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| 8-K - FORM 8-K - China Housing & Land Development, Inc. | v308435_8k.htm |
China Housing & Land Development
Inc. Announces
Fourth Quarter 2011 Financial Results
Xi’an, China – March 30, 2012 -- China Housing & Land Development, Inc. (“China Housing” or the “Company”; Nasdaq: CHLN) today announced its financial results for the quarter ended December 31, 2011.
Highlights for Q4 2011:
| · | Total revenue in the fourth quarter of 2011 increased 49.2% to $47.9 million from $32.1 million in the third quarter of 2011 and increased 32.8% from $36.1 million in the fourth quarter of 2010. |
| · | Total gross floor area (“GFA”) sales were 44,631 sq. meters during the fourth quarter of 2011, compared to 24,793 sq. meters in the third quarter of 2011 and 30,680 sq. meters in the fourth quarter of 2010. |
| · | Average residential selling price (“ASP”) in the fourth quarter of 2011 was RMB 6,301, compared with RMB 5,574 in the third quarter of 2011, and RMB 6,661 in the fourth quarter of 2010. |
| · | Gross profit decreased 27.7% to $6.9 million from $9.5 million in the third quarter of 2011 and decreased 15.8% from $8.2 million in the fourth quarter of 2010. Fourth quarter 2011 gross margin was 14.4% compared to 29.7% in the third quarter of 2011 and 22.7% in the fourth quarter of 2010. |
| · | SG&A expenses as a percentage of total revenue decreased to 7.0%, compared to 9.1% in the third quarter of 2011 and decreased from 10.4% in the fourth quarter of 2010. |
| · | Operating income decreased 64.7% to $2.2 million from $6.1 million in the third quarter of 2011, and decreased from $3.0 million in the fourth quarter of 2010. |
| · | Net income attributable to the Company in the fourth quarter of 2011 was $2.8 million, or $0.08 per diluted share. Excluding the $0.3 million gain associated with the revaluation of derivatives and warrants, net income was $2.4 million. |
Mr. Pingji Lu, China Housing’s Chairman, commented, “While we were pleased to see sequential improvements both in GFA sales and ASP’s , our business continued to experience the impact of restrictive government policies on the real estate market that have impacted home purchases in Xi’an. We had three active projects in the fourth quarter, including JunJing III, Puhua Phase I and Puhua Phase II. Total GFA sales reached 44,631 square meters and average selling prices were RMB 6,301, both of which were sequential improvements. According to data from E-House (China) and the Xi’an Bureau of Statistics, during the fourth quarter of 2011, housing sales volume in Xi’an decreased 12.8% to 2.5 million square meters from 2.8 million square meters in the third quarter 2011 and average selling prices increased 6.6% to RMB 7,903 per sq. meter compared to RMB 7,412 in the third quarter of 2011.”
“We added one new development project to our pipeline in the fourth quarter. The Ankang project, located approximately 200 kilometers south of Xi’an is now our largest project outside of Xi’an. We intend to develop middle income residential units on the site with an estimated gross floor area (“GFA”) of 243,000 square meters. The development period of the project is currently expected to begin in the second quarter of 2012 and is estimated to last approximately three years. We plan to start presales in the third quarter of 2012 and anticipate that this new development project will generate revenue of approximately RMB1.1 billion (US$171.9 million) over the life of the project.”
“If there is no easing of the aforementioned restrictive government policies, we expect contract sales to remain slow this year. However, labor costs and construction costs continue to rise which together can result in higher apartment sales prices. We have the ability to modify the timeline of our development projects based on market conditions and will monitor the latest trends to control the roll out of our construction projects. We have an active pipeline of projects and look forward to expanding our position as market conditions improve.”
Total revenue in the fourth quarter of 2011 increased 49.2% to $47.9 million from $32.1 million in the third quarter of 2011 and increased 32.8% from $36.1 million in the fourth quarter of 2010. In the fourth quarter of 2011, most of the Company’s revenue came from its JunJing III, Puhua Phase I and Phase II projects. Fourth quarter 2011 contract sales totaled US$44.6 million representing a total GFA of 44,631 square meters. Fourth quarter 2011 contract sales represented a 45.4% increase over the US$30.7 million from the fourth quarter of 2010. Total gross floor area (“GFA”) sales were 44,631 sq. meters during the fourth quarter of 2011, compared to 24,793 sq. meters in the third quarter of 2011 and 30,680 sq. meters in the fourth quarter of 2010. The Company’s ASP in the fourth quarter of 2011 was RMB 6,301 compared with RMB 5,574 in the third quarter of 2011, and RMB 6,661 in the fourth quarter of 2010. The lowered ASP over the prior year was mainly due to parking lot sales in Puhua Phase I.
