China Housing & Land Development Inc. Announces First Quarter 2010 Financial Results
Press Release Source: China Housing & Land Development, Inc. On Friday May 14, 2010, 7:51 am EDT
XI'AN, China, May 14 /PRNewswire-Asia-FirstCall/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its audited financial results for the quarter ended March 31, 2010.
Highlights for 1Q10:
-- Total revenues increased 27.8% to US$33.6 million compared to US$26.3 million in the fourth quarter of 2009, and increased 58.9% from $13.8
million in the first quarter of 2009.
-- Total gross floor area ("GFA") sales were 61,666 sq. meters, compared to 61,786 sq. meters in the 2009 fourth quarter period and 20,922 sq. meters in the 2009 first quarter period.
-- Gross profit increased 38.3% to $6.5 million from $4.7 million in the fourth quarter of 2009 and 51.2% from $4.3 million in the first quarter of 2009. Gross margin was 19.3% compared to 17.8% and 31.4% in each respective period.
-- SG&A expenses as a percentage of total revenue declined to 7.6% from 12.6% in the 2009 fourth quarter and 10.1% in the 2009 first quarter.
-- Operating income increased to $3.0 million from an operating loss of ($0.2 million) in the 2009 fourth quarter and operating income of $1.7 million in the 2009 first quarter period.
-- Net loss attributable to the Company was ($11.1 million), or ($0.34) per diluted share, due to a one-time charge of $14.2 million related to the Prax Puhua project restructuring. Excluding this charge, net income would have increased 148% to $3.1 million, or $0.10 per diluted share, from $1.3 million, or $0.04 per diluted share, in the first quarter of 2009.
Mr. Pingji Lu, China Housing's Chairman, commented, "We posted strong first quarter results in what is traditionally one of our seasonally slower quarters. The overall real estate market condition in Xi'an has improved since the beginning of 2010 and through the first quarter, which is demonstrated in the pre-sales results of our current projects under construction. In the first quarter, we were able to recognize approximately $26.6 million as revenue from the JunJing II Phase Two project and our Puhua project, and were able to secure approximately $11.3 million new contracts from these two projects. As of March 31, 2010, we have pre-sold approximately 72.6% of the JunJing II Phase Two project on a GFA basis and 74.1% on a unit basis as well as pre-sold 7.8% and 7.9% of our Puhua project on a GFA sales and unit basis. As we accelerate our sales of Puhua units in the future, we are expecting a slight improvement to gross margin due to higher average prices of these apartment units. Since we first started pre-sales of Puhua units in October 2009, the average selling price per sq. meter has risen 9% to RMB 4,742."
Total revenue in the first quarter of 2010 increased to $33.6 million from $26.3 million in the fourth quarter of 2009 and $13.9 million in the first quarter of 2009. In the first quarter of 2010, most of the Company's revenue came from its JunJing II Phases Two and Puhua project. Contract sales totaled US$44.7 million of residential and commercial unit sales from the JunJing II Phase One, Phase Two, Puhua Phase One and other completed projects, representing a total of GFA 61,666 square meters.
Gross profit in the first quarter of 2010 was $6.5 million, or 19.3% of total revenue, compared to gross profit of $4.7 million, or 17.8% of total revenue, in the fourth quarter of 2009 and $4.3 million, or 31.4% of total revenue, in the first quarter of 2009. Our gross margin decreased due to the sales of the parking lots of JunJing I and JunJing II phase one which only had 3% to 5% margin.
SG&A expense was $2.5 million in the first quarter of 2010, compared to $3.3 million in the fourth quarter of 2009 and $1.4 million in the first quarter of 2009. As a percentage of total revenue, SG&A expenses decreased to 7.6% from 12.6% in the fourth quarter of 2009 and 10.1% in the first quarter of 2009.
Operating income in the first quarter of 2010 was $3.0 million, compared to operating loss of ($0.2 million) in the fourth quarter of 2009 and operating income of $1.7 million in the first quarter of 2009.
