China HGS Reports Third Quarter of Fiscal Year 2015 Results

Aug 07, 2015, 07:00 ET from China HGS Real Estate Inc.

HANZHONG, China, Aug. 7, 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 third quarter of fiscal 2015 ended June 30, 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 third quarter of fiscal 2015 were approximately $26 million, a decrease of 10% from approximately $28.9 million in the same quarter of fiscal 2014. Total revenues recognized from percentage of completion method were approximately $25.6 million, which accounted for 98.2% of total revenues in the third quarter of fiscal 2015. The year-over-year decrease of revenue was primarily due to limited inventory on completed projects.
  • Net income for the third quarter of fiscal 2015 totaled approximately $13.7 million, an increase of approximately $5.5 million from the net income of approximately $8.2 million in the same period of last year. The increased net income in this quarter compared to the same quarter of last year was primarily due to sales of higher margin commercial and parking units during the current period.  
  • For the nine months ended June 30, 2015, the Company achieved a positive operating cash flow of approximately $13.1 million, compared to negative operating cash flow of approximately $30.7 million in the same period of last year.
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the third quarter of fiscal 2015 were $0.30, an increase of 66.7% from $0.18 for the same quarter of last year.  

"I am very pleased that the Company reported strong earnings this quarter, with net income up 68% compared to the same period of last year. As we are selling out our inventory on completed projects, our sales were negatively impacted due to limited number of units for customer selection," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "The overall slower economic environment in China posted challenges for real estate industry. However, our regional real estate market remains stable, with average unit price held steady. Our commercial property and parking units with higher average unit price are particularly in strong demand. Our near term effort is to focus on completion of the projects currently under construction as soon as possible. We expect our contract sales and revenue will improve as we have more GFA available for sale," 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) 091-62622612 Email: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30

September 30

2015

2014

ASSETS

Current assets:

Cash

$

3,784,384

$

1,125,545

Restricted cash

1,783,501

1,589,887

Advances to vendors

223,745

-

Cost and earnings in excess of billings

11,479,614

12,332,396

Real estate property development completed

4,452,559

6,050,263

Real estate property under development

122,564,553

140,313,127

Other current assets

237,488

1,409,367

Total current assets

144,525,844

162,820,585

Property, plant and equipment, net

832,824

889,497

Real estate property development completed, net of current portion

2,312,716

2,572,215

Security deposits for land use right

3,273,965

3,249,549

Real estate property under development, net of current portion

141,714,322

128,516,074

Due from local government for real estate property development completed

2,370,939

3,165,644

Total Assets

$

295,030,610

$

301,213,564

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Bank loan - current portion

$

11,458,879

$

12,998,197

Short-term loans - other

13,090,951

15,290,753

Accounts payable

31,984,471

57,317,877

Other payables

14,770,664

13,777,853

Construction deposits

382,838

367,133

Billings in excess of cost and earnings

7,785,747

2,960,452

Customer deposits

20,876,258

31,100,334

Shareholder loan

3,903,701

5,465,743

Accrued expenses

4,958,910

3,801,567

Taxes payable

15,153,949

12,579,071

Total current liabilities

124,366,368

155,658,980

Long-term bank loan, less current portion

1,636,983

6,499,098

Deferred tax liabilities

4,389,695

2,992,459

Customer deposits, net of current portion

6,704,214

3,829,870

Construction deposits, net of current portion

1,011,910

1,004,364

Total liabilities

138,109,170

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 June 30, 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

116,440,388

91,834,708

Accumulated other comprehensive income

9,831,456

8,744,489

Total stockholders' equity

156,921,440

131,228,793

Total Liabilities and Stockholders' Equity

$

295,030,610

$

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 June 30,

Nine months ended June 30,

2015

2014

2015

2014

Real estate sales

$

26,014,516

$

28,854,104

$

60,138,945

$

92,902,437

Less: Sales tax

1,655,046

1,746,835

3,892,435

5,700,706

Cost of real estate sales

9,347,052

17,538,690

27,702,998

58,077,310

Gross profit

15,012,418

9,568,579

28,543,512

29,124,421

Operating expenses

Selling and distribution expenses

211,558

154,007

804,700

522,273

General and administrative expenses

427,363

557,779

1,636,889

1,684,253

Total operating expenses

638,921

711,786

2,441,589

2,206,526

Operating income

14,373,497

8,856,793

26,101,923

26,917,895

Interest income

-

3,401

-

12,406

Interest expense

(22,540)

(17,793)

(54,300)

(53,973)

Income before income taxes

14,350,957

8,842,401

26,047,623

26,876,328

Provision for income taxes

641,368

681,130

1,441,943

2,099,030

Net income

13,709,589

8,161,271

24,605,680

24,777,298

Other comprehensive income (loss)

Foreign currency translation adjustment

306,940

124,287

1,086,967

(408,017)

Comprehensive income

$

14,016,529

$

8,285,558

$

25,692,647

$

24,369,281

Basic and diluted income per common share

Basic

$

0.30

$

0.18

$

0.55

$

0.55

Diluted

$

0.30

$

0.18

$

0.55

$

0.55

Weighted average common shares outstanding

Basic

45,050,000

45,050,000

45,050,000

45,050,000

Diluted

45,075,821

45,125,144

45,089,819

45,125,144

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)

Nine months ended June 30,

2015

2014

Cash flows from operating activities

Net income

$

24,605,680

$

24,777,298

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

Deferred tax provision

1,369,997

1,681,415

Depreciation

63,137

54,933

Changes in assets and liabilities:

Restricted cash

(181,039)

(375,470)

Due from local government for real estate property development completed

815,661

(3,174,981)

Advances to vendors

(222,972)

109,130

Cost and earnings in excess of billings

942,175

(4,732,899)

Real estate property development completed

1,915,343

9,297,037

Real estate property under development

6,547,520

(87,987,018)

Other current assets

1,178,377

(290,275)

Accounts payables

(25,674,976)

2,728,118

Other payables

886,212

8,432,511

Billings in excess of cost and earnings

4,786,440

3,575,124

Customer deposits

(7,585,864)

10,913,504

Construction deposits

12,902

4,793

Accrued expenses

1,126,826

179,365

Taxes payable

2,471,784

4,085,999

Net cash provided by (used in) operating activities

13,057,203

(30,721,416)

Cash flow from financing activities

Proceeds from shareholder loan

10,500,816

7,577,486

Repayment of shareholder loan

(12,084,829)

(1,906,593)

Proceeds from bank loan

-

8,147,834

Repayment of bank loan

(6,525,285)

(1,629,567)

Proceeds from short-term loans-other

9,787,928

15,335,854

Repayment of short-term loans-other

(12,094,617)

-

Net cash (used in) provided by financing activities

(10,415,987)

27,525,014

Effect of changes of foreign exchange rate on cash

17,623

(8,816)

Net decrease in cash

2,658,839

(3,205,218)

Cash, beginning of period

1,125,545

5,878,101

Cash, end of period

$

3,784,384

$

2,672,883

Supplemental disclosures of cash flow information:

Interest paid

$

1,355,741

$

1,143,784

Income taxes paid

$

102,337

$

291,776

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