Gross profit for the three months ended December 31, 2011 was $6.9 million, representing a decrease of 27.7% from $9.5 million in the third quarter of 2011 and a 15.8% decrease from $8.2 million in the same period of 2010. Gross profit margin for the three months ended December 31, 2011 was 14.4%, which is below the 22.7% in the same period of 2010 and the 29.7% in the third quarter of 2011. The decrease in gross profit margin was mainly due to increased general construction costs and lower contract sales expected for its JunJing III project compared to original estimates. Sales of parking spaces at Puhua Phase I, which generally have gross margins of 4% to 6%, also negatively impacted overall gross margin in the fourth quarter.
SG&A expense was $3.4 million in the fourth quarter of 2011, compared to $2.9 million in the third quarter of 2011 and $3.7 million in the fourth quarter of 2010. As more revenues are generated from our JunJing III project, SG&A expenses as a percentage of total revenue decreased to 7.0%, compared to 9.1% in the third quarter of 2011.
Operating income in the fourth quarter decreased to $2.2 million, or 4.5% of total revenue, from $6.1 million, or 19.0% of total revenue, in the third quarter of 2011, and decreased from $3.1 million, or 8.5% of total revenue in the fourth quarter of 2010. The decrease was mainly due to the decrease in gross margin.
Net income attributable to China Housing in the fourth quarter of 2011 was $2.8 million or $0.08 per basic share and $0.08 per diluted share. Excluding the $0.3 million gain associated with the revaluation of derivatives and warrants, net income was $2.5 million. This performance compares to a net income of $4.4 million in the third quarter of 2011.
Sequential Quarterly Revenue Breakout Comparison
| Project | Q4 2011 | Q3 2011 | ||||||||
| Recognized Revenue |
Contract Sales |
GFA Sold |
ASP | Unsold GFA |
POC | Recognized Revenue |
Contract Sales |
GFA Sold |
ASP | |
| ($) | ($) | (m2) | (RMB) | (m2) | ($) | ($) | (m2) | (RMB) | ||
| Projects Under Construction | ||||||||||
| Puhua Phase One | 13,736,692 | 6,128,808 | 5,248 | 7,358 | 20,285 | 87.4% | 12,852,050 | 5,806,231 | 8,377 | 4,367 |
| Puhua Phase Two | 6,040,769 | 4,904,144 | 5,082 | 6,080 | 182,833 | 53.2% | 12,588,905 | 14,859,498 | 15,567 | 6,014 |
| JunJing III | 24,408,721 | 32,921,226 | 33,913 | 6,117 | 18,332 | 73.9% | - | - | - | - |
| Projects Completed | ||||||||||
| JunJing II Phase One | - | - | - | - | 2,913 | 100% | 1,118,044 | 1,118,044 | 624 | 4,091 |
| JunJing II Phase Two | - | - | - | - | 0 | 100% | 107,068 | 107,068 | 168 | 11,500 |
| Tsining-24G | - | - | - | - | 71 | 100% | - | - | - | - |
| JunJing I | 683,643 | 683,643 | 388 | 11,100 | 610 | 100% | 45,789 | 45,789 | 57 | 5,200 |
| Additional Project | - | - | - | - | - | 100% | - | - | - | - |
| Other Income | 3,025,519 | - | - | 5,387,137 | - | - | ||||
| Total | 47,895,344 | 44,637,821 | 44,631 | 6,301 | 225,044 | - | 32,098,993 | 21,936,630 | 24,793 | 5,574 |
| Q-o-Q Change | 49.2% | 103.5% | 80.0% | 13.0% | ||||||
Total debt outstanding as of December 31, 2011 was $191.7 million compared with $172.4 million on September 30, 2011 and $143.9 million on December 31, 2010. Net debt outstanding (total debt less cash) as of December 31, 2011 was $64.0 million compared with $57.6 million on September 30, 2011 and $62.3 million on December 31, 2010. The Company’s net debt as a percentage of total capital (net debt plus shareholders’ equity) was 33.0% on December 31, 2011 and 46.4% on September 30, 2011 and 38.0% on December 31, 2010.
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| Q4 2011 | ||
| Projects in Planning |
Unsold GFA |
First Pre-sales Scheduled |
| (m2) | ||
| Ankang Project | 243,152 | Q3 2012 |
| Park Plaza | 141,822 | Q3 2012 |
| Golden Bay | 252,540 | Q3 2012 |
| Puhua Phase Three | 130,000 | Q2 2012 |
| Puhua Phase Four | 161,107 | Q4 2013 |
| Textile City | 630,000 | Q3 2013 |
| Total projects in planning | 1,558,621 | |
2012 Outlook
Total contract sales for the 2012 first quarter are expected to reach $16.5 to $17.5 million, a 37.6% - 33.8 % decrease compared to $26.4 million in the same quarter of 2011. Total recognized revenue for the 2012 first quarter is expected to reach $16.5 to $17.5 million, compared to $22.6 million in 2011. The Company is reporting contract sales estimates compared to revenue as they are not subject to percentage of completion alterations.