Net loss attributable to China Housing in the first quarter of 2010 was ($11.1 million), or ($0.34) per diluted share, compared to net loss of ($1.1 million), or ($0.03) per diluted share, in the fourth quarter of 2009 and net income of $1.3 million, or $0.04 per diluted share, in the first quarter of 2009. First quarter 2009 adjusted net income, which excludes a $14.2 million charge associated with the restructure of Prax, was $3.1 million, or $0.10 per diluted share.
| | | | | | | Q1 2010 | | | | |
| Project | | Revenue | | | GFA Sold | | | ASP | |
| | | Recognized | | | | | | | | |
| | | ($) | | | | (m2) | | | (RMB) | |
| Projects Under Construction | | | | | | | | | | |
| JunJing II Phase One | | | 4,095,525 | | | | 6,295 | | | | 5,263 | |
| JunJing II Phase Two | | | 15,161,722 | | | | 26,415 | | | | 5,426 | |
| Puhua Project | | | 11,454,564 | | | | 25,741 | | | | 4,742 | |
| Projects Completed | | | | | | | | | | | | |
| Tsining-24G | | | 15,684 | | | | 8 | | | | 14,015 | |
| JunJing I | | | 1,296,725 | | | | 2370.48 | | | | 3,735 | |
| Additional Projects | | | 366,841 | | | | 836 | | | | 2,996 | |
| Other Income | | | 1,181,853 | | | | | | | | | |
| Total | | | 33,572,914 | | | | 61,666 | | | | 5,027 | |
| | | | | | | Q4 2009 | | | | |
| | | Revenue | | | | | | | | |
| Project | | Recognized | | | GFA Sold | | | ASP | |
| | | ($) | | | | (m2) | | | (RMB) | |
| Projects Under Construction | | | | | | | | | | |
| JunJing II Phase One | | | 6,224,147 | | | | 7,498 | | | | 4,287 | |
| JunJing II Phase Two | | | 16,014,055 | | | | 29,499 | | | | 4,935 | |
| Puhua Project | | | -- | | | | 24,129 | | | | 4,377 | |
| Projects Completed | | | | | | | | | | | | |
| Tsining-24G | | | 409,367 | | | | 220 | | | | 16,736 | |
| JunJing I | | | (1,083,459 | ) | | | 57 | | | | 11,543 | |
| Additional Projects | | | 112,068 | | | | 384 | | | | 3,070 | |
| Other Income | | | 4,642,727 | | | | | | | | | |
| Total | | | 26,318,905 | | | | 61,786 | | | | 4,675 | |
| Q-o-Q Change | | | 27.6 | % | | | (0.2 | %) | | | 7.5 | % |
As of March 31, 2010, China Housing reported $66.3 million in unrestricted cash, compared to $36.9 million as of December 31, 2009 and $10.6 million as of March 31, 2009. Total debt was $92.9 million on March 31, 2010, compared to $59.8 million as of December 31, 2009 and $59.4 million on March 31, 2009. Net debt as a percentage of total capital was 23.9% on March 31, 2010, compared to 16.1% on December 31, 2009 and 29.4% on March 31, 2009.
"In mid-April the central government raised minimum mortgage rates and down payment ratios for home purchases in order to curb property price speculation in Tier 1 cities. Shortly following that, Xi'an's government issued local real estate policies, which still focused on enhancing affordable home purchases for first time home buyer and first upgraders. We believe that we are relatively well positioned from the impact of these policies given that we target middle income consumers in Xi'an, a Tier II city, where price increases and speculative buying has been much lower. Close to 90% of unit purchases in the Xi'an market come from local customers, not outside speculators. First time home-buyers account for around 72% our units purchased among our existing projects. The average down payment for those with a mortgage is around 34% and approximately 16% of our customers at our existing projects have paid in cash, reducing mortgage risk. We believe there will be more hesitation in the broader market due to central government policies, which could slow down our sales in the coming months. However, industry research from E house shows that demand in the Xi'an market is still greater than supply and that average selling prices and transaction volume will be stable thereby giving us comfort with our full year financial outlook.
The general real estate performance data for Xi'an thus far in the second quarter remains encouraging. Apartment unit transaction volume and average selling prices in Xi'an in the month of April are both higher compared to the previous month and previous year. Currently, we do not have any plans to lower our prices as we already provide mid to low end price range developments in Xi'an which are affordably priced. Based on the current market demand in Xi'an, we believe we have the right number of projects in place and in the pipeline to meet our full year financial forecast," concluded Mr. Lu.
