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| 8-K - FORM 8-K - China Housing & Land Development, Inc. | v232906_8k.htm |
China Housing & Land Development Inc. Announces
Second Quarter 2011 Financial Results
Xi’an, China – August 15, 2011 -- China Housing & Land Development, Inc. (“China Housing” or the “Company”; Nasdaq: CHLN) today announced its financial results for the quarter ended June 30, 2011.
Highlights for Q2 2011:
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·
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Total revenue in the second quarter of 2011 decreased 10.2% to $20.3 million from $22.6 million in the first quarter of 2011 and decreased 44.7% from $36.6 million in the second quarter of 2010.
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·
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Total gross floor area (“GFA”) sales were 12,769 sq. meters during the second quarter of 2011, compared to 28,438 sq. meters in the first quarter of 2011 and 46,459 sq. meters in the second quarter of 2010.
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·
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Average residential selling price (“ASP”) in the second quarter of 2011 was RMB 6,551, compared with RMB 6,115 in the first quarter of 2011, and RMB 5,641 in the second quarter of 2010.
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·
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Gross profit decreased 10.6% to $5.1 million from $5.7 million in the first quarter of 2011 and decreased 50.5% from $10.3 million in the second quarter of 2010. Second quarter 2011 gross margin was 25.3% compared to 25.4% in the first quarter of 2011 and 28.2% in the second quarter of 2010.
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·
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SG&A expenses as a percentage of total revenue increased to 16.4%, compared to 15.2% in the first quarter of 2011 and 10.3% in the second quarter of 2010.
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·
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Operating income decreased 35.1% to $0.9 million from $1.3 million in the first quarter of 2011, and decreased from $5.7 million in the second quarter of 2010.
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·
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Net income attributable to the Company in the second quarter of 2011 was $0.6 million, or $0.02 per basic share and $0.01 per diluted share. Excluding the $0.7 million or $ 0.02 gain on basic EPS associated with the revaluation of derivatives and warrants, net income was $(0.1) million.
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Mr. Pingji Lu, China Housing’s Chairman, commented, “The majority of our revenue in the second quarter was derived from our Puhua Phase I and Phase II projects. The local government in Xi’an slowed down the approval process for new development projects resulting in a pre-sales schedule delay for our three outstanding development projects scheduled for this year. We now believe JunJing III, Park Plaza and Golden Bay will commence pre-sales at the end of our third quarter of 2011, in the fourth quarter of 2011 and the first quarter of 2012, respectively.”
“After the local government implemented policies designed to slow down the new supply of development projects, Xi’an’s housing sales volume decreased dramatically in March, but since that time, has gradually risen each month and as of the end of June is 66% above its March lows. We are also pleased to see that average selling prices in Xi’an have remained steady throughout these policy changes, which bodes well for our current and upcoming residential projects.”
“In the second quarter, buyers showed signs of absorbing the latest round of government policies implemented earlier this year. In spite of the delay related to the timing of pre-sales at JunJing III, as of August 12, 2011, we have presold over 90% of the units available at this project at gross margin levels in the 30%-35% range. Once we receive all of the required permits, we will be able to book our contract sales based on percentage of completion accounting methods.
“We expect the majority of our project revenue in the second half of 2011 to come from our Puhua Phase One, Puhua Phase Two, JunJing III, and Park Plaza projects. Based on the delayed permit approval process for our latest development projects, we have lowered our full year expectations for contact sales and recognized revenue. We are optimistic that our delayed projects will move forward as buyers continue to show signs of returning to the market.”
Total revenue in the second quarter of 2011 decreased 10.2% to $20.3 million from $22.6 million in the first quarter of 2011 and decreased 44.7% from $36.6 million in the second quarter of 2010. In the second quarter of 2011, most of the Company’s revenue came from its Puhua Phase I and Phase II. Second quarter 2011 contract sales totaled US$12.9 million representing a total GFA of 12,769 square meters. Second quarter 2011 contract sales represented a 66.4% decrease compared to US$38.4 million in the second quarter of 2010. Total gross floor area (“GFA”) sales were 12,769 sq. meters during the second quarter of 2011, compared to 28,438 sq. meters in the first quarter of 2011 and 46,459 sq. meters in the second quarter of 2010. The Company’s average residential selling price (“ASP”) in the second quarter of 2011 was RMB 6,551, compared with RMB 6,115 in the first quarter of 2011, and RMB 5,641 in the second quarter of 2010.