Conference Call Information
Management will host a conference call at 8:30 am ET on the same day. Listeners may access the call by dialing #1-913-981-5507. 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 April 6th, 2012, by dialing #1-858-384-5517; passcode: 9714123.
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.
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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
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CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
Consolidated Balance Sheets
As of December 31, 2011 and 2010
| 2011 | 2010 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 22,014,953 | $ | 46,904,161 | ||||
| Cash - restricted | 105,720,400 | 34,756,450 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $571,857 and $266,493, respectively | 20,253,706 | 9,297,505 | ||||||
| Other receivables, prepaid expenses and other assets, net | 1,483,758 | 7,653,925 | ||||||
| Real estate held for development or sale | 163,482,316 | 104,586,550 | ||||||
| Property and equipment, net | 33,018,990 | 29,735,836 | ||||||
| Advances to suppliers | 889,965 | 1,223,366 | ||||||
| Deposits on land use rights | 65,286,137 | 74,938,729 | ||||||
| Intangible assets, net | 54,148,953 | 51,846,410 | ||||||
| Goodwill | 1,894,782 | 1,806,905 | ||||||
| Deferred income tax assets | 308,248 | - | ||||||
| Deferred financing costs | 253,569 | 401,703 | ||||||
| Total assets | $ | 468,755,777 | $ | 363,151,540 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 44,275,965 | $ | 22,542,083 | ||||
| Advances from customers | 57,541,251 | 52,229,189 | ||||||
| Accrued expenses | 8,380,041 | 2,507,638 | ||||||
| Payables for acquisition of businesses | - | 2,363,385 | ||||||
| Income and other taxes payable | 14,386,133 | 15,429,752 | ||||||
| Other payables | 7,474,035 | 5,663,222 | ||||||
| Loans from employees | 14,887,431 | 8,787,879 | ||||||
| Loans payable | 148,402,690 | 82,971,074 | ||||||
| Deferred tax liability | 14,861,462 | 14,344,712 | ||||||
| Warrants liability | 4,162 | 2,766,382 | ||||||
| Fair value of embedded derivatives | 330,629 | 2,027,726 | ||||||
| Convertible debt | 9,165,591 | 16,251,840 | ||||||
| Mandatorily redeemable non-controlling interests in Subsidiaries | 19,935,482 | 33,535,969 | ||||||
| Total liabilities | 339,644,872 | 261,420,851 | ||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Common stock: $.001 par value, authorized 100,000,000 shares issued ; 35,078,639and 32,685,331, respectively | 35,079 | 32,685 | ||||||
| Additional paid in capital | 48,961,658 | 38,996,078 | ||||||
| Treasury stock at cost 337,800 shares and Nil shares, respectively | (420,098 | ) | - | |||||
| Common stock subscribed | - | 59,606 | ||||||
| Statutory reserves | 7,848,612 | 6,654,715 | ||||||
| Retained earnings | 50,555,460 | 41,528,907 | ||||||
| Accumulated other comprehensive income | 22,121,194 | 14,458,698 | ||||||
| Total shareholders' equity | 129,110,905 | 101,730,689 | ||||||
| Total liabilities and shareholders' equity | $ | 468,755,777 | $ | 363,151,540 | ||||
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CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
Consolidated Statements of Income
For The Years Ended December 31, 2011, 2010 and 2009
| 2011 | 2010 | 2009 | ||||||||||
| REVENUES | ||||||||||||
| Real estate sales | $ | 106,811,754 | $ | 131,472,461 | $ | 78,511,269 | ||||||
| Other revenue | 15,992,471 | 8,796,323 | 8,047,883 | |||||||||
| Total revenues | 122,804,225 | 140,268,784 | 86,559,152 | |||||||||
| COST OF REVENUES | ||||||||||||
| Cost of real estate sales | 85,013,637 | 98,280,358 | 57,625,613 | |||||||||
| Cost of other revenue | 10,543,645 | 6,102,184 | 5,276,828 | |||||||||
| Total costs of revenues | 95,557,282 | 104,382,542 | 62,902,441 | |||||||||
| Gross margin | 27,246,943 | 35,886,242 | 23,656,711 | |||||||||
| OPERATING EXPENSES | ||||||||||||
| Selling, general, and administrative expenses | 13,036,109 | 12,909,946 | 9,182,165 | |||||||||
| Stock-based compensation | 210,696 | 59,606 | 252,118 | |||||||||
| Security registration expenses | - | - | 1,786,517 | |||||||||
