Attached files
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| 8-K - FORM 8-K CHINA HGS REAL ESTATE - CHINA HGS REAL ESTATE INC. | form8k.htm |
Exhibit 99.1
China
HGS Real Estate Inc.
(OTC
BB: CAHS)
January
2010
2
Forward
Looking Statement
CAUTIONARY
STATEMENT REGARDING
FORWARD
- LOOKING STATEMENTS
This
presentation includes or incorporates by reference statements that constitute
forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future
events or to our future financial performance, and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity, performance, or achievements
to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements and therefore refer you to a more detailed
discussion of the risks and uncertainties in the Company’s filings with the Securities & Exchange
Commission. In some cases, you can identify forward-looking statements by the use of words such
as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “continue,” or the negative of these terms or other comparable terminology. You should
not place undue reliance on forward-looking statements since they involve known and unknown
risks, uncertainties and other factors which are, in some cases, beyond our control and which could
materially affect actual results, levels of activity, performance or achievements. The forward-looking
statements contained in this presentation are made only as of this date and CAHS is under no
obligation to revise or update these forward-looking statements.
statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to future
events or to our future financial performance, and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity, performance, or achievements
to be materially different from any future results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements and therefore refer you to a more detailed
discussion of the risks and uncertainties in the Company’s filings with the Securities & Exchange
Commission. In some cases, you can identify forward-looking statements by the use of words such
as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “continue,” or the negative of these terms or other comparable terminology. You should
not place undue reliance on forward-looking statements since they involve known and unknown
risks, uncertainties and other factors which are, in some cases, beyond our control and which could
materially affect actual results, levels of activity, performance or achievements. The forward-looking
statements contained in this presentation are made only as of this date and CAHS is under no
obligation to revise or update these forward-looking statements.
3
Equity
Snapshot
|
OTC
BB Listed
|
CAHS
|
|
Share
Price (01/20/2010)
|
$3.98
|
|
52
Week Range
|
$0.02
- $4.00
|
|
Market
Cap
|
$179.5
Million
|
|
Shares
Outstanding*
|
45.1
Million
|
|
Revenue
(ttm)
|
$28.5
Million
|
|
Net
Income (ttm)
|
$11.1
Million
|
|
EPS
|
$0.28
|
|
Gross
Margin
|
47.0%
|
|
Net
Margin
|
38.9%
|
|
P/E
(ttm)
|
14.2x
|
* As of
December 24, 2009
4
|
§ Rapidly
growing real estate market in the tier II and tier III cities in
China
|
|
§ Strong project
pipelines under development and planning with 459,614 sq m GFA
(Gross Floor Area) |
|
§ Largest
property developer in Hanzhong (3.8 m population)
|
|
§ Standardized,
scalable model that emphasizes rapid asset turnover, efficient
capital management and strict cost control |
|
§ Experienced
management team
|
|
§ Strong
financial position
|
|
|
Investment
Highlights
5
§ No.1 real estate
developer with 47%
market share in Hanzhong, a third-tier city
in Shaanxi province with 3.8 million
population
market share in Hanzhong, a third-tier city
in Shaanxi province with 3.8 million
population
§ Real estate
properties offered include:
multi-layer, sub-high-rise, and high-rise