Gross profit for the three months ended June 30, 2011 was $5.1 million, representing a decrease of 10.6% from $5.7 million in the first quarter of 2011 and 50.5% decrease from $10.3 million in the same period of 2010. The gross profit margin for the three months ended June 30, 2011 was 25.3%, which is below the 28.2% in the same period of 2010 and the 25.4% in the first quarter of 2011. The Company’s gross margin in the current period was consistent with the expectations. Due to the sellout of Jun Jing II Phase Two, gross profit decreased as a result of decreased revenue. Our gross margin decreased 2.9%compared with the same period in 2010 and remained at the same level as the first quarter of 2011.
SG&A expense was $3.3 million in the second quarter of 2011, compared to $3.4 million in the first quarter of 2011 and $3.8 million in the second quarter of 2010. SG&A expenses as a percentage of total revenue increased to 16.4%, compared to 15.2% in the first quarter of 2011 and 10.3% in the second quarter of 2010. The increase in SG&A as a percent of total revenue is primarily due to reduced revenue.
Operating income in the second quarter decreased to $0.9 million, or 4.2% of total revenue, from $1.3 million, or 5.8% of total revenue, in the first quarter of 2011, and decreased from $5.7 million, or 15.6% of total revenue in the second quarter of 2010 primarily due to reduced revenues, while we had level SG&A expenses and interest expenses in the three months ended on June 30, 2011 compared with the same period of 2010.
Net income attributable to China Housing in the second quarter of 2011 was $0.6 million or $0.02 per basic share and $0.01 per diluted share. Excluding the $0.7 million or $0.02 gain on basic earnings per share (“EPS”) associated with the revaluation of derivatives and warrants, net income was $(0.1) million. This performance compares to a net income of $2.5 million, or $0.07 per basic share, in the first quarter of 2011, which excludes a $1.9 million non-cash loss associated with the revaluation of derivatives and warrants in the first quarter of 2011.
Sequential Quarterly Revenue Breakout Comparison
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Project
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Q2 2011
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Q1 2011
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||||||||
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Recognized Revenue
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Contract Sales
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GFA Sold
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ASP
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Unsold GFA
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POC
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Recognized Revenue
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Contract Sales
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GFA Sold
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ASP
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($)
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($)
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(m2)
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(RMB)
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(m2)
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($)
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($)
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(m2)
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(RMB)
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Projects Under Construction
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Puhua Phase One
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7,703,630
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4,952,039
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4,291
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7,500
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22,928
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65.1%
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5,219,729
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5,150,567
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3,665
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9,243
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Puhua Phase Two
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4,975,580
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5,686,955
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6,717
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5,502
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201,966
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40.3%
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8,428,480
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18,767,261
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21,984
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5,618
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Projects Completed
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JunJing II Phase One
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193,138
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193,138
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125
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9,992
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4065
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100%
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1,080,635
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1,080,635
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1,139
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6,242
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JunJing II Phase Two
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1,988,513
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1,325,792
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966
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8,923
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155
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100%
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4,174,516
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680,484
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697
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6,421
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Tsining-24G
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-
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-
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-
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-
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71
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100%
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695,439
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695,439
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953
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4,801
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JunJing I
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672,697
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672,697
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587
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7,450
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1,054
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100%
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-
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-
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-
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-
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Additional Project
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39,698
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39,698
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83
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-
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-
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100%
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58,018
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58,018
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-
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-
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Other Income
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4,678,936
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-
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-
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2,900,879
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-
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-
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|||
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Total
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20,252,192
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12,870,319
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12,769
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6,551
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230,239
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-
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22,557,696
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26,432,404
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28,438
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6,115
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Q-o-Q Change
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-10.2%
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-51.3%
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-55.0%
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7.1 %
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As of June 30, 2011, China Housing reported $72.7 million in unrestricted cash, compared to $81.6 million as of March 31, 2011 and $46.9 million as of December 31, 2010. Total debt outstanding as of June 30, 2011 was $167.0 million compared with $167.4 million on March 31, 2011 and $143.9 million on December 31, 2010. Net debt outstanding (total debt less cash) as of June 30, 2011 was $54.2 million compared with $46.1 million on March 31, 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 31.5% on June 30, 2011 and 28.6% on March 31, 2011 and 38.0% on December 31, 2010, which increased due to additional bank loan and employee loans.