| Other expenses | 1,380,517 | 937,568 | 385,652 | |||||||||
| Financing expense | 1,218,464 | 1,834,322 | 2,323,141 | |||||||||
| Accretion expense on convertible debt | 987,263 | 1,416,871 | 1,213,063 | |||||||||
| Total operating expenses | 16,833,049 | 17,158,313 | 15,142,656 | |||||||||
| NET INCOME FROM BUSINESS OPERATIONS | 10,413,894 | 18,727,929 | 8,514,055 | |||||||||
| CHANGE IN FAIR VALUE OF DERIVATIVES | ||||||||||||
| Loss on extinguishment of debt | - | 2,180,492 | - | |||||||||
| Change in fair value of embedded derivatives | (1,697,097 | ) | (3,882,873 | ) | 3,230,649 | |||||||
| Change in fair value of warrants | (1,138,061 | ) | (2,527,423 | ) | 4,365,633 | |||||||
| Total change in fair value of derivatives | (2,835,158 | ) | (4,229,804 | ) | 7,596,282 | |||||||
| Income before provision for income taxes and non-controlling interest | 13,249,052 | 22,957,733 | 917,773 | |||||||||
| Provision for (recovery of) income taxes | 3,205,013 | 5,513,517 | (814,155 | ) | ||||||||
| Recovery of deferred income taxes | (185,411 | ) | (151,022 | ) | - | |||||||
| NET INCOME | 10,229,450 | 17,595,238 | 1,731,928 | |||||||||
| Less: net charge (loss) attributable to non-controlling interest | - | 14,229,043 | (737,882 | ) | ||||||||
| Net income attributable to China Housing & Land | ||||||||||||
| Development, Inc. | $ | 10,229,450 | $ | 3,366,195 | $ | 2,469,810 | ||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||
| Basic | 34,741,511 | 32,854,429 | 31,180,246 | |||||||||
| Diluted | 36,357,220 | 35,579,398 | 31,180,246 | |||||||||
| EARNINGS PER SHARE | ||||||||||||
| Basic | $ | 0.29 | $ | 0.10 | $ | 0.08 | ||||||
| Diluted | $ | 0.26 | $ | 0.02 | $ | 0.08 | ||||||
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CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES
Consolidated Statements of Income
For The 3 Months Ended December 31, 2011, and 2010
| 3 months ended December 31, 2011 | 3 months ended December 31, 2010 | |||||||
| REVENUES | ||||||||
| Real estate sales | $ | 44,869,825 | $ | 32,405,093 | ||||
| Other revenue | 3,025,519 | 3,648,208 | ||||||
| Total revenues | 47,895,344 | 36,053,301 | ||||||
| COST OF REVENUES | ||||||||
| Cost of real estate sales | 38,395,049 | 23,458,888 | ||||||
| Cost of other revenue | 2,616,026 | 4,417,333 | ||||||
| Total costs of revenues | 41,011,075 | 27,876,221 | ||||||
| Gross margin | 6,884,270 | 8,177,080 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling, general, and administrative expenses | 3,368,660 | 3,739,907 | ||||||
| Stock-based compensation | 96,438 | 59,606 | ||||||
| Security registration expenses | ||||||||
| Other expenses | 935,772 | 517,043 | ||||||
| Financing expense | 107,117 | 446,156 | ||||||
| Accretion expense on convertible debt | 226,068 | 378,139 | ||||||
| Total operating expenses | 4,734,055 | 5,140,851 | ||||||
| NET INCOME FROM BUSINESS OPERATIONS | 2,150,214 | 3,036,229 | ||||||
| - | ||||||||
| CHANGE IN FAIR VALUE OF DERIVATIVES | - | |||||||
| Loss on extinguishment of debt | - | |||||||
| Change in fair value of embedded derivatives | (174,160 | ) | (1,050,850 | ) | ||||
| Change in fair value of warrants | (82,724 | ) | 675,662 | |||||
| Total change in fair value of derivatives | (256,884 | ) | (375,188 | ) | ||||
| Income before provision for income taxes and non-controlling interest | 2,407,098 | 3,411,417 | ||||||
| Provision for (recovery of) income taxes | - | |||||||
| Recovery of deferred income taxes | (324,601 | ) | 1,046,180 | |||||
| (50,902 | ) | (68,655 | ) | |||||
| NET INCOME | 2,782,600 | 2,433,892 | ||||||
| Less: net charge (loss) attributable to non-controlling interest | - | 28,458,086 | ||||||
| Net income attributable to China Housing & Land | ||||||||
| Development, Inc. | $ | 2,782,600 | $ | 2,433,892 | ||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||
| Basic | 35,071,915 | 33,083,354 | ||||||
| Diluted | 36,687,624 | 37,374,784 | ||||||
| EARNINGS PER SHARE | ||||||||
| Basic | $ | 0.08 | $ | 0.07 | ||||
| Diluted | $ | 0.08 | $ | 0.07 | ||||
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