apartment buildings
multi-layer, sub-high-rise, and high-rise
apartment buildings
§ Majority of recent
projects completed with
gross margin in the range of 40% to 55%
gross margin in the range of 40% to 55%
§ 150,000 ㎡ of average
annual area
developed in the past 14 years
developed in the past 14 years
§ National grade II
real estate qualification
Company
Overview
Business
Overview
A
branch company in Yangxian was
established
established
Hanzhong
Guangsha Real Estate
Development Co., Ltd. was founded
Development Co., Ltd. was founded
A
branch company in Weinan was
established
established
Shaanxi
Guangsha Investment and
Development Group Co., Ltd. was
registered with RMB160.7 million
Development Group Co., Ltd. was
registered with RMB160.7 million
Goal:
To become the leading
residential property developer
focused on China’s Tier III cities
residential property developer
focused on China’s Tier III cities
2008
2007
1995
2001
August
2009
2009
Became
public and listed on OTCBB
under ticker symbol “CAHS”
under ticker symbol “CAHS”
6
§ Increasing
urbanization rate drives
demand for real estate
demand for real estate
§ Less significant and
small-scale
property bubbles in tier II and tier III
cities relative to tier I cities
property bubbles in tier II and tier III
cities relative to tier I cities
§ Attractive growth in
resident disposable
income boost demand for real estate
income boost demand for real estate
§ Significantly lower
competition in tier III
cities
cities
Promising
Real Estate Opportunity
in
Tier II and Tier III cities
Urban
population expected to increase from 43% to 47% by 2010
Source:
State Statistical Bureau, the 11th Tenth Five-Year Plan
7
Hanzhong’s
Geographic Significance
Weinan
Hanzhong
ü Located
in the southwestern part of Shaanxi
Province, Hangzhong is historically a strategic
passageway liking northwest to southwest
Province, Hangzhong is historically a strategic
passageway liking northwest to southwest
ü Located
in the southeastern part of Shaanxi
Province, Weinan the “Eastern Gate” connecting
northwest to central China
Province, Weinan the “Eastern Gate” connecting
northwest to central China
8
Hanzhong
- Culture Center in Central China
Source:
Shaanxi Statistical Bureau
GDP
(Hundred Million RMB)
Average
Disposal Income (RMB)
Real
Estate Investment (Hundred Million RMB)
9
• Pre-sale
• Customer
Financing
Financing
A
systematic and standardized process to project development, which is implemented
through
several well-defined phases
several well-defined phases
Opportunity
Identification
Initial
Planning
Planning
Land
Acquisition
Acquisition
• Strategic
Planning
Planning
• Geographic
and Market
Analysis
and Market
Analysis
• Auction
Opportunity
Study
Opportunity
Study
• Feasibility
• Preliminary
Design
Design
• Costing
and
Financial
Evaluation
Financial
Evaluation
• Financial
Projection
Projection
• Internal
Approval
Approval
• Biding
Process
Process
Project
Planning &
Design
Planning &
Design
Project
Construction
&
Management
Construction
&
Management
Pre-sale,
sale
& Marketing
& Marketing
After-sale,
Service
Service
• Architectural
&
Engineering
Design
&
Engineering
Design
• Design
Management
Management
• Arrange
Financing
Financing
• Construction
• Construction
Supervision
Supervision
• Quality
Control
Control
• Completion
Inspection
Inspection
• Landscaping
& Fixture
Installation
& Fixture
Installation
• Registration
Assistance
Assistance
• Feedback
Collection
Collection
• Advertising
• Property
Management
Management
• Heating
System
System
Land
Acquisition Process
Systematic
& Standardized Project
Development Process
Development Process
10
Solid
Track Record of Completed Projects
All
data as of September 30, 2009
* The
