China Housing & Land Development Inc. Announces Third Quarter 2011 Financial Results

Nov 14, 2011, 07:00 ET from China Housing & Land Development, Inc.

XI'AN, China Nov. 14, 2011 /PRNewswire-Asia-FirstCall/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2011.

Highlights for Q3 2011:

  • Total revenue in the third quarter of 2011 increased 58.5% to $32.1 million from $20.3 million in the second quarter of 2011 and decreased 5.7% from $34.0 million in the third quarter of 2010.

  • Total gross floor area ("GFA") sales were 19,212 sq. meters during the third quarter of 2011, compared to 12,769 sq. meters in the second quarter of 2011 and 39,833 sq. meters in the third quarter of 2010.

  • Average residential selling price ("ASP") in the third quarter of 2011 was RMB 7,326, compared with RMB 6,551 in the second quarter of 2011, and RMB 5,694 in the third quarter of 2010.

  • Gross profit increased 86.3% to $9.5 million from $5.1 million in the second quarter of 2011 and decreased 12.7% from $10.9 million in the third quarter of 2010. Third quarter 2011 gross margin was 29.7% compared to 25.3% in the second quarter of 2011 and 32.0% in the third quarter of 2010.

  • SG&A expenses as a percentage of total revenue decreased to 9.1%, compared to 16.4% in the second quarter of 2011 and increased from 8.4% in the third quarter of 2010.

  • Operating income increased 614.7% to $6.1 million from $0.9 million in the second quarter of 2011, and decreased from $7.0 million in the third quarter of 2010.

  • Net income attributable to the Company in the third quarter of 2011 was $4.4 million, or $0.13 per basic share and $0.12 per diluted share.  Excluding the $1.8 thousand gain associated with the revaluation of derivatives and warrants, net income was $4.3 million.

Mr. Pingji Lu, China Housing's Chairman, commented, "We were pleased to see across-the-board improvement in our business as compared to last quarter as we enjoyed stronger levels of sales, gross margin, reduced operating expenses, and higher net income. Puhua Phase I and Puhua Phase II, which together comprised nearly 80% of our recognized revenue, both had strong average selling prices representing favorable increases over the prior quarter.  These improvements helped increase our gross margin to 30% compared to the 25% from last quarter."

"As we evaluate our schedule of project activity going forward, we have an active lineup of projects expected to commence pre-sales activity over the next twelve months. While there are broader concerns about falling prices in the real estate market, particularly in Tier 1 cities, we currently remain comfortable with the market environment in Xi'an

We have five projects in the pipeline that together represent a total of nearly 1.4 million sq. meters of unsold GFA.  As more of these projects are introduced into the market, we have the opportunity to significantly increase our performance over 2011 levels."  

Total revenue in the third quarter of 2011 increased 58.5% to $32.1 million from $20.3 million in the second quarter of 2011 and decreased 5.7% from $34.0 million in the third quarter of 2010. In the third quarter of 2011, most of the Company's revenue came from its Puhua Phase I and Phase II. Third quarter 2011 contract sales totaled US$21.9 million representing a total GFA of 19,212 square meters. Third quarter 2011 contract sales represented a 34.6% decrease compared to US$33.5 million in the third quarter of 2010.  Total gross floor area ("GFA") sales were 19,212 sq. meters during the third quarter of 2011, compared to 12,769 sq. meters in the second quarter of 2011 and 39,833 sq. meters in the third quarter of 2010. The Company's average residential selling price ("ASP") in the third quarter of 2011 was RMB 7,326, compared with RMB 6,551 in the second quarter of 2011, and RMB 5,694 in the third quarter of 2010.

Gross profit for the three months ended September 30, 2011 was $9.5 million, representing an increase of 86.3% from $5.1 million in the second quarter of 2011 and 12.7% decrease from $10.9 million in the same period of 2010. The gross profit margin for the three months ended September 30, 2011 was 29.7%, which is below the 32.0% in the same period of 2010 and above the 25.3% in the second quarter of 2011.

SG&A expense was $2.9 million in the third quarter of 2011, compared to $3.3 million in the second quarter of 2011 and $2.9 million in the third quarter of 2010. SG&A expenses as a percentage of total revenue decreased to 9.1%, compared to 16.4% in the second quarter of 2011 but increased from 8.4% in the third quarter of 2010.  The increase in SG&A as a percent of total revenue is primarily due to reduced revenue.

