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

-- Company Beats 2Q13 Forecast --

 

XI’AN, China, Aug. 14, 2013 -- China Housing & Land Development, Inc. (“China Housing” or the “Company”; Nasdaq: CHLN) today announced its financial results for the quarter ended June 30, 2013.

 

Highlights for Q2 2013:

 

•

Total revenue in the second quarter of 2013 was $59.7 million, a 9.9% increase from $54.4 million in the first quarter of 2013 and a 70.6% increase from $35.0 million in the second quarter of 2012.  Second quarter recognized revenue significantly exceeded the Company’s second quarter revenue outlook of $34 to $36 million.

 

•

Total gross floor area (“GFA”) sales were 48,439 sq. meters during the second quarter of 2013, compared with 89,691 sq. meters in the first quarter of 2013 and 25,908 sq. meters in the second quarter of 2012.

 

•

Average residential selling price (“ASP”) in the second quarter of 2013 was RMB 7,499, compared with RMB 5,695 in the first quarter of 2013, and RMB 5,705 in the second quarter of 2012.

 

•

Gross profit increased $18.3 million in the second quarter of 2013, a 101.9% increase from $9.0 million in the first quarter of 2013 and a 125.3% increase from $8.1 million in the second quarter of 2012. Second quarter 2013 gross margin was 30.6%, compared with 16.6% in the first quarter of 2013 and 23.2% in the second quarter of 2012.

 

•

SG&A expenses as a percentage of total revenue increased to 8.2%, from 5.8% in the first quarter of 2013 and decreased from 11.3% in the second quarter of 2012.

 

•

Operating income was $9.2 million in the second quarter of 2013, a 113.9% increase from $4.3 million in the first quarter of 2013, and a 199.4% increase from $3.1 million in the second quarter of 2012.

 

•

Net income attributable to the Company in the second quarter of 2013 was $6.4 million, or $0.18 per diluted share, a 107.0% increase from $3.1 million, or $0.09 per diluted share, in the first quarter of 2013.

 

Mr. Pingji Lu, China Housing’s Chairman, commented, “We are pleased to report another strong quarter as our second quarter top line results once again exceeded our guidance forecast. Our strong project development efforts combined with continued strength in the Xi’an residential housing market led to higher average selling prices compared to the last quarter and prior year periods. Four projects contributed the majority of our revenue during the second quarter of 2013, which include our Puhua Phase Two and Three, Park Plaza and Ankang projects.”

 

“We experienced a notable increase in gross profit and a higher gross margin than both the previous quarter and the same period last year, as a result of a considerable increase in revenue and average selling prices while costs remained relatively flat. Furthermore, our Ankang project, which began pre-sales in the fourth quarter of 2012, began to contribute to our revenue during the second quarter.”

 

“As we enter the second half of the year, our current four projects provide us with solid sales and profit opportunities. Additionally, we will initiate marketing for Golden Bay in the third quarter and adjust our sales strategy based on market feedback on the project. We anticipate that official pre-sales will start in the fourth quarter. We remain optimistic about our opportunities in the Xi’an real estate market and continue to focus on the execution of our development project plan. We believe our financial performance in the second half of the year will be strong and that our commitment to providing the highest quality residential properties will continue to drive our growth forward.”

 

 

Total revenue in the second quarter of 2013 increased 9.9% to $59.7 million from $54.4 million in the first quarter of 2013 and increased 70.6% from $35.0 million in the second quarter of 2012. Other revenue in the second quarter of 2013 decreased to $7.0 million from $11.1 million in the first quarter of 2013 and increased from $4.9 million in the second quarter of 2012. The year-over-year increase was caused by the recognition of interest income on deposits based on the Company’s borrowing activity from several overseas banks.

 

In the second quarter of 2013, the majority of the Company’s real estate revenue came from its Puhua Phase Two and Three projects, Park Plaza and Ankang projects. Second quarter 2013 contract sales totaled $59.0 million compared with $82.4 million in the first quarter of 2013 and $24.8 million in the second quarter of 2012. Total gross floor area (“GFA”) sales were 48,439 sq. meters during the second quarter of 2013, compared with 89,691 sq. meters in the first quarter of 2013 and 25,908 sq. meters in the second quarter of 2012. The Company’s ASP in the second quarter of 2013 was RMB 7,499, compared with RMB 5,695 in the first quarter of 2013, and RMB 5,705 in the second quarter of 2012.

