China HGS Provides Updates on Hanzhong Real Estate Projects and Reaffirms 2010 Outlook

HANZHONG, China, July 20 /PRNewswire-Asia-FirstCall/ -- China HGS Real Estate Inc. (OTC Bulletin Board: CAHS) ("China HGS" or "the Company"), a leading residential property developer in Hanzhong, China, today provided updates on the Company's Ming Zhu Xin Ju Project ("Xin Ju"), Ming Zhu Nan Yuan Project Phase II and Phase III, and Yang Zhou Ming Zhu Project ("Yang Zhou"), all located in Shaanxi Province, China.

The Company's Xin Ju Project in Hanzhong's downtown comprises two high-rise apartment buildings (Tower A and Tower B) with a total Gross Floor Area ("GFA") of 42,476 square meters. As of the end of June 2010, approximately 96% of the entire project had been sold. The Company is on schedule to complete and deliver Tower A, with a GFA of 20,500 square meters, in June 2011. As a result of improved project planning and highly efficient project management, China HGS completed construction and delivery of Tower B, with a GFA of 21,900 square meters, significantly ahead of schedule in June 2010.

The Company's Nan Yuan II Project in downtown Hanzhong comprises four multi-layer residential buildings and five high-rise apartment buildings. China HGS has completed construction of four multi-layer buildings and these units were delivered to customers in March 2010. The construction of two of the five high-rise apartment buildings (Building #27 and Building #28), with a total GFA of 30,300 square meters, is expected to be completed by November 2010. At the end of June 2010, about 80% of Building #27 and Building #28 had been either sold or reserved. Construction of two of the remaining three buildings is expected to be completed and delivered to customers in March 2011 and the third building is expected to be constructed and delivered to customers in September 2011.

The entire Ming Zhu Nan Yuan Project has a total of three phases, of which construction of Phase I with a total GFA of 221,851 square meters was completed and delivered to customers in 2009, construction of Phase II with a total GFA of 91,514 square meters is estimated to be completed and delivered in September 2011, construction of Phase III with a total GFA of 63,671 square meters, will be complete in March 2011.

China HGS recently commenced construction of over 10 multi-layer buildings at its Yang Zhou project in Yang County, which is expected to be completed over the course of 2011 and 2012

"We are pleased to report that our Xin Ju project was nearly sold out at the end of June 2010, reflecting the continued strong demand in the Hanzhong residential property market," commented Mr. Xiaojun Zhu, Chairman and CEO of China HGS. "Despite the tightening measures undertaken by the Chinese government in 2010 to control the overheated real estate market in certain Tier 1 cities, Hanzhong and the surrounding areas have continued to be vibrant markets during the first half of 2010. Increasing flow of the population into urban areas, rising incomes, and affordable housing costs have contributed to strong demand, primarily by first-time homeowners. We are very confident that the economic growth in Hanzhong will continue to exhibit robust growth for the next several years, resulting in stable and growing demand for real estate."

"We also expect the new multi-layer buildings we are constructing in Yang County to make meaningful revenue contributions over the next two years. We remain confident in our ability to meet our 2010 fiscal year guidance of revenue of approximately $47.5 million to $49.0 million and net income of $15.5 million to $16.0 million," added Mr. Zhu.

About China HGS Real Estate Inc.

China HGS Real Estate Inc., through its wholly-owned subsidiary, Shaanxi Guangsha Investment and Development Group Co., Ltd., specializes in real estate development in China's second-tier and third-tier cities. The Company's real estate properties include multi-layer, sub-high-rise, and high-rise apartment buildings. The Company possesses the national grade II real estate qualification and was ranked as the No. 1 property developer in Hanzhong, Shaanxi Province in terms of market share in 2007 and 2008 successively.

Forward-looking Statements:

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding the company's financial estimates and construction timeline of the Ming Zhu Xin Ju Project, Ming Zhu Nan Yuan Project Phase II and III, and Yang Zhou Ming Zhu Project; and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in demand especially in the residential property market of tier II and tier III cities, the Company's ability to secure financing for land use rights acquisition and property development, meet the planned property development schedule, reliance on third-party contractors, changes in government regulations, risk of default by customers on the Company guaranteed mortgage loans, increase in the cost of raw materials, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. You are urged to consider these factors care in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

    For more information, please contact:

    Company Contact:
     Mr. Ran Xiong, Deputy GM
     Email: [email protected]
     Tel:   +86-916-2622612

    Investor Relations Contact:
    CCG Investor Relations
     Mr. Crocker Coulson, President
     Email: [email protected]
     Tel:   +1-646-213-1915 (NY office)

     Elaine Ketchmere, Partner
     Email: [email protected]
     Tel:   +1-310-954-1345 (LA office)

SOURCE China HGS Real Estate Inc.