China Housing & Land Development Inc. Announces Third Quarter 2010 Financial Results

XI'AN, China, Nov. 12, 2010 /PRNewswire-Asia-FirstCall/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2010.

Highlights for 3Q10:

• Total revenue in the third quarter of 2010 decreased 7.1% to $34.0 million from $36.6 million in the second quarter of 2010 but increased 42.3% from $23.9 million in the third quarter of 2009.

• Total gross floor area ("GFA") sales were 39,833 sq. meters, compared to 46,459 sq. meters in the 2010 second quarter period and 32,436 sq. meters in the 2009 third quarter period.

• Average residential selling price ("ASP") in the third quarter was RMB 5,694, compared with RMB 5,641 in the second quarter of 2010, and represents a 13.9% increase from RMB 5,001 in the third quarter of 2009.

• Gross profit increased 5.8% to $10.9 million from $10.3 million in the second quarter of 2010 and 47.3% from $7.4 million in the third quarter of 2009. Third quarter 2010 gross margin was 32.0% compared to 28.2% in the second quarter of 2010 and 31.0% in the third quarter of 2009.

• SG&A expenses as a percentage of total revenue decreased to 8.4%, compared to 10.3% in the 2010 second quarter and 10.5% in the 2009 third quarter period.

• Operating income increased 22.8% to $7.0 million from $5.7 million in the second quarter of 2010, and increased 118.8% from $3.2 million in the third quarter of 2009.

• Net income attributable to the Company in the third quarter of 2010 was $6.5 million, or $0.20 per basic share and $0.15 per diluted share.  Excluding the $1.4 million or $0.04 impact on basic EPS associated with the revaluation of derivatives and warrants, net income was $5.1 million, or $0.15 per basic share.

Mr. Pingji Lu, China Housing's Chairman, commented, "We were generally pleased with our performance in the third quarter.  JunJing II Phase Two and Puhua Phase One were the primary contributors to our performance.  Sales would have been even higher in the third quarter were it not for government approval delays related to JunJing III that required us to delay recognizing revenue related to this project until the fourth quarter.  We believe that overall demand for housing, average selling prices and transaction volume trends in the Xi'an market continue to improve.  According to data from E-House (China) and the Xi'an Bureau of Statistics, Xian's residential sales in the third quarter of 2010 totaled 3.1 million square meters with an average selling price of RMB 6,560, a 2% increase in sales volume and 12% increase in sales price compared to the second quarter of 2010. In the third quarter of 2009, residential sales totaled 3.3 million square meters with an average sales price of RMB 5,280 per square meter. When compared to the 2009 third quarter, total residential sales volume in Xi'an decreased 7%, while sales prices increased 24%."

We are focused on layering on additional ASP and gross margin improvement. These trends can continue to trend higher in the coming quarters as we develop and sell more mid-to-high level apartment units at our current projects under development.  We are also evaluating the opportunity to design and create move-in ready apartments for specific high-end projects under development such as Park Plaza."

Total revenue in the third quarter of 2010 decreased to $34.0 million from $36.6 million in the second quarter of 2010 and increased from $23.9 million in the third quarter of 2009.  In the third quarter of 2010, most of the Company's revenue came from its JunJing II Phase Two and Puhua Phase One projects.  Third quarter 2010 contract sales totaled US$33.5 million representing a total GFA of 39,833 square meters.  Third quarter 2010 contract sales represented a 40.2% increase compared to US$23.9 million in the third quarter of 2009.  The Company secured $13.7 million in contract sales from its JunJing III project in the third quarter. However, this revenue will not be recognized until the fourth quarter due to government approval delays.  The Company's average residential selling price per square meter in the third quarter of 2010 was RMB 5,694, a 13.9% increase from RMB 5,001 in the third quarter of 2009 and a 0.9% increase compared with RMB 5,641 in the second quarter of 2010.

Gross profit for the three months ended September 30, 2010 was $10.9 million, representing an increase of 5.8% from $10.3 million in the second quarter of 2010 and a 47.3% increase from $7.4 million in the same period of 2009. The gross profit margin for the three months ended September 30, 2010 was 32.0%, which surpassed the 31.0% in the same period of 2009 and was higher than the 28.2% in the second quarter of 2010. Gross profit increased sequentially due to increased sales and average selling prices of Jun Jing II Phase Two and Puhua projects as well as from the sale of commercial space at some existing projects which typically carry a higher gross margin than residential apartment sales.

SG&A expense was $2.9 million in the third quarter of 2010, compared to $3.8 million in the second quarter of 2010 and $2.5 million in the third quarter of 2009.  As a percentage of total revenue, SG&A expenses decreased to 8.4% from 10.3% in the second quarter of 2010 and was comparable to the 10.5% in the third quarter of 2009. The decrease in SG&A a percent of total revenue is due to lower marketing expenses and from enhanced cost control procedures.

Operating income in the third quarter of 2010 increased to $7.0 million, or 20.6% of total revenue, from $5.7 million, or 15.6% of total revenue, in the second quarter of 2010 and $3.2 million, or 13.6% of total revenue, in the third quarter of 2009.

Net income attributable to China Housing in the third quarter of 2010 was $6.5 million, or $0.20 per basic share and $0.15 per diluted share.  Excluding the $1.4 million or $0.04 impact on basic EPS associated with the revaluation of derivatives and warrants, net income was $5.1 million or $0.15 per basic share. This performance compares to net income of $6.9 million, or $0.22 per basic share, in the third quarter of 2009, which excludes a $5.7 million non-cash gain associated with the revaluation of derivatives and warrants in the third quarter of 2009.

As of September 30, 2010, China Housing reported $71.6 million in unrestricted cash, compared to $68.3 million as of June 30, 2010 and $19.1 million as of September 30, 2009. Total debt was $132.1 million on September 30, 2010, compared to $130.9 million as of June 30, 2010, and $52.6 million as of September 30, 2009.  Net debt as a percentage of total capital was 38.3% on September 30, 2010, compared to 40.6% on June 30, 2010 and 21.4% on September 30, 2009.

2010 Outlook

Total contract sales in 2010 are expected to reach US$168 to $205 million, a 62%-97% increase compared to $103.9 million in 2009.  Total recognized revenue in 2010 is expected to reach US$135 to $165 million, a 56%-91% 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.

"We believe that we'll enter 2011 positioned for even greater financial success. Provided that current conditions remain stable, we believe we have an opportunity to increase our revenue and contract sales growth by an average of 30% each year for the next several years. We remain encouraged with the overall progress in our business and believe our portfolio of current and future development projects can position China Housing and Land as a leading developer in the western China region," concluded Mr. Lu.

Conference Call Information

China Housing's management will host an earnings conference call on Friday, November 12, 2010 at 8:30 a.m. U.S. Eastern Time. Listeners may access the call by dialing #1-719-325-2145. 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 November 18th, by dialing #1-858-384-5517; passcode: 5434239.

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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SOURCE China Housing & Land Development, Inc.