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Q2 2011
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Projects in Planning
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Unsold
GFA
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First
Pre-sales
Scheduled
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(m2)
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JunJing III
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49,636
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Q3 2011
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Park Plaza
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141,822
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Q4 2011
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Golden Bay
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252,540
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Q1 2012
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Puhua Phase Three
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130,000
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Q2 2012
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Puhua Phase Four
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161,107
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Q4 2013
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Textile City
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630,000
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Q3 2012
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Hu County
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195,000
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Q3 2011
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Total projects in planning
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1,560,105
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2011 Outlook
Total contract sales in 2011 are expected to reach $180 to $200 million, a 22%-35% increase compared to $148 million in 2010. Total recognized revenue in 2011 is expected to reach $135 to $155 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
China Housing’s management will host a conference call at 8:30 am ET on Monday August 15, 2011. Listeners may access the call by dialing #1-913-312-1403. 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 August 22nd, by dialing #1-858-384-5517; passcode: 2541242.
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)
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES
Interim Condensed Consolidated Balance Sheets
As of June 30, 2011 and December 31, 2010
(Unaudited)
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June 30,
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December 31,
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|||||||
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2011
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2010
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ASSETS
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Cash and cash equivalents
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$
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72,693,792
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$
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46,904,161
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||||
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Cash - restricted
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40,163,129
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34,756,450
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||||||
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Accounts receivable, net of allowance for doubtful
accounts of $272,121 and $266,493, respectively
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11,645,849
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9,297,505
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||||||
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Other receivables, prepaid expenses and other assets, net
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4,819,554
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7,653,925
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Real estate held for development or sale
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136,496,753
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104,586,550
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Property and equipment, net
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30,109,786
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29,735,836
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Advance to suppliers
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1,771,850
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1,223,366
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Deposits on land use rights
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64,292,684
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74,938,729
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Intangible assets, net
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52,834,718
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51,846,410
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Goodwill
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1,845,064
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1,806,905
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Deferred financing costs
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327,384
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401,703
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||||||
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Total assets
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$
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417,000,563
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$
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363,151,540
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||||
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LIABILITIES
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||||||||
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Accounts payable
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$
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25,957,225
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$
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22,542,083
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||||
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Advances from customers
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69,551,520
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52,229,189
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||||||
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Accrued expenses
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3,025,094
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2,507,638
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||||||
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Payables for acquisition of businesses
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92,572
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2,363,385
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||||||
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Income and other taxes payable
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12,156,822
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15,429,752
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||||||
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Other payables
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6,536,097
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5,663,222
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||||||
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Loans from employees
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12,052,294
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8,787,879
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||||||
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Loans payable
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104,898,559
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82,971,074
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||||||
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Deferred tax liability
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14,577,897
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14,344,712
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||||||
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Warrants liability
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27,949
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2,766,382
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||||||
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Fair value of embedded derivatives
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565,494
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2,027,726
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||||||
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Convertible debt
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8,722,132
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16,251,840
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||||||
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Mandatorily redeemable noncontrolling interests in Subsidiaries
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41,255,994