Operating income in the third quarter increased to $6.1 million, or 19.0% of total revenue, from $0.9 million, or 4.2% of total revenue, in the second quarter of 2011, and decreased from $7.0 million, or 20.6% of total revenue in the third quarter of 2010 primarily due to reduced revenues.

Net income attributable to China Housing in the third quarter of 2011 was $4.4 million or $0.13 per basic share and $0.12 per diluted share. Excluding the $1.8 thousand gain associated with the revaluation of derivatives and warrants, net income was $4.3 million. This performance compares to a net income of $(0.1) million in the second quarter of 2011, which excludes a $0.7 million non-cash gain associated with the revaluation of derivatives and warrants in the second quarter of 2011.

Sequential Quarterly Revenue Breakout Comparison


Project

Q3 2011

Q2 2011

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

Puhua Phase One

12,852,050

5,806,231

4,829

7,712

18,099

74.6%

7,703,630

4,952,039

4,291

7,500

Puhua Phase Two

12,588,905

14,859,498

13,534

7,045

193,142

49.6%

4,975,580

5,686,955

6,717

5,502

Projects Completed

JunJing II Phase One

1,118,044

1,118,044

624

4,091

2,913

100%

193,138

193,138

125

9,992

JunJing II Phase Two

107,068

107,068

168

11,500

-

100%

1,988,513

1,325,792

966

8,923

Tsining-24G

-

-

-

-

71

100%

-

-

-

-

JunJing I

45,789

45,789

57

5,200

998

100%

672,697

672,697

587

7,450

Additional Project

-

-


-

-

100%

39,698

39,698

83

-

 

 

 

 

 

 

 

 

 

 

 

Other Income

5,387,137

-

-




4,678,936

-

-


Total

32,098,993

21,936,630

19,212

7,326

215,223 

- 

20,252,192

12,870,319

12,769

6,551

Q-o-Q Change

58.5%

70.4%

50.50%

11.8%

 

 







As of September 30, 2011, China Housing reported $74.1 million in unrestricted cash, compared to $72.7 million as of June 30, 2011 and $46.9 million as of December 31, 2010. Total debt outstanding as of September 30, 2011 was $172.4 million compared with $167.0 million on June 30, 2011 and $143.9 million on December 31, 2010. Net debt outstanding (total debt less cash) as of September 30, 2011 was $57.6 million compared with $54.2 million on June 30, 2011 and $62.3 million on December 31, 2010. The Company's net debt as a percentage of total capital (net debt plus shareholders' equity) was 46.4% on September 30, 2011 and 31.5% on June 30, 2011 and 38.0% on December 31, 2010. The increase in this figure was primarily due to additional bank loans and employee loans.



Q3 2011

Projects in Planning

Unsold

GFA

First

Pre-sales

Scheduled


(m2)


JunJing III

49,636

Q4 2011

Park Plaza

141,822

Q2 2012

Golden Bay

252,540

Q3 2012

Puhua Phase Three

130,000

Q2 2012

Puhua Phase Four

161,107

Q4 2013

Textile City

630,000

Q4 2012

Total projects in planning

1,365,105




2011 Outlook

Total contract sales in 2011 are expected to reach $120 to $130 million, a 12.2%-18.9% decrease compared to $148 million in 2010.  Total recognized revenue in 2011 is expected to reach $110 to $120 million, compared to $140 million in 2010. Gross margin in 2011 is expected to reach 30%-35%.  The Company is reporting contract sales estimates compared to revenue as they are not subject to percentage of completion alterations.

Conference Call Information

Management will host a conference call at 9:00 am ET on the date of this press release.  Listeners may access the call by dialing #1-913-312-0684. 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 November 21st, 2011, by dialing #1-858-384-5517; passcode: 5844807.

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
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

(Financial Tables on Following Pages)

Item 1. Financial Statements

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES


Interim Condensed Consolidated Balance Sheets

As of September 30, 2011 and December 31, 2010

 (Unaudited)