 

Gross profit for the three months ended June 30, 2013 was $18.3 million, representing an increase of 101.9% from $9.0 million in the first quarter of 2013 and a 125.3% increase from $8.1 million in the second quarter of 2012. Gross profit margin for the three months ended June 30, 2013 was 30.6%, which is above the 16.6% in the first quarter of 2013 and the 23.2% in the second quarter of 2012. The increase in gross profit margin was mainly due to a combination of increased sales volume, increased average selling prices, and sales of Puhua Phase Two commercial units, which had higher gross margin. The Company continues to expect full year gross margin to be in the 25% to 30% range in 2013.

 

SG&A expense was $4.9 million in the second quarter of 2013, compared with $3.2 million in the first quarter of 2013 and $4.0 million in the second quarter of 2012. SG&A expense as a percentage of total revenue was 8.2%, compared with 5.8% in the first quarter of 2013 and 11.3% in the second quarter of 2012. The year-over-year increase in SG&A expense was due to increased selling expenses during the second quarter of 2013 associated with new projects commencing pre-sales activity. 

 

Operating income in the second quarter of 2013 was $9.2 million, or 15.3% of total revenue, compared with $4.3 million, or 7.9% of total revenue, in the first quarter of 2013, and $3.1 million, or 8.7% of total revenue in the second quarter of 2012. The year-over-year increase in operating income was mainly due to increased sales revenue and improved gross profit margin.

 

Net income attributable to China Housing in the second quarter of 2013 was $6.4 million, or $0.18 per diluted share. This performance compares with net income of $3.1 million, or $0.09 per diluted share, in the first quarter of 2013 and net income of $1.9 million, or $0.06 per diluted share, in the second quarter of 2012.

 

Sequential Quarterly Revenue Breakout Comparison

 

Project		Q2 2013																								Q1 2013
		Recognized Revenue				Contract Sales				GFA Sold				ASP				Unsold GFA				POC				Recognized Revenue				Contract Sales				GFA Sold				ASP
		($)				($)				(m2)				(RMB)				(m2)								($)				($)				(m2)				(RMB)
Projects Under Construction
Park Plaza			21,709,086				25,098,516				17,348				8,903				110,323				70.9	%			19,794,628				30,152,026				22,151				8,439
Puhua Phase Three			9,168,480				10,163,137				8,665				7,218				71,733				50.9	%			17,348,070				36,469,024				48,902				4,624
Puhua Phase Two			14,621,508				14,039,803				9,181				9,411				127,204				79.9	%			5,372,159				7,122,505				5,076				8,700
Ankang			5,526,291				8,024,028				12,655				3,902				191,151				21.5	%			-				7,876,083				12,909				4,631
Projects Completed
Puhua Phase One			1,673,638				1,673,638				591				17,427				7,311				100	%			649,744				649,744				569				7,080
JunJing III			24,132				24,132				-				-				873				100	%			109,970				109,970				84				8,118
JunJing II Phase One			-				-				-				-				817				100	%			-				-				-				-
JunJing I			-				-				-				-				4,699				100	%			-				-				-				-
Other Projects			19,500				-				-				-				-								-				-				-				-
Other Income			6,996,473				-				-																11,099,124				-				-
Total			59,739,107				59,023,253				48,439				7,499				514,110				-				54,373,695				82,379,352				89,691				5,695
Q-o-Q Change			9.9	%			-28.4	%			-46.0	%			31.7	%

 

 

Total debt outstanding as of June 30, 2013 was $301.9 million compared with $202.6 million on December 31, 2012. Net debt outstanding (total debt less cash and restricted cash) as of June 30, 2013 was $88.7 million compared with $85.9 million on December 31, 2012. The Company’s net debt as a percentage of total capital (net debt plus shareholders’ equity) was 35.3 percent on June 30, 2013 and 36.6 percent on December 31, 2012.

 

	Q2 2013
Projects in Planning	Unsold GFA	First Pre-sales Scheduled
	(m2)
Golden Bay	252,540	Q4 2013
Puhua Phase Four	263,833	Q3 2014
Textile City	630,000	Q3 2014
Total projects in planning	1,146,373

 

2013 Third Quarter Outlook

 

Total recognized revenue for the 2013 third quarter is expected to reach $34 million to $36 million, compared with $59.7 million in the 2013 second quarter and $28.9 million in the third quarter of 2012. The Company is reporting revenues, which are subject to percentage of completion alterations.

 

Conference Call Information

 

Management will host a conference call at 8:30 am ET on August 14, 2013. Listeners may access the call by dialing #1-913-312-0643. 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 21, 2013, by dialing #1-858-384-5517; passcode: 7803652.

