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

PR Newswire

XI'AN, China, Nov. 19, 2013 /PRNewswire/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2013.

Highlights for Q3 2013:

  • Total revenue in the third quarter of 2013 was $24.8 million compared to $57.8 million in the second quarter of 2013 and $28.7 million in the third quarter of 2012. 
  • Total gross floor area ("GFA") sales were 17,846 sq. meters during the third quarter of 2013, compared with 48,439 sq. meters in the second quarter of 2013 and 12,773 sq. meters in the third quarter of 2012.
  • Average residential selling price ("ASP") in the third quarter of 2013 was RMB 6,369, compared with RMB 7,499 in the second quarter of 2013, and RMB 6,359 in the third quarter of 2012.
  • Gross profit decreased to $4.9 million in the third quarter of 2013 compared to $17.6 million in the second quarter of 2013 and $6.5 million in the third quarter of 2012. Third quarter 2013 gross margin was 19.8%, compared with 30.4% in the second quarter of 2013 and 22.5% in the third quarter of 2012.
  • SG&A expenses as a percentage of total revenue increased to 15.2%, from 8.5% in the second quarter of 2013 and 12.9% in the third quarter of 2012.
  • Operating loss was $0.7 million in the third quarter of 2013 compared to operating income of $8.5 million in the second quarter of 2013, and operating income of $2.5 million in the third quarter of 2012.
  • Net loss attributable to the Company in the third quarter of 2013 was $0.8 million, or $0.02 per diluted share, compared to net income of $5.9 million, or $0.17 per diluted share, in the second quarter of 2013 and $1.6 million, or $0.04 per diluted share, in the third quarter of 2012.

Mr. Pingji Lu, China Housing's Chairman, commented, "We experienced a challenging period as our current saleable project inventory did not fully match consumer demand in the third quarter. We encountered higher levels of interest for low and high end apartment units this quarter whereas more of our saleable units were in the mid-tier category. Given the government's efforts over the last year to reduce pricing speculation in Xi'an's real estate market, consumers looking to upgrade to mid-level units were not as active this quarter as they were in past quarters. At our Puhua and Park Plaza projects, the limited amount of our entry-level unit inventory sold well during the quarter, however more of our remaining inventory is intended for customers looking to upgrade to larger, more expensive mid-level units.  At the high end, of which sales remain steady, our Golden Bay project was delayed to the second quarter of 2014 due to government delays issuing the required permits to commence pre-sales activity." 

"As we move forward, we are comfortable we'll have the appropriate levels of inventory to march customer demand.  We are preparing to develop more low-end units early next year through our Puhua Phase 4 project.  Our unit sales at the high end will benefit from our Golden Bay development once all permits are secured and pre-sales begins early next year. Consequently, we expect our performance in the fourth quarter to mirror that of the third, and that our sales trends in 2014 can grow once again as our development projects offer a broader array of low, mid and high-end units that can more adequately meet customer demand."

Total revenue in the third quarter of 2013 decreased 57.1% to $24.8 million from $57.8 million in the second quarter of 2013 and decreased 13.6% from $28.7 million in the third quarter of 2012. Other revenue in the third quarter of 2013 decreased to $3.8 million from $7.0 million in the second quarter of 2013 and $4.8 million in the third quarter of 2012. The year-over-year decrease was due to the Company's available unit inventory not fully matching the customer demand and the market condition.

In the third 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. Third quarter 2013 contract sales totaled $18.6 million compared with $59.0 million in the second quarter of 2013 and $12.8 million in the third quarter of 2012. Total gross floor area ("GFA") sales were 17,847 sq. meters during the third quarter of 2013, compared with 48,439 sq. meters in the second quarter of 2013 and 12,773 sq. meters in the third quarter of 2012. The Company's ASP in the third quarter of 2013 was RMB 6,369, compared with RMB 7,499 in the second quarter of 2013, and RMB 6,359 in the third quarter of 2012.