2010 Outlook
Since government policies raised purchase hesitation in the Xi'an real estate market, the sales for the coming months have become less visible. That said, we are still confident with our project pipeline and market positioning and maintain our previous financial outlook for 2010. The Company will keep monitoring the market condition and adjust our business strategy if necessary.
2010 total contract sales in 2010 are expected to reach US$237 to $262 million, a 128%-152% increase compared to $103.9 million in 2009. Total recognized revenue in 2010 is expected to reach US$179 to $198 million, a 107%-129% increase compared to $86.6 million in 2009. The Company is reporting contract sales estimates compared to revenue as it is not subject to percentage of completion alterations.
Conference Call Information
China Housing's management will host an earnings conference call on Friday, May 14, 2010 at 8:30 a.m. U.S. Eastern Time. Listeners may access the call by dialing #1-719-325-2108. 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 May 21st, by dialing #1-719-457-0820; Passcode: 7003204.
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 and only Chinese real estate development company traded on NASDAQ. The Company's news releases, project information, photographs, and more are available on the internet at http://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.
For more information, please contact:
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
Tel: +86-29-8258-2639 in Xi'an
Email: jinglu@chldinc.com / English and Chinese
Mr. Shuai Luo
Investor Relations
Tel: +86-29-8258-2632 in Xi'an
Email: Laurentluo@chldinc.com/ English and Chinese
Mr. Bill Zima, ICR
Tel: +1-203-682-8200 in United States
Email: William.Zima@icrinc.com
Ms. Annie Chen, ICR
Tel: +86-10-6599-7966 in Beijing
Email: Annie.Chen@icrinc.com
(Financial Tables Follow)
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES
Interim Condensed Consolidated Balance Sheets
As of March 31, 2010 and December 31, 2010
(Unaudited)
| | | March 31, | | | December 31, | |
| | | 2010 | | | 2009 | |
| ASSETS | | | | | | |
| Cash & cash equivalents | | $ | 66,323,400 | | | $ | 36,863,216 | |
| Cash - restricted | | | 701,259 | | | | 701,017 | |
| Accounts receivable, net of allowance for doubtful accounts of $390,002 and $389,996, respectively | | | 9,267,167 | | | | 6,088,482 | |
| Other receivables, prepaid expenses and other assets, net | | | 4,696,509 | | | | 2,484,221 | |
| Real estate held for development or sale | | | 105,763,268 | | | | 103,003,529 | |
| Property and equipment, net | | | 15,715,656 | | | | 15,307,478 | |
| Asset held for sale | | | 14,301,774 | | | | 14,301,564 | |
| Advance to suppliers | | | 580,863 | | | | 10,368,386 | |
| Deposits on land use rights | | | 50,939,221 | | | | 28,084,346 | |
| Intangible assets, net | | | 41,355,740 | | | | 41,355,134 | |
| Goodwill | | | 816,481 | | | | 816,469 | |
| Deferred financing costs | | | 372,975 | | | | 411,457 | |
| Total assets | | | 310,834,313 | | | | 259,785,299 | |
| LIABILITIES | | | | | | | | |
| Accounts payable | | $ | 18,127,903 | | | $ | 20,706,263 | |
| Advances from customers | | | 30,453,151 | | | | 21,301,876 | |
| Accrued expenses | | | 2,296,023 | | | | 5,587,837 | |
| Payable for acquisition of businesses | | | 8,555,780 | | | | 5,916,354 | |
| Income and other taxes payable | | | 9,478,550 | | | | 8,194,659 | |
| Other payables | | | 4,608,268 | | | | 4,524,288 | |
| Loans from employees 4,715,931 2,864,824 | | | | | | | | |
| Loans payable | | | 64,461,309 | | | | 36,185,705 | |
| Deferred tax liability | | | 13,656,266 | | | | 11,505,181 | |