September 30,



December 31,




2011



2010


 ASSETS







Cash and cash equivalents


$

74,098,123



$

46,904,161


Cash - restricted



40,701,899




34,756,450


Accounts receivable, net of allowance for doubtful

accounts of $272,121 and $266,493, respectively



13,910,436




9,297,505


Other receivables, prepaid expenses and deposits, net



3,930,649




7,653,925


Real estate held for development or sale



148,442,048




104,586,550


Property and equipment, net



31,587,601




29,735,836


Advance to suppliers



844,374




1,223,366


Deposits on land use rights



63,508,273




74,938,729


Intangible assets, net



53,488,970




51,846,410


Goodwill



1,869,798




1,806,905


Deferred financing costs



290,894




401,703


Total assets


$

432,673,065



$

363,151,540











LIABILITIES









Accounts payable


$

29,523,570



$

22,542,083


Advances from customers



69,581,165




52,229,189


Accrued expenses



2,307,947




2,507,638


Payable for acquisition of businesses



-




2,363,385


Income and other taxes payable



13,584,230




15,429,752


Other payables



6,039,241




5,663,222


Loans from employees



12,213,860




8,787,879


Bank loans



105,275,231




82,971,074


Deferred tax liability



14,712,954




14,344,712


Warrants liability



86,886




2,766,382


Fair value of embedded derivatives



504,789




2,027,726


Convertible debt



8,939,523




16,251,840


Mandatorily redeemable noncontrolling interests in Subsidiaries



45,890,236




33,535,969


Total liabilities



308,659,632




261,420,851











SHAREHOLDERS' EQUITY









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









issued and outstanding 33,083,354 and 31,884,969, respectively



35,079




32,685


Additional paid in capital



48,865,219




38,996,078


Treasury Stock



(167,357)




-


Common stock subscribed



-




59,606


Statutory reserves



6,654,715




6,654,715


Retained earnings



48,975,756




41,528,907


Accumulated other comprehensive income



19,650,021




14,458,698


Total China Housing & Land Development, Inc. shareholders' equity



124,013,433




101,730,689











Noncontrolling interests



-




-











Total shareholders' equity



124,013,433




101,730,689











Total liabilities and shareholders' equity


$

432,673,065



$

363,151,540





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

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES


Interim Condensed Consolidated Statements of Income

For The Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited)




3 Months



3 Months



9 Months



9 Months




September 30,

2011



September 30,

2010



September 30,

2011



September 30,

2010


REVENUES













Sale of properties


$

26,711,856



$

31,455,921



$

61,941,929



$

99,067,368


Other income



5,387,137




2,592,853




12,966,952




5,148,115


Total revenues



32,098,993




34,048,774




74,908,811




104,215,483



















COST OF SALES

















Cost of sales of properties



18,829,374




22,568,245




46,618,588




74,821,470


Cost of other income



3,743,196




571,224




7,927,620




1,684,851


Total cost of sales



22,572,570




23,139,469




54,546,208




76,506,321



















Gross margin



9,526,423




10,909,305




20,362,673




27,709,162



















OPERATING EXPENSES

















Selling, general, and administrative expenses



2,913,008




2,873,590




9,667,449




9,170,039


Stock based compensation



96,438




-




114,258




-


Other expenses



54,267




232,493




444,745




420,525


Interest expense



148,739




433,666




1,111,347




1,038,732


Accretion expense on convertible debt



217,391




363,624




761,195




1,038,732


Total operating expenses



3,429,843




3,903,373




12,098,994




12,017,462



















NET INCOME FROM BUSINESS OPERATION



6,096,580




7,005,932




8,263,679




15,691,700



















CHANGE IN FAIR VALUE OF DERIVATIVES

















Change in fair value of embedded derivatives and warrants from modification



-




-




-




2,180,492


Change in fair value of embedded derivatives



(60,705)




(958,688)




(1,522,937)




(2,832,023)


Change in fair value of warrants



58,937




(405,821)




(1,055,337)




(3,203,085)


 Total change in fair value of derivatives



(1,768)




(1,364,509)




(2,578,274)




(3,854,616)



















Income before provision for income taxes

and noncontrolling interest



6,098,348




8,370,441




10,841,953




19,546,316



















Provision for income taxes



1,758,024




1,926,345




3,529,614




4,467,337


Recovery of deferred income taxes



(62,542)




(31,370)




(134,510)




(82,367)


NET INCOME



4,402,866




6,475,466




7,446,849




15,161,346



















Charge to noncontrolling interest



-




-




-




(14,229,043)



















NET INCOME ATTRIBUTABLE TO

CHINA HOUSING & LAND DEVELOPMENT, INC.


$

4,402,866



$

6,475,466



$

7,446,849



$

932,303



















WEIGHTED AVERAGE SHARES OUTSTANDING

















Basic



35,071,915




33,082,573




34,683,383




32,911,414



















Diluted



36,687,624




37,374,784




36,299,092




35,636,354



















NET INCOME (LOSS) PER SHARE

















Basic



0.13




0.20




0.22




0.03



















Diluted



0.13




0.15




0.19




(0.05)





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

SOURCE China Housing & Land Development, Inc.



RELATED LINKS

http://www.chldinc.com