Gross profit for the three months ended September 30, 2013 was $4.9 million, representing a decrease of 72.2% from $17.6 million in the second quarter of 2013 and a 24.6% decrease from $6.5 million in the third quarter of 2012. Gross profit margin for the three months ended September 30, 2013 was 19.8%, compared to 30.4% in the second quarter of 2013 and the 22.5% in the third quarter of 2012. The decrease in gross profit margin was mainly due to that We made some adjustment on the total estimate cost of Park Plaza, Puhua Phase Two and Three according to the actual situation and recorded the accumulated impact in the third quarter of 2013.We still expect full year gross margin to be in the 25% to 30% range in 2013.

SG&A expense was $3.8 million in the third quarter of 2013, compared with $4.9 million in the second quarter of 2013 and $3.7 million in the third quarter of 2012. SG&A expense as a percentage of total revenue was 15.2%, compared with 8.5% in the second quarter of 2013 and 12.9% in the third quarter of 2012. The year-over-year increase in SG&A expense was mainly due to the increase of salary of salary.

Operating loss in the third quarter of 2013 was $0.7 million compared to operating income of $8.5 million in the second quarter of 2013, and $2.5 million in the third quarter of 2012. The year-over-year decrease in operating income was mainly due to reduced sales revenue and lower profit margin.

Net loss attributable to China Housing in the third quarter of 2013 was $0.8 million, or a loss of $0.02 per diluted share. This performance compares with net income of $5.9 million, or $0.17 per diluted share, in the second quarter of 2013 and net income of $1.6 million, or $0.04 per diluted share, in the third quarter of 2012.

Sequential Quarterly Revenue Breakout Comparison

Project

Q3 2013






Q2 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

6,541,366

5,659,081

4,002

8,661

110,323

68.1%

19,958,986

25,098,516

17,348

8,903

Puhua Phase Three

3,449,098

3,685,035

3,675

6,143

68,058

50.9%

8,985,610

10,163,137

8,665

7,218

Puhua Phase Two-East Region

5,979,885

3,470,786

3,240

6,560

111,394

71.2%

12,512,381

14,039,803

9,181

9,411

Ankang

3,304,218

3,571,860

5,474

4,000

185,677

71.5%

5,526,291

8,024,028

12,655

3,902

Projects Completed










Puhua Phase One

642,927

889,021

662

8,232

6,649

100%

1,673,638

1,673,638

591

17,427

Puhua Phase Two-West Region

231,686

387,717

327

7,264

13,553

100%

2,057,092

2,057,092

1,773

7,138

JunJing III

-116,995

-116,995

-166

--

1,039

100%

24,132

24,132

--

--

JunJing II Phase One

481,746

481,746

299

9,855

518

100%

-

-

-

-

JunJing I

528,465

528,465

333

9,277

4,366

100%

-

-

-

-

Other Projects







19,500

-

-

-

Other Income

3,788,434






6,996,473

-

-


Total

24,830,830

18,556,716

17,846

6,369

501,577

-

57,754,103

59,023,253

48,439

7,499

Q-o-Q Change

-57%

-68.6%

-63.2%

-15.1%



9.9%

-28.4%

-46.0%

31.7%

Total debt outstanding as of September 30, 2013 was $301.6 million compared with $202.6 million on December 31, 2012. Net debt outstanding (total debt less cash and restricted cash) as of September 30, 2013 was $99.3 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 42.8 percent on September 30, 2013 and 36.6 percent on December 31, 2012.


Q3 2013

Projects in Planning

Unsold

GFA

First

Pre-sales

Scheduled


(m2)


Golden Bay

250,000

Q1 2014

Puhua Phase Four

263,833

Q3 2014

Textile City

630,000

Q3 2014

Total projects in planning

1,143,833


2013 Fourth Quarter Outlook guidance

Total recognized revenue for the 2013 fourth quarter is expected to reach $18 million to $22 million, compared with $24.8 million in the 2013 third quarter and $62.5 million in the fourth 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 the following day, November 20th, 2013. Listeners may access the call by dialing +1-913-312-0406. To listen to the live webcast of the event, please go to http://public.viavid.com; event number: 7167817. Listeners may access the call replay, which will be available through November 27th, 2013, by dialing +1-858-384-5517; passcode: 7167817.