| Warrants liability | | | 4,519,590 | | | | 5,074,191 | |
| Fair value of embedded derivatives | | | 3,424,841 | | | | 3,991,047 | |
| Convertible debt | | | 15,164,169 | | | | 14,834,987 | |
| Mandatory redeemable noncontrolling interests in Subsidiaries | | | 46,751,893 | | | | -- | |
| Total liabilities | | | 226,213,674 | | | | 140,687,212 | |
| SHAREHOLDERS' EQUITY | | | | | | | | |
| Common stock: $.001 par value, authorized 100,000,000 shares issued and outstanding 33,065,386 and 31,884,969, respectively | | | 33,065 | | | | 31,885 | |
| Additional paid in capital | | | 40,745,457 | | | | 35,461,706 | |
| Common stock subscribed | | | -- | | | | 252,118 | |
| Statutory reserves | | | 4,922,248 | | | | 4,922,248 | |
| Retained earnings | | | 28,784,070 | | | | 39,895,179 | |
| Accumulated other comprehensive | | | | | | | | |
| income | | | 10,135,799 | | | | 10,163,483 | |
| Total China Housing & Land Development, Inc. shareholders' equity | | | 84,620,639 | | | | 90,726,619 | |
| Noncontrolling interests | | | -- | | | | 28,371,468 | |
| Total shareholders' equity | | | 84,620,639 | | | | 119,098,087 | |
| Total liabilities and shareholders' equity | | $ | 310,834,313 | | | $ | 259,785,299 | |
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES
Interim Condensed Consolidated Statements of Income
For The Three Months Ended March 31, 2010 and 2009
(Unaudited)
| | | 3 Months | | | 3 Months | |
| | | March 31, | | | March 31, | |
| | | 2010 | | | 2009 | |
| REVENUES | | | | | | |
| Sale of properties | | $ | 32,391,061 | | | $ | 12,925,869 | |
| Other income | | | 1,181,853 | | | | 1,002,058 | |
| Total revenues | | | 33,572,914 | | | | 13,927,927 | |
| Cost of sales | | | 27,098,660 | | | | 9,581,459 | |
| Gross margin | | | 6,474,254 | | | | 4,346,468 | |
| OPERATING EXPENSES | | | | | | | | |
| Selling, general and administrative expenses | | | 2,537,884 | | | | 1,408,824 | |
| Security registration expenses | | | -- | | | | 600,000 | |
| Other expenses | | | 122,651 | | | | 39,796 | |
| Interest expense | | | 507,025 | | | | 338,078 | |
| Accretion expense on convertible debt | | | 329,182 | | | | 281,822 | |
| Total operating expenses | | | 3,496,742 | | | | 2,668,520 | |
| NET INCOME (LOSS) FROM BUSINESS | | | | | | | | |
| OPERATIONS | | | 2,977,512 | | | | 1,677,948 | |
| CHANGE IN FAIR VALUE OF DERIVATIVES | | | | | | | | |
| Change in fair value of embedded derivatives | | | 566,206 | | | | 124,038 | |
| Change in fair value of warrants | | | 554,601 | | | | 167,239 | |
| Total change in fair value of derivatives | | | 1,120,807 | | | | 291,277 | |
| Income before provision for income | | | | | | | | |
| taxes and noncontrolling interests 4,098,319 | | | 1,969,225 | | | | | |
| Provision for income taxes | | | 1,009,531 | | | | 713,641 | |
| Recovery of deferred income taxes | | | (29,146 | ) | | | -- | |
| NET INCOME | | | 3,117,934 | | | | 1,255,584 | |
| Charge to noncontrolling interests | | | (14,229,043 | ) | | | (47,135 | ) |
| Net (loss) income attributable to China Housing & Land Development, Inc. | | | (11,111,109 | ) | | | 1,302,719 | |
| WEIGHTED AVERAGE SHARES OUTSTANDING | | | | | | | | |
| Basic | | | 32,580,769 | | | | 30,893,757 | |
| Diluted | | | 32,580,769 | | | | 30,922,261 | |
| NET INCOME PER SHARE | | | | | | | | |
| Basic | | $ | (0.34 | ) | | $ | 0.04 | |
| Diluted | | $ | (0.34 | ) | | $ | 0.04 | |
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES
Interim Condensed Consolidated Statements of Comprehensive Income
For The Three Months Ended March 31, 2010 and 2009
(Unaudited)
| | | 3 Months | | | 3 Months | |
| | | March 31, | | | March 31, | |
