China Housing & Land Development Inc. Announces Third Quarter 2014 Financial Results

News provided by

China Housing & Land Development Inc.

Nov 14, 2014, 07:55 ET

XI'AN, China, Nov. 14, 2014 /PRNewswire/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2014.

Highlights for Q3 2014:

  • Total revenue in the third quarter of 2014 was $27.7 million compared to $44.1 million in the second quarter of 2014 and $24.8 million in the third quarter of 2013.
  • Total gross floor area ("GFA") sales were 21,768 sq. meters during the third quarter of 2014, compared with 30,408 sq. meters in the second quarter of 2014 and 17,846 sq. meters in the third quarter of 2013.
  • Average residential selling price ("ASP") in the third quarter of 2014 was RMB6,597, compared with RMB6,493 in the second quarter of 2014, and RMB6,369 in the third quarter of 2013.
  • Gross profit increased to $5.8 million in the third quarter of 2014 compared to gross loss of $0.8 million in the second quarter of 2014 and gross profit of $4.9 million in the third quarter of 2013. Third quarter 2014 gross margin was 20.9%, compared with negative 1.9% in the second quarter of 2014 and 19.8% in the third quarter of 2013.
  • SG&A expenses as a percentage of total revenue increased to 14.2%, from 8.8% in the second quarter of 2014 and decreased from 15.2% in the third quarter of 2013.
  • Operating income was $0.5 million in the third quarter of 2014 compared to operating loss of $6.6 million in the second quarter of 2014, and operating loss of $0.7 million in the third quarter of 2013.
  • Net income attributable to the Company in the third quarter of 2014 was $2.2 million, or $0.06 per diluted share, compared to net loss of $6.8 million, or $(0.20) per diluted share, in the second quarter of 2014 and net loss of $0.8 million, or $(0.02) per diluted share, in the third quarter of 2013.

Mr. Pingji Lu, China Housing's Chairman, commented, "We were pleased that our third quarter contract sales met our financial guidance projections and that we returned to profitability once again compared to the prior quarter. We were able to maintain respectable average selling prices for our units however local real estate market conditions in Xi'an and the surrounding region remain difficult as home buyers remain cautious with their purchase activity. There were five projects that contributed to the majority of our sales in the third quarter, led by our Park Plaza project."

"The Chinese government recently passed several important policies to improve national housing market conditions. While we believe such initiatives can help stabilize the market and increase home purchasing activity over time, we foresee ongoing uncertainty in the near future and expect market turbulence to continue in the fourth quarter. Supply and demand conditions in the local Xi'an housing market remain challenging as competition continues to be fierce. As a result, we intend to increase our promotional efforts to drive unit volume and enhance cash flow in the fourth quarter, which can help stabilize our operations. We will maintain our focus on boosting sales and minimizing costs as we wait for market conditions to improve," concluded Mr. Lu.

Total revenue in the third quarter of 2014 decreased 37.1% to $27.7 million from $44.1 million in the second quarter of 2014 and increased 11.6% from $24.8 million in the third quarter of 2013. Other revenue in the third quarter of 2014 increased to $4.9 million from $3.3 million in the second quarter of 2014 and $3.8 million in the third quarter of 2013.

In the third quarter of 2014, the Company's top three real estate projects measured by revenue were Park Plaza, Puhua Phase Three and Ankang projects. Third quarter 2014 contract sales totaled $23.3 million compared with $31.7 million in the second quarter of 2014 and $18.6 million in the third quarter of 2013. Total gross floor area ("GFA") sales were 21,768 sq. meters during the third quarter of 2014, compared with 30,408 sq. meters in the second quarter of 2014 and 17,846 sq. meters in the third quarter of 2013. The Company's ASP in the third quarter of 2014 was RMB6,597, compared with RMB6,493 in the second quarter of 2014, and RMB6,369 in the third quarter of 2013.