amounts for “total GFA” in this table are the amounts of total saleable
residential GFA
|
|
Location
|
Type
of
Projects |
Completion
Date |
Total
GFA
(sq m) |
%
of Units
Sold |
|
Weinan
Lijing Garden - Project I
|
Weinan
City
|
M
|
April
2005
|
44,373
|
100%
|
|
Weinan
Lijing Garden - Project II
|
Weinan
City
|
M
|
December
2006
|
55,390
|
100%
|
|
Weinan
Lijing Garden - Project III
|
Weinan
City
|
M
|
June
2008
|
3,964
|
100%
|
|
Yangzhou
Pearl Garden - Project I
|
Yang
County
|
M
|
September
2009
|
34,348
|
59.3%
|
|
Mingzhu
Garden - Project I & II
|
Hanzhong
City
|
M
|
September
2009
|
28,666
|
100%
|
|
Total
|
|
|
|
166,741
|
91.9%
|
11
Under
Construction and Planned Projects
|
|
Location
|
Type
of
Projects
|
Expected
Completion Date |
Total
GFA*
(sq m)
|
%
of Units
Pre-sold |
|
Projects
under Construction
|
|
|
|
|
|
|
Yangzhou
Pearl Garden
|
Yang
County
|
M
|
December
2010
|
72,476
|
8.8%
|
|
Mingzhu
Xinju - Project I
|
Hanzhong
City
|
M/S
|
December
2010
|
42,476
|
62.5%
|
|
Mingzhu
Real Estate
|
Hanzhong
City
|
M/S/H
|
December
2010
|
37,015
|
100%
|
|
Subtotal
|
|
|
|
151,967
|
26.1%
|
|
Projects
under Planning
|
|
|
|
|
|
|
Yangzhou
Pearl Garden -
Project IV |
Yang
County
|
M/S/H
|
|
246,471
|
0.0%
|
|
Mingzhu
Xinju - Project II
|
Hanzhong
City
|
M/S/H
|
|
61,176
|
0.0%
|
|
Subtotal
|
|
|
|
307,647
|
0.0%
|
|
Total
|
|
|
|
459,614
|
|
All
data as of September 30, 2009
•The amounts for
“total GFA” in this table are the amounts of total saleable residential
GFA
• M = Multi-layer ; S
= Sub-high-rise; H = High-rise
12
§ Dominant residential
real estate
development company in Hanzhong
development company in Hanzhong
§ Primary competitors
include local and
regional property developers
regional property developers
§ No direct
competition from the increasing
number of large national players in Tier II
cities as HGS focuses on small to medium
-size projects
number of large national players in Tier II
cities as HGS focuses on small to medium
-size projects
Competition
(in
Ten Thousand RMB)
WB-
Wanbang Real Estate
13
• Recognized
as "AAA Enterprise in Shaanxi Construction Industry" by Credit
Association of Agricultural Bank of China, Shaanxi Branch
Association of Agricultural Bank of China, Shaanxi Branch
• Disciplined
bidding process
• Senior
management closely supervises management and planning process
Forward
looking land acquisition strategy focuses on locations with
promising
development potential
Competitive
Strengths
Captures
over 80% of the resident real estate market in Hanzhong
Awards
received include:
“3.15
Trustworthy Enterprise in China” by China Credibility Alliance
“Trustworthy
Enterprise” by Shanxi Banking Association
Insignificant
amount of debt and no long term bank loans
High
Standard Quality
Control
Land
Acquisition Strategy
Leading
Market Position
High
Market Recognition
Conservative
Cap Structure
14
Target
Customer Profile
Occupation
Region
Age
Payment
15
Marketing
Strategies
Key
Marketing Strategies
Advance
sales
- Pre sale of units
when new buildings made available for trading
Internal
improvement
- Enhanced designs for
residential areas
- Supporting
infrastructure (roads, heating system, schools and hospitals)
Other
Marketing Initiatives
Advertisements
- Television,
newspaper, broadcasting, etc
Sales
promotion
- Interest
concessions, preferential offers and non-periodical lucky
draws
Agents
- For large-scale
development of buildings, a professional corporate agent is
engaged
- Improve sales and
enhance brand influence
16
Zhu
Xiaojun, President, CEO and Chairman
- More than 20 years
of experience in the real estate industry in China and a well-known industry
leader
- Rated as one of “Top
100 Management Elites in China’s Building Industry 2005”
Ma
Haizhu, Deputy General Manager
- Solid background in