| | | 2010 | | | 2009 | |
| NET INCOME | | $ | 3,117,934 | | | $ | 1,255,584 | |
| OTHER COMPREHENSIVE INCOME (LOSS) | | | | | | | | |
| (Loss) gain in foreign exchange | | | (27,684 | ) | | | (363,133 | ) |
| COMPREHENSIVE INCOME | | | 3,090,250 | | | | 892,451 | |
| Charge to noncontrolling interests | | | (14,229,043 | ) | | | 47,135 | |
| Comprehensive income attributable to China Housing & Land Development, Inc. | | $ | (11,138,793 | ) | | $ | 939,586 | |
CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES
Interim Condensed Consolidated Statements of Cash Flows
For The Three Months Ended March 31, 2010 and 2009
(Unaudited)
| | | March 31, | | | March 31, | |
| | | 2010 | | | 2009 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | |
| Net income | | | 3,117,934 | | | $ | 1,255,584 | |
| Adjustments to reconcile net income to cash provided by (used in) operating activities: | | | | | | | | |
| Depreciation | | | 293,134 | | | | 154,088 | |
| Gain on disposal of fixed assets | | | -- | | | | (16,945 | ) |
| Amortization of deferred financing costs | | | 38,482 | | | | 38,482 | |
| Recovery of future income taxes | | | (29,146 | ) | | | -- | |
| Change in fair value of warrants | | | (554,601 | ) | | | (167,239 | ) |
| Change in fair value of embedded derivatives | | | (566,206 | ) | | | (124,038 | ) |
| Accretion expense on convertible debt | | | 329,182 | | | | 281,822 | |
| Non-cash proceeds from sales | | | -- | | | | (15,835 | ) |
| (Increase) decrease in assets: | | | | | | | | |
| Accounts receivable | | | (3,177,943 | ) | | | (3,107,443 | ) |
| Other receivable and prepaid expense | | | (2,211,864 | ) | | | 643,186 | |
| Real estate held for development or sale | | | 7,485,899 | | | | (36,452,495 | ) |
| Advance to suppliers | | | 9,492,722 | | | | 227,051 | |
| Refund (deposit) on land use rights | | | (22,849,777 | ) | | | 11,372,462 | |
| Deferred financing costs | | | -- | | | | -- | |
| Increase (decrease) in liabilities: | | | | | | | | |
| Accounts payable | | | (2,578,136 | ) | | | (892,860 | ) |
| Advances from customers | | | 9,149,087 | | | | 1,182,958 | |
| Accrued expenses | | | 858,829 | | | | 198,281 | |
| Other payables | | | 82,578 | | | | (2,127,062 | ) |
| Income and other taxes payable | | | 1,283,577 | | | | 1,148,392 | |
| Accrued security registration expenses | | | -- | | | | 600,000 | |
| Net cash used in operating activities | | | 163,751 | | | | (25,801,611 | ) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
| Change in restricted cash | | | (231 | ) | | | 53,002 | |
| Purchase of property and equipment | | | (701,004 | ) | | | (63,224 | ) |
| Notes receivable collected | | | -- | | | | 111,737 | |
| Cash acquired from acquisition of business | | | 2,179 | | | | 519,309 | |
| Proceeds from sale of property and equipment | | | -- | | | | 193,098 | |
| Net cash provided by (used in) investing activities | | | (699,056 | ) | | | 813,922 | |
| CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
| Loans from bank | | | 31,491,680 | | | | -- | |
| Payments of loans payable | | | (3,222,404 | ) | | | (1,170,292 | ) |
| Loans from or repayment to employees, net | | | 1,850,685 | | | | 151,407 | |
| Repayment of payables for acquisition of businesses | | | (117,334 | ) | | | (753,416 | ) |
| Net cash (used in) provided by financing activities | | | 30,002,627 | | | | (1,772,301 | ) |
| (DECREASE)/INCREASE IN CASH | | | 29,467,322 | | | | (26,759,990 | ) |
| Effects on foreign currency exchange | | | (7,138 | ) | | | (67,150 | ) |
| CASH, beginning of period | | | 36,863,216 | | | | 37,425,340 | |
| CASH, end of period | | | 66,323,400 | | | $ | 10,598,200 | |