 

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, CFA

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

 

 

 CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Unaudited Interim Consolidated Statements of Income

For Three and Six Months Ended June 30, 2013 and 2012

 

		3 months				3 months				6 months				6 months
		June 30, 2013				June 30, 2012				June 30, 2013				June 30, 2012
REVENUES
Real estate sales		$	52,742,634			$	30,069,549			$	96,017,205			$	50,503,892
Other revenue			6,996,473				4,945,971				18,095,597				8,013,399
Total revenues			59,739,107				35,015,520				114,112,802				58,517,291
COST OF REVENUES
Cost of real estate sales			37,235,900				23,115,905				73,024,315				37,348,769
Cost of other revenue			4,232,921				3,792,088				13,768,820				6,031,958
Total cost of revenues			41,468,821				26,907,993				86,793,135				43,380,727
Gross margin			18,270,286				8,107,527				27,319,667				15,136,564
OPERATING EXPENSES
Selling, general and administrative expenses			4,904,517				3,956,069				8,066,398				6,979,754
Stock-based compensation			1,006,736				690,390				1,104,273				812,996
Other expenses			390,567				58,455				450,549				64,888
Financing expense			2,807,094				100,676				4,253,880				330,948
Accretion expense on convertible debt			-				241,665				-				474,151
Total operating expenses			9,108,914				5,047,255				13,875,100				8,662,737
			9,161,372				3,060,272
CHANGE IN FAIR VALUE OF DERIVATIVES
Change in fair value of embedded derivatives			-				(150,181	)			-				(221,284	)
Change in fair value of warrants			-				(3,554	)			-				(3,186	)
Total change in fair value of derivatives			-				(153,735	)			-				(224,470	)
Income before provision for income taxes			9,161,372				3,214,007				13,444,567				6,698,297
Provision for income taxes			2,835,057				1,372,027				4,102,200				2,341,512
(Recovery of) provision for deferred income taxes			(50,013	)			(64,768	)			(114,648	)			214,624
Provision for income taxes			2,785,044				1,307,259				3,987,552				2,556,136
NET INCOME		$	6,376,328			$	1,906,748			$	9,457,015			$	4,142,161
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic			35,086,599				34,914,731				35,086,599				34,822,496
Diluted			35,086,599				34,914,731				35,086,599				34,822,496
NET INCOME PER SHARE
Basic		$	0.18			$	0.06			$	0.27			$	0.12
Diluted		$	0.18			$	0.06			$	0.27			$	0.12

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Unaudited Interim Condensed Consolidated Balance Sheets 

As of June 30, 2013 and December 31, 2012

 

		March 31,				December 31,
		2013				2012
ASSETS
Cash		$	100,960,800			$	6,121,448
Cash - restricted			112,235,956				110,576,248
Accounts receivable, net of allowance for doubtful accounts of $586,439 and $577,713, respectively			50,137,448				26,897,958
Construction in excess of billing			953,735				1,484,626
Other receivables, prepaid expenses and other assets, net			7,972,560				6,854,325
Real estate held for development or sale			225,395,977				238,111,545
Property and equipment, net			34,354,503				33,837,346
Advances to suppliers			460,774				1,363,817
Deposits on land use rights			43,393,688				42,748,017
Intangible asset, net			55,192,879				54,482,252
Goodwill			1,943,098				1,914,186
Deferred financing costs			116,221				194,162
Total assets			633,117,639				524,585,930
LIABILITIES
Accounts payable		$	52,640,327			$	55,142,928
Advances from customers			43,172,088				48,829,289
Accrued expenses			17,467,815				22,229,514
Income and other taxes payable			27,265,975				20,929,485
Other payables			12,532,968				11,228,553
Loans from employees			23,002,319				27,868,785
Loans payable			278,893,997				174,749,368
Deferred tax liability			14,625,370				14,521,613
Total liabilities			469,600,859				375,499,535
SHAREHOLDERS’ EQUITY
Common stock: $.001 par value, authorized 100,000,000 shares; Issued 35,438,079 and 35,438,079, respectively			35,438				35,438
Common stock subscribed			900,364				-
Additional paid in capital			50,176,083				49,972,174
Treasury Stock			(434,240	)			(434,240	)
Statutory reserves			9,903,457				9,903,457
Retained earnings			74,514,348				65,057,333
Accumulated other comprehensive income			28,421,330				24,552,233
Total shareholders’ equity			163,516,780				149,086,395
Total liabilities and shareholders’ equity		$	633,117,639			$	524,585,930

 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.