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

Ms. Sandy Jin
Assistant CFO
+86 29.8258.2638 in Xi'an
jinq@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

 

Interim Condensed Consolidated Balance Sheets

As of September 30, 2013 and December 31, 2012

(Unaudited)

 







December 31,




September 30,



2012




2013



(Restated )


 ASSETS









Cash


$

85,721,169



$

6,121,448


Cash - restricted



116,602,187




110,576,248


Accounts receivable, net of allowance for doubtful
                     accounts of $588,106 and $577,713, respectively



37,413,820




26,429,332


Construction in excess of billing



956,447




1,484,626


Other receivables, prepaid expenses and other assets



9,149,087




6,854,325


Real estate held for development or sale



218,980,559




212,371,875


Property and equipment, net



36,493,568




33,837,346


Advance to suppliers



786,453




1,363,817


Deposits on land use rights



43,517,062




42,748,017


Intangible assets, net



55,292,952




54,482,252


Goodwill



1,948,622




1,914,186


Deferred financing costs



149,778




194,162


Total assets


$

607,011,704



$

498,377,634











LIABILITIES









Accounts payable


$

45,033,491



$

55,142,928


Advances from customers



56,123,221




49,297,915


Accrued expenses



13,985,716




22,229,514


Income and other taxes payable



30,739,765




23,727,064


Other payables



12,307,734




11,228,553


Loans from employees



22,871,639




27,868,785


Loans payable



278,747,427




174,749,368


Deferred tax liability



14,657,144




14,521,613


Total liabilities



474,196,137




378,765,740











SHAREHOLDERS'EQUITY









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









Issued 35,849,204 and 35,438,079, respectively



35,849




35,438


Additional paid in capital



51,211,828




49,972,174


Treasury stock at cost 351,480 shares and 351,480 shares, respectively



(434,240)




(434,240)


Statutory reserves



9,903,457




9,903,457


Retained earnings



46,461,434




38,573,966


Accumulated other comprehensive income



25,637,239




21,561,099


Total shareholders' equity



132,815,567




119,611,894











Total liabilities and shareholders' equity


$

607,011,704



$

498,377,634


 

 

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

 

Interim Condensed Consolidated Statements of (Loss) Income

For The Three and Nine Months Ended September 30, 2013 and 2012

(Unaudited)

 







3 Months






9 Months




3 Months



September 30,



9 Months



September 30,




September 30,
2013



2012

(Restated )



September 30,
2013



2012

(Restated )


REVENUES

















Real estate sales


$

21,042,396



$

23,931,025



$

112,091,843



$

74,170,706


Other income



3,788,434




4,798,239




21,884,031




12,811,638


Total revenues



24,830,830




28,729,264




133,975,874




86,982,344



















COST OF SALES

















Cost of real estate sales



17,480,961




18,140,372




86,517,123




53,458,120


Cost of other revenue



2,423,455




4,134,356




16,192,275




10,166,314


Total cost of revenues



19,904,416




22,274,728




102,709,398




63,624,434



















Gross margin



4,926,414




6,454,536




31,226,476




23,357,910



















OPERATING EXPENSES

















Selling, general, and administrative expenses



3,784,742




3,717,178




11,884,682




10,696,590


Stock-based compensation



135,792




96,438




1,240,065




909,434


Other (income) expenses



(91,766)




(22,503)




358,783




42,385


Financing expense



1,762,724




63,764




6,016,604




394,712


Accretion expense on convertible debt



-




254,023




-




728,174


Total operating expenses



5,591,492




4,108,900




19,460,134




12,771,295



















 CHANGES IN FAIR VALUE OF DERIVATIVES

















Change in fair value of embedded derivatives



-




(109,344)




-




(330,628)


Change in fair value of warrants



-




(976)




-




(4,162)


Total changes in fair value of derivatives



-




(110,320)




-




(334,790)



















(Loss) income before provision for income taxes



(665,078)