Gross profit for the three months ended September 30, 2014 was $5.8 million, compared to gross loss of $0.8 million in the second quarter of 2014 and a 17.5% increase from $4.9 million in the third quarter of 2013. Gross profit margin for the three months ended September 30, 2014 was 20.9%, compared to negative 1.9% in the second quarter of 2014 and the 19.8% in the third quarter of 2013. The improvement in gross profit margin from the second quarter of 2014 was mainly due to the gross profit margin decreased by change of estimates in the second quarter of 2014.

SG&A expense was $3.9 million in the third quarter of 2014, same as the second quarter of 2014 and compared with $3.8 million in the third quarter of 2013. SG&A expense as a percentage of total revenue was 14.2%, compared with 8.8% inthe second quarter of 2014 and 15.2% in the third quarter of 2013.The increase in the ratio of SG&A to total revenue from the second quarter of 2014 was primarily due to the decrease in revenue.

Operating income in the third quarter of 2014 was $0.5 million compared to operating loss of $6.6 million in the second quarter of 2014, and operating loss of $0.7 million in the third quarter of 2013. The decrease in operating income from the second quarter of 2014 was mainly due to reduced total revenue.

Net income attributable to China Housing in the third quarter of 2014 was $2.2 million, or $0.06 per diluted share. This performance compares with net loss of $6.8 million, or ($0.20) per diluted share, in the second quarter of 2014 and net loss of $0.8 million, or $(0.02) per diluted share, in the third quarter of 2013.

Sequential Quarterly Revenue Breakout Comparison

Project

Q3 2014

Q2 2014

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 Phase One

8,126,813

6,150,233

4,285

8,845

40,404

98.9%

15,503,089

12,092,922

9,117

8,265

Puhua Phase Three

5,176,650

4,573,451

3,639

7,748

55,457

83.1%

6,472,271

1,382,502

1,412

6,101

Puhua Phase Two-East Region

2,226,757

1,916,575

1,877

6,293

87,230

81.6%

6,890,399

5,969,853

4,875

7,631

Ankang Phase One

4,241,380

2,559,384

3,828

4,123

53,142

62.6%

7,386,849

4,972,520

7,596

4,079

Puhua Four

2,851,066

7,772,451

7,868

6,090

127,571

26.3%

3,485,109

6,192,960

6,323

6,102

Projects Completed








Puhua
Phase One

21,271

21,271

-

-

5,506

100%

(284,182)

(284,182)

--

--

Puhua Phase Two-West Region& New Coast Line

304,026

304,026

271

6,915

30,188

 

 

 

100%

616,066

616,066

566

6,780

JunJing III

(131,198)

-

-

-

647

100%

309,952

309,952

259

7,445

JunJing I

-

-

-

-

4,107

100%

433,310

433,310

259

10,407

Other Income

4,893,589

-

-

-

-

-

3,254,400

-

-

Total

27,710,354

23,297,391

21,768

6,597

404,252

-

44,067,263

31,685,903

30,408

6,493

Q-o-Q Change

(37.1)%

(26.5)%

(28.4)%

1.6%

-

-

99.9%

60.0%

48.9%

9.7%

Total debt outstanding as of September 30, 2014 was $333.0 million compared with $300.7 million on December 31, 2013. Net debt outstanding (total debt less cash and restricted cash) as of September 30, 2014 was $212.9 million compared with $161.8 million on December 31, 2013. The Company's net debt as a percentage of total capital (net debt plus shareholders' equity) was 62.2 percent on September 30, 2014 and 54.1 percent on December 31, 2013, which mainly resulted from additional debt financing for the next 12 months. Consequently, the ratio of net debt as a percentage of total capital increased as of September 30, 2014 compared with December 31, 2013.

Q3 2013

Projects in Planning

Unsold

GFA

First

Pre-sales

Scheduled

(m2)

Golden Bay

326,494

Q2 2015

Ankang Project-Phase II

207,794

Q1 2015

Park Plaza- Phase II

60,057

Q3 2015

Textile City

630,000

Q2 2016

Total projects in planning

1,224,345

2014 Fourth Quarter Outlook guidance

Total contract sales for the 2014 fourth quarter are expected to reach $24.3 million to $29.2 million, compared with $23.3 million in the 2014 third quarter and $31.0 million in the fourth quarter of 2013. The Company is reporting revenues, which are subject to percentage of completion alterations.

