17,348

8,903

110,323

70.9%

19,794,628

30,152,026

22,151

8,439

Puhua Phase

Three

9,168,480

10,163,137

8,665

7,218

71,733

50.9%

17,348,070

36,469,024

48,902

4,624

Puhua Phase

Two

14,621,508

14,039,803

9,181

9,411

127,204

79.9%

5,372,159

7,122,505

5,076

8,700

Ankang

5,526,291

8,024,028

12,655

3,902

191,151

21.5%

-

7,876,083

12,909

4,631

Projects Completed

Puhua Phase

One

1,673,638

1,673,638

591

17,427

7,311

100%

649,744

649,744

569

7,080

JunJing III

24,132

24,132

-

-

873

100%

109,970

109,970

84

8,118

JunJing II

Phase One

-

-

-

-

817

100%

-

-

-

-

JunJing I

-

-

-

-

4,699

100%

-

-

-

-

Other Projects

19,500

-

-

-

-

-

-

-

-

Other Income

6,996,473

-

-

11,099,124

-

-

Total

59,739,107

59,023,253

48,439

7,499

514,110

-

54,373,695

82,379,352

89,691

5,695

Q-o-Q Change

9.9%

-28.4%

-46.0%

31.7%

Total debt outstanding as of June 30, 2013 was $301.9 million compared with $202.6 million on December 31, 2012. Net debt outstanding (total debt less cash and restricted cash) as of June 30, 2013 was $88.7 million compared with $85.9 million on December 31, 2012. The Company's net debt as a percentage of total capital (net debt plus shareholders' equity) was 35.3 percent on June 30, 2013 and 36.6 percent on December 31, 2012.

Q2 2013

Projects in Planning

Unsold

GFA

First

Pre-sales

Scheduled

(m2)

Golden Bay

252,540

Q4 2013

Puhua Phase Four

263,833

Q3 2014

Textile City

630,000

Q3 2014

Total projects in planning

1,146,373

2013 Third Quarter Outlook

Total recognized revenue for the 2013 third quarter is expected to reach $34 million to $36 million, compared with $59.7 million in the 2013 second quarter and $28.9 million in the third quarter of 2012. The Company is reporting revenues, which are subject to percentage of completion alterations.

Conference Call Information

Management will host a conference call at 8:30 am ET on August 14, 2013. Listeners may access the call by dialing #1-913-312-0643. 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 August 21, 2013, by dialing #1-858-384-5517; passcode: 7803652.

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, CFA 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

 

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Unaudited Interim Consolidated Statements of Income

For Three and Six Months Ended June 30, 2013 and 2012

3 months

3 months

6 months

6 months

June 30, 2013

June 30, 2012

June 30, 2013

June 30, 2012

REVENUES

Real estate sales

$

52,742,634

$

30,069,549

$

96,017,205

$

50,503,892

Other revenue

6,996,473

4,945,971

18,095,597

8,013,399

Total revenues

59,739,107

35,015,520

114,112,802

58,517,291

COST OF REVENUES

Cost of real estate sales

37,235,900

23,115,905

73,024,315

37,348,769

Cost of other revenue

4,232,921

3,792,088

13,768,820

6,031,958

Total cost of revenues

41,468,821

26,907,993

86,793,135

43,380,727

Gross margin

18,270,286

8,107,527

27,319,667

15,136,564

OPERATING EXPENSES

Selling, general and administrative expenses

4,904,517

3,956,069

8,066,398

6,979,754

Stock-based compensation

1,006,736

690,390

1,104,273

812,996

Other expenses

390,567

58,455

450,549

64,888

Financing expense 

2,807,094

100,676

4,253,880

330,948

Accretion expense on convertible debt

-

241,665

-

474,151

Total operating expenses

9,108,914

5,047,255

13,875,100

8,662,737

9,161,372

3,060,272

CHANGE IN FAIR VALUE OF DERIVATIVES

Change in fair value of embedded derivatives

-

(150,181)

-

(221,284)

Change in fair value of warrants

-

(3,554)

-

(3,186)

Total change in fair value of derivatives

-

(153,735)

-

(224,470)

Income before provision for income taxes

9,161,372

3,214,007

13,444,567

6,698,297

Provision for income taxes

2,835,057

1,372,027

4,102,200

2,341,512

(Recovery of) provision for deferred income taxes

(50,013)

(64,768)

(114,648)

214,624

Provision for income taxes

2,785,044

1,307,259

3,987,552

2,556,136

NET INCOME

$

6,376,328

$

1,906,748

$

9,457,015

$

4,142,161

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

35,086,599

34,914,731

35,086,599

34,822,496

Diluted

35,086,599

34,914,731

35,086,599

34,822,496

NET INCOME PER SHARE

Basic

$

0.18

$

0.06

$

0.27

$

0.12

Diluted

$

0.18

$

0.06

$

0.27

$

0.12

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

 

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Unaudited Interim Condensed Consolidated Balance Sheets 

As of June 30, 2013 and December 31, 2012

March 31,

December 31,

2013

2012

ASSETS

Cash

$

100,960,800

$

6,121,448

Cash - restricted

112,235,956

110,576,248

Accounts receivable, net of allowance for doubtful

accounts of $586,439 and $577,713, respectively

50,137,448

26,897,958

Construction in excess of billing

953,735

1,484,626

Other receivables, prepaid expenses and other assets, net

7,972,560

6,854,325

Real estate held for development or sale

225,395,977

238,111,545

Property and equipment, net

34,354,503

33,837,346

Advances to suppliers

460,774

1,363,817

Deposits on land use rights

43,393,688

42,748,017

Intangible asset, net

55,192,879

54,482,252

Goodwill

1,943,098

1,914,186

Deferred financing costs

116,221

194,162

Total assets

633,117,639

524,585,930

LIABILITIES

Accounts payable

$

52,640,327

$

55,142,928

Advances from customers

43,172,088

48,829,289

Accrued expenses

17,467,815

22,229,514

Income and other taxes payable

27,265,975

20,929,485

Other payables 

12,532,968

11,228,553

Loans from employees

23,002,319

27,868,785

Loans payable

278,893,997

174,749,368

Deferred tax liability

14,625,370

14,521,613

Total liabilities

469,600,859

375,499,535

SHAREHOLDERS' EQUITY

Common stock: $.001 par value, authorized 100,000,000 shares;

Issued 35,438,079 and 35,438,079, respectively

35,438

35,438

Common stock subscribed

900,364

-

Additional paid in capital

50,176,083

49,972,174

Treasury Stock

(434,240)

(434,240)

Statutory reserves

9,903,457

9,903,457

Retained earnings

74,514,348

65,057,333

Accumulated other comprehensive income

28,421,330

24,552,233

Total shareholders' equity

163,516,780

149,086,395

Total liabilities and shareholders' equity

$

633,117,639

$

524,585,930

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

 

SOURCE China Housing & Land Development, Inc.



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