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33,535,969
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||||||
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Total liabilities
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299,419,649
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261,420,851
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||||||
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SHAREHOLDERS' EQUITY
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||||||||
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Common stock: $.001 par value, authorized 100,000,000 shares
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||||||||
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issued and outstanding 35,078,639 and 32,685,331, respectively
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35,079
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32,685
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||||||
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Additional paid in capital
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48,768,781
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38,996,078
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||||||
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Common stock subscribed
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-
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59,606
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||||||
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Statutory reserves
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6,654,715
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6,654,715
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||||||
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Retained earnings
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44,579,620
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41,528,907
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||||||
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Accumulated other comprehensive income
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17,542,719
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14,458,698
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||||||
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Total shareholders’ equity
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117,580,914
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101,730,689
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||||||
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Total liabilities and shareholders' equity
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$
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417,408,913
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$
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363,151,540
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||||
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES
Interim Condensed Consolidated Statements of Income (Loss)
For The Three and Six Months Ended June 30, 2011 and 2010
(Unaudited)
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3 Months
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3 Months
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6 Months
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6 Months
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|||||||||||||
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June 30,
2011
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June 30,
2010
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June 30,
2011
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June 30,
2010
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|||||||||||||
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REVENUES
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||||||||||||||||
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Real Estate sales
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$ | 15,573,256 | $ | 35,220,386 | $ | 35,230,073 | $ | 67,611,447 | ||||||||
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Other income
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4,678,938 | 1,373,409 | 7,579,817 | 2,555,262 | ||||||||||||
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Total revenues
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20,252,194 | 36,593,795 | 42,809,890 | 70,166,709 | ||||||||||||
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COST OF SALES
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||||||||||||||||
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Cost of real estate sales
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13,150,640 | 25,691,338 | 27,789,214 | 52,253,225 | ||||||||||||
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Cost of other revenue
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1,987,855 | 576,854 | 4,184,424 | 1,113,627 | ||||||||||||
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Total cost of revenue
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15,138,495 | 26,268,192 | 31,973,638 | 53,366,852 | ||||||||||||
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Gross margin
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5,113,699 | 10,325,603 | 10,836,252 | 16,799,857 | ||||||||||||
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OPERATING EXPENSES
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||||||||||||||||
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Selling, general, and administrative expenses
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3,321,725 | 3,758,565 | 6,754,441 | 6,296,449 | ||||||||||||
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Stock based compensation
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17,820 | - | 17,820 | |||||||||||||
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Other expenses
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348,901 | 65,381 | 390,478 | 188,032 | ||||||||||||
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Interest expense
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365,460 | 447,475 | 962,608 | 954,500 | ||||||||||||
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Accretion expense on convertible debt
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206,813 | 345,926 | 543,804 | 675,108 | ||||||||||||
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Total operating expenses
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4,260,719 | 4,617,347 | 8,669,151 | 8,114,089 | ||||||||||||
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NET INCOME FROM BUSINESS OPERATION
|
852,980 | 5,708,256 | 2,167,101 | 8,685,768 | ||||||||||||
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CHANGE IN FAIR VALUE OF DERIVATIVES
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||||||||||||||||
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Change in fair value of embedded derivatives
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(409,478 | ) | (1,307,129 | ) | (1,462,232 | ) | (1,873,335 | ) | ||||||||
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Change in fair value of warrants
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(263,623 | ) | (2,242,663 | ) | (1,114,274 | ) | (2,797,264 | ) | ||||||||
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Total change in fair value of derivatives
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(673,101 | ) | (1,369,300 | ) | (2,576,506 | ) | (2,490,107 | ) | ||||||||
|
Income (loss) before provision for income taxes and noncontrolling interest
|
1,526,081 | 7,077,556 | 4,743,607 | 11,175,875 | ||||||||||||
|
Provision for income taxes
|
978,373 | 1,531,461 | 1,764,862 | 2,540,992 | ||||||||||||
|
Recovery of deferred income taxes
|
(33,922 | ) | (21,851 | ) | (71,968 | ) | (50,997 | ) | ||||||||
|
Net income (loss)
|
581,630 | 5,567,946 | 3,050,713 | 8,685,880 | ||||||||||||
|
Charge to noncontrolling interest
|
- | - | - | (14,229,043 | ) | |||||||||||
|
NET INCOME (LOSS) ATTRIBUTABLE TO CHINA HOUSING & LAND DEVELOPMENT, INC.
|
$ | 581,630 | $ | 5,567,946 | $ | 3,050,713 | $ | (5,543,163 | ) | |||||||
|
WEIGHTED AVERAGE SHARES OUTSTANDING
|
||||||||||||||||
|
Basic
|
35,078,639 | 33,065,386 | 34,485,897 | 32,824,416 | ||||||||||||
|
Diluted
|
36,694,348 | 35,302,785 | 36,101,606 | 34,752,732 | ||||||||||||
|
NET INCOME (LOSS) PER SHARE
|
||||||||||||||||
|
Basic
|
$ | 0.02 | $ | 0.17 | $ | 0.09 | $ | (0.17 | ) | |||||||
|
Diluted
|
$ | 0.01 | $ | 0.13 | $ | 0.05 | $ | (0.20 | ) | |||||||
CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES
Interim Condensed Consolidated Statements of Comprehensive Income (Loss)
For The Three and Six Months Ended June 30, 2011 and 2010
(Unaudited)
|
3 Months
|
3 Months
|
6 Months
|
6 Months
|
|||||||||||||
|
June 30,
|
June 30,
|
June 30,
|
June 30,
|
|||||||||||||
|
2011
|
2010
|
2011
|
2010
|
|||||||||||||
|
NET INCOME (LOSS)
|
$
|
581,630
|
$
|
5,567,946
|
$
|
3,050,713
|
$
|
8,685,880
|
||||||||
|
OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||||||||||||
|
Gain (loss) in foreign exchange
|
1,721,150
|
834,531
|
3,084,021
|
806,847
|
||||||||||||
|
Less: COMPREHENSIVE INCOME (LOSS)
|
2,302,780
|
6,402,477
|
6,134,734
|
9,492,727
|
||||||||||||
|
Charge to noncontrolling interest
|
-
|
-
|
-
|
(14,229,043
|
)
|
|||||||||||
|
Comprehensive income (loss) attributable to China Housing & Land Development, Inc.
|
$
|
2,302,780
|
$
|
6,402,477
|
$
|
6,134,734
|
$
|
(4,736,316
|
)
|
|||||||