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: [email protected]

Ms. Jing Lu
Chief Operating Officer, Board Secretary, and Investor Relations Officer
+86 29.8258.2639 in Xi'an
[email protected] / English and Chinese

Mr. Bill Zima, ICR
+86 10 6583 7511
[email protected]

China Housing Investor Relations Department
+1 646.308.1285

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Balance Sheets

As of September 30, 2014 and December 31, 2013

(Unaudited)



September 30,
2014

December 31,
2013

 ASSETS






Cash

$

7,013,787

$

21,320,071

Cash - restricted

113,112,130


117,534,900

Short-term investment

22,070,271


-

Accounts receivable, net of allowance for doubtful accounts of $586,219 and $594,382, respectively

36,231,894


41,158,998

Construction in excess of billing

2,078,037


2,106,975

Other receivables, prepaid expenses and other assets

10,828,324


7,188,153

Real estate held for development or sale

368,088,188


289,474,812

Property and equipment, net

42,495,001


36,281,168

Advance to suppliers

1,929,343


697,823

Deposits on land use rights

16,454,057


59,155,165

Intangible assets, net

24,208,737


42,453,473

Goodwill

1,942,908


1,969,964

Deferred financing costs

545,853


151,585

Total assets

$

646,998,530

$

619,493,087








LIABILITIES






Accounts payable

$

60,086,286

$

59,400,262

Advances from customers

46,467,941


45,441,402

Accrued expenses

14,831,813


17,439,541

Income taxes payable

23,945,300


24,534,095

Other taxes payable

10,727,679


7,139,870

Other payables

14,115,147


12,755,824

Loans from employees

29,780,976


25,759,453

Loans payable

303,233,847


274,917,332

Deferred tax liability

14,568,710


14,782,118

Total liabilities

517,757,699


482,169,897








SHAREHOLDERS' EQUITY






Common stock: $.001 par value, authorized 100,000,000 shares






Issued 34,800,558 and 35,849,204, respectively

34,800


35,849

Additional paid in capital

52,483,510


51,347,620

Treasury stock at cost Nil shares and 1,166,369 shares, respectively

-


(2,400,288)

Statutory reserves

11,535,242


11,535,242

Retained earnings

40,295,103


48,696,878

Accumulated other comprehensive income

24,892,176


28,107,889

Total shareholders' equity

129,240,831


137,323,190








Total liabilities and shareholders' equity

$

646,998,530

$

619,493,087

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

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Income (Loss)

For The Three and Nine Months Ended September 30, 2014 and 2013

(Unaudited)



3 Months
September 30,
2014

3 Months
September 30,
2013

9 Months
September 30,
2014

9 Months
September 30,
2013

REVENUES











Real estate sales

$

22,816,765

$

21,042,396

$

79,436,412

$

112,091,843

Other income

4,893,589

3,788,434

14,383,616

21,884,031

Total revenues

27,710,354

24,830,830

93,820,028

133,975,874













COST OF SALES











Cost of real estate sales

18,632,301

17,480,961

74,840,421

86,517,123

Cost of other revenue

3,290,397

2,423,455

8,692,392

16,192,275

Total cost of revenues

21,922,698

19,904,416

83,532,813

102,709,398













Gross margin

5,787,656

4,926,414

10,287,215

31,266,476













OPERATING EXPENSES











Selling, general, and administrative expenses

3,936,507

3,784,742

11,802,817

11,844,682

Stock-based compensation

-

135,792

1,136,304

1,240,065

Other expenses (income)



6,460

(91,766)

20,480

358,783

Financing expense

1,342,370

1,762,724

3,676,752

6,016,604

Total operating expenses

5,285,337

5,591,492

16,636,353

19,460,134













Operating Incom (loss)

502,319

(665,078)

(6,349,138)

11,806,342













Loss from disposal of property and equipment

-

-

563,710

-

Gain on extinguishment of loan

(2,071,672)

-

(2,071,672)

-













Income (loss) before provision for income taxes

2,573,991

(665,078)