China’s construction and real estate industry
- Management
experience in state-owned enterprises and government agencies
Shi
Jiachuan, Manager of Marketing
- Significant sales
experience in the real estate development industry
Li
Shumin, Manager of Engineering
- Over 20 years of
engineering work experience and 10 years of management
experience
- Strong technical and
consulting skills
Luo
Shenghui, Manager of Finance
- Over 15 years of
accounting and finance background with 10 years of management
experience
Gordon
Silver, Independent Director
- Strong background in
the financial services industry
- Received his MBA and
Law degree from Harvard University
David
Sherman, Independent Director
- Extensive experience
as a board member and industry expertise in the health care and financial
services sector
- Received his
Doctorate and MBA degree from Harvard Business Schooland is a U.S. Certified
Public Accountant
Yuankai
Wen, Independent Director
- Extensive experience
working in China managing investments
- Received his
Bachelor's degree in Chemistry from Nanjing University
Experienced
Management Team
17
Large-scale
Real
Estate
Development
• Enormous
market
opportunity
opportunity
• Very low
land
acquisition cost
acquisition cost
Strict
Cost Control
• Long term
construction partners
construction partners
• Supervision
system
• Efficient
sales
expenses
expenses
Product
Innovation
• Design
• Project
management
management
• Heating
Services
Pricing
strategy
• High
quality
• Moderate
pricing
• Targeting
middle
income group
income group
China
HGS Goal
To
become the leading
residential property developer
focused on China’s Tier III
cities
residential property developer
focused on China’s Tier III
cities
18
Strong
Revenue Growth
*
Management Estimates
19
Attractive
Net Income Growth
*
Management Estimates
20
Selected
Income Statement
|
|
Fiscal
Year
Ended September
30
|
|
|
|
2009
|
2008
|
|
Real
estate sales, net of sales taxes
|
28,459,176
|
17,249,539
|
|
Gross
profit
|
13,375,159
|
8,087,591
|
|
Gross
margin
|
47.0%
|
46.9%
|
|
Operating
income (loss)
|
11,402,326
|
6,289,037
|
|
Operating
margin
|
40.1%
|
36.5%
|
|
Net
income (loss)
|
$11,057,550
|
$6,019,731
|
|
Net
margin
|
38.9%
|
34.9%
|
21
Selected
Balance Sheet
|
|
Fiscal
Year
Ended September
30
|
|
|
|
2009
|
2008
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash & cash equivalents
|
$820,783
|
$2,121,060
|
|
Restricted cash
|
412,373
|
596,258
|
|
Real estate property development completed
|
2,392,003
|
13,657,042
|
|
Real
estate property under development
|
42,522,287
|
22,699,749
|
|
Total
current assets
|
47,981,453
|
39,320,615
|
|
Property,
plant and equipment, net
|
713,008
|
401,635
|
|
Total
Assets
|
$48,694,461
|
$39,722,250
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
Total
current liabilities
|
18,831,506
|
21,414,759
|
|
Total
shareholders' equity
|
29,862,955
|
18,307,491
|
|
Total
Liabilities and Shareholders' Equity
|
$48,694,461
|
$39,722,250
|
22
|
§ Rapidly
growing real estate market in the tier II and tier III cities in
China
|
|
§ Strong project
pipelines under development and planning with 459,614
GFA
|
|
§ Largest
property developer in Hanzhong (3.8 m population)
|
|
§ Standardized,
scalable model that emphasizes rapid asset turnover, efficient
capital management and strict cost control |
|
§ Experienced
management team
|
|
§ Strong
financial position
|
|
|
Investment
Highlights
23
Company
Contact
China
HGS Real Estate Inc.
Mr. Ran
Xiong, Deputy GM
China
HGS Real Estate Inc.
Tel:
+86-916-2622612
Email:
xr968@163.net
Investor
Relations
CCG
Investor Relations
Crocker
Coulson, President
Tel: +1-646-213-915
Email:
crocker.coulson@ccgir.com
Legal
Counsel
The
Crone Law Group
Independent
Auditor
Friedman
LLP
Contact