2,455,956




11,806,342




10,921,405



















    Provision for current income taxes



185,950




1,201,523




4,044,863




3,984,823


    Recovery of deferred income taxes



(11,341)




(310,834)




(125,989)




(96,210)


Provision for income taxes



174,609




890,689




3,918,874




3,888,613



















NET (LOSS) INCOME


$

(839,687)



$

1,565,267



$

7,887,467



$

7,032,792



















WEIGHTED AVERAGE SHARES OUTSTANDING

















Basic



35,497,724




35,086,599




35,277,047




34,911,173



















Diluted



35,497,724




35,086,599




35,277,047




34,911,173



















NET (LOSS) INCOME PER SHARE

















Basic



(0.02)




0.04




0.22




0.20



















Diluted



(0.02)




0.04




0.22




0.20


 

 

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

 

 Interim Condensed Consolidated Statements of Comprehensive (Loss) Income

For The Three and Nine Months Ended September 30, 2013 and 2012

(Unaudited)

 

 







3 Months






9 Months




3 Months



September 30,



9 Months



September 30,




September 30,
2013



2012

(Restated )



September 30,
2013



2012

(Restated )



















NET INCOME


$

(839,687)



$

1,565,267



$

7,887,468



$

7,032,792



















OTHER COMPREHENSIVE INCOME

















Gain in foreign exchange



656,539




1,969,140




4,076,140




397,512



















COMPREHENSIVE (LOSS) INCOME


$

(183,148)



$

3,534,407



$

11,963,608



$

7,430,304


 

 

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Cash Flows

For The Nine Months Ended September 30, 2013 and 2012

(Unaudited)

 







September 30,




September 30,



2012




2013



(Restated )


CASH FLOWS FROM OPERATING ACTIVITIES:









Net income for the period


$

7,887,468



$

7,032,792


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









Depreciation



1,940,103




1,559,229


Stock-based compensation



1,240,065




909,434


Gain on disposal of property and equipment



-




(70,097)


Amortization of deferred financing costs



55,326




117,155


Amortization of intangible assets



167,609




163,290


Recovery of deferred income taxes



(125,989)




(96,210)


Change in fair value of embedded derivatives



-




(330,628)


Change in fair value of warrants



-




(4,162)


Accretion expense on convertible debt



-




728,174


(Increase) decrease in assets:









Accounts receivable



(10,322,423)




5,126,977


Construction in excess of billing



559,202




-


Other receivable and prepaid expense



(1,937,372)




(2,877,068)


Real estate held for development or sale



(3,011,051)




(66,525,427)


Advances to suppliers



597,004




(1,611,109)


  Deposit on land use right



-




22,754,848


Increase (decrease) in liabilities:









Accounts payable



(10,956,225)




(17,485)


Advances from customers



5,986,114




(5,569,449)


Accrued expense



(8,669,217)




9,816,101


Other payables



602,031




265,942


Income and other taxes payable



6,345,305




2,807,134


Net cash used in operating activities



(9,642,050)




(25,820,559)











CASH FLOWS FROM INVESTING ACTIVITIES:









Purchase of property and equipment



(3,982,755)




(7,995,987)


Proceeds from sale of property and equipment



-




63,476


Net cash used in investing activities



(3,982,755)




(7,932,511)











CASH FLOWS FROM FINANCING ACTIVITIES:









Change in restricted cash



(4,036,463)




20,968,025


Loans from banks



98,841,999




30,111,889


Loans from Days Hotel and Dinghui



42,985,007




34,367,627


Payments on loans payable



(40,142,194)




(68,685,407)


Loans (repayment to) or from employees, net



(5,524,219)




4,963,786


Purchase of treasury stock



-




(14,142)


Net cash provided by financing activities



92,124,130




21,711,778











INCREASE (DECREASE) IN CASH



78,499,325




(12,041,292)











Effects on foreign currency exchange



1,100,396




(27,729)











CASH, beginning of period



6,121,448




22,014,953











CASH, end of period


$

85,721,169



$

9,945,932


 

 

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