(4,841,176)

11,806,342













Provision for current taxes

414,147

185,950

559,605

4,044,863

Recovery of deferred taxes

(11,270)

(11,341)

(33,802)

(125,989

Provision for income taxes

402,877

174,609

525,803

3,918,874













NET INCOME (LOSS)


$

2,171,114

$

(839,687)

$

(5,366,979)

$

7,887,468













WEIGHTED AVERAGE SHARES OUTSTANDING











Basic

34,477,458

35,497,724

34,532,629

35,277,047













Diluted

34,477,458

35,497,724

34,532,629

35,277,047













NET INCOME (LOSS) PER SHARE











Basic

0.06

(0.02)

(0.16)

0.22













Diluted

0.06

(0.02)

(0.16)

0.22

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

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Comprehensive Income (Loss)

For The Three and Nine Months Ended September 30, 2014 and 2013

(Unaudited)




3 Months
September 30,
2014

3 Months
September 30,
2013

9 Months
September 30,
2014

9 Months
September 30,
2013













NET INCOME (LOSS)

$

2,171,114

$

(839,687)

$

(5,366,979)

$

7,887,468













OTHER COMPREHENSIVE INCOME (LOSS)











Gain (loss) in foreign exchange

2,782,552

656,539

(3,215,708)

4,076,140













COMPREHENSIVE INCOME (LOSS)

$

4,953,666

$

(183,148)

$

(8,582,687)

$

11,963,608

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

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Interim Condensed Consolidated Statements of Cash Flows

For The Nine Months Ended September 30, 2014 and 2013

(Unaudited)



September 30,
2014

September 30,
2013

CASH FLOWS FROM OPERATING ACTIVITIES:





Net (loss) income for the period

$

(5,366,979)

$

7,887,468

Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:





Depreciation

1,836,084

1,940,103

Stock-based compensation

1,136,304

1,240,065

Loss on disposal of property and equipment

563,710

-

Amortization of deferred financing costs

-

55,326

Amortization of intangible assets

17,944,433

167,609

Recovery of deferred income taxes

(33,802)

(125,989

Gain on extinguishment of loan

(2,071,672)

-

(Increase) decrease in assets:





Accounts receivable

4,313,651

(10,322,423)

Construction in excess of billing

-

559,202

Other receivable and prepaid expense

(4,783,591)

(1,937,372

Real estate held for development or sale

(82,750,198)

(3,011,051

Advances to suppliers

(1,238,311)

597,004

 Deposit on land use right

41,899,123

-

Deferred finance costs

416,109


Increase (decrease) in liabilities:





Accounts payable

1,160,426

(10,956,225

Advances from customers

3,842,693

5,986,114

Accrued expense and interests

(2,387,985)

(8,669,217)

Other payables

1,544,722

602,031

Income and other taxes payable

3,537,296

6,345,305

Net cash used in operating activities

(20,437,987)

(9,642,050







CASH FLOWS FROM INVESTING ACTIVITIES:





Purchase of property and equipment

(9,006,050)

(3,982,755

Proceeds from sale of property and equipment

4,615

-

Proceeds from sale of short term investment

21,537,169

-

Purchase of short term investment

(43,607,440)

-

Net cash used in investing activities

(31,071,706)

(3,982,755







CASH FLOWS FROM FINANCING ACTIVITIES:





Change in restricted cash

2,826,336

(4,036,463)

Loans from banks

49,943,480

98,841,999

Loans from Days Hotel and Dinghui

10,979,808

42,985,007

Payments on loans payable

(29,930,693)

(40,142,194

Loans (repayment to) or from employees, net

4,404,795

(5,524,219)

Purchase of treasury stock

(634,648)

-

Net cash provided by financing activities

37,589,078

92,124,130







(DECREASE) INCREASE IN CASH

(13,920,615)

78,499,325







Effects on foreign currency exchange

(385,669)

1,100,396







CASH, beginning of period

21,320,071

6,121,448







CASH, end of period

$

7,013,787

$

85,721,169

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

SOURCE China Housing & Land Development Inc.

Related Links

http://www.chldinc.com

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