China HGS Reports Second Quarter of Fiscal Year 2017 Results

News provided by

China HGS Real Estate Inc.

May 12, 2017, 07:00 ET

HANZHONG, China, May 12, 2017 /PRNewswire/ -- China HGS Real Estate Inc. (NASDAQ: HGSH) ("China HGS" or the "Company"), a leading regional real estate developer headquartered in Hanzhong City, Shaanxi Province, China, today reported its financial results for the second quarter of fiscal 2017 ended March 31, 2017 with the U.S. Securities and Exchange Commission. An electronic copy of the quarterly report on Form 10-Q can be accessed on the SEC's website at www.sec.gov.

Highlights for the Quarter

  • Total revenues for the second quarter of fiscal 2017 were approximately $11.1 million, an increase of 62.2% from approximately $6.9 million in the same quarter of fiscal 2016.
  • Net income for the second quarter of fiscal 2017 totaled approximately $0.8 million, a decrease of approximately 36.7% from the net income of approximately $1.3 million in the same period of last year. The decreased profit margin in this quarter compared to the same quarter of last year was primarily due to lower margin residential properties, instead of higher margin commercial properties, sold during the second quarter of fiscal 2017
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the second quarter of fiscal 2017 were $0.02, compared to $0.03 for the same quarter last year.

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China HGS Real Estate Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the uncertain market for the Company's business, macroeconomic, technological, regulatory, or other factors affecting the profitability of real estate business; and other risks related to the Company's business and risks related to operating in China. Please refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2016, as well as the Company's Quarterly Reports on Form 10-Q that have been filed since the date of such annual report, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

About China HGS Real Estate, Inc.

China HGS Real Estate, Inc. (NASDAQ: HGSH), founded in 1995 and headquartered in Hanzhong City, Shaanxi Province, is a leading real estate developer in the region and holds the national grade I real estate qualification. The Company focuses on the development of high-rise, sub-high-rise residential buildings and multi-building apartment complexes in China's Tier 3 and Tier 4 cities and counties with rapidly growing populations driven by increased urbanization. The Company provides affordable housing with popular and modern designs to meet the needs of multiple buyer groups. The Company's development activity spans a range of services, including land acquisition, project planning, design management, construction management, sales and marketing, and property management. For further information about China HGS, please go to www.chinahgs.com. 

Company contact:

Randy Xiong
President of Capital Market
China Phone: (86) 091-62622612
Email: [email protected]

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)








March 31,

September 30,


2017

2016

ASSETS






Current assets:






Cash

$

2,290,389

$

6,401,237

Restricted cash

1,100,447


1,493,537

Cost and earnings in excess of billings

12,340,490


11,891,230

Real estate property development completed

94,437,309


113,185,929

Real estate property under development

94,376,792


-

Other current assets

2,008,185


2,722,036

Total current assets

206,553,612


135,693,969

Property, plant and equipment, net

737,396


792,650

Real estate property development completed, net of current portion

1,605,777


1,657,055

Security deposits for land use right

7,694,430


7,940,137

Real estate property under development, net of current portion

153,223,559


207,384,015

Due from local government for real estate property development
completed

2,830,600


2,920,990

Total Assets

$

372,645,374

$

356,388,816

LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Other loans

11,872,385


6,125,753

Accounts payable

24,604,226


30,574,497

Other payables

5,057,405


5,200,807

Construction deposits

1,437,652


1,911,158

Billings in excess of cost and earnings

2,078,686


2,110,808

Customer deposits

16,662,127


16,790,208

Shareholder loan

3,175,644


2,709,523

Accrued expenses

2,873,536


3,205,099

Taxes  payable

15,912,799


15,843,815

Total current liabilities

83,674,460


84,471,668

Deferred tax liabilities

4,949,824


5,107,887

Customer deposits, net of current portion

13,856,184


10,687,272

Other loans, less current portion

117,192,568


99,843,228

Construction deposits, net of current portion

1,276,989


1,329,820

Total liabilities

220,950,025


201,439,875

Commitments and Contingencies






Stockholders' equity






Common stock, $0.001 par value, 100,000,000 shares
authorized, 45,050,000 shares issued and outstanding March 31,
2017 and September 30, 2016

45,050


45,050

Additional paid-in capital

129,823,372


129,793,572

Statutory surplus

8,495,631


8,495,631

Retained earnings

22,246,398


20,661,184

Accumulated other comprehensive income

(8,915,102)


(4,046,496)

Total stockholders' equity

151,695,349


154,948,941








Total Liabilities and Stockholders' Equity

$

372,645,374

$

356,388,816

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

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)








Three months ended March 31,

Six months ended March 31,


2017

2016

2017

2016












Real estate sales

$

11,113,794

$

6,851,859

$

20,011,648

$

12,708,466

Less: Sales tax

(353,436)


(481,325)


(466,038)


(893,313)

Cost of real estate sales

(8,254,621)


(4,128,020)


(15,315,656)


(7,336,909)

Gross profit

2,505,737


2,242,514


4,229,954


4,478,244
















Operating expenses














Selling and distribution expenses

131,851


126,026


278,085


216,179

General and administrative expenses

1,150,833


580,851


1,623,563


1,059,362

Total operating expenses

1,282,684


706,877


1,901,648


1,275,541
















Operating income

1,223,053


1,535,637


2,328,306


3,202,703
















Interest expense

(123,447)


(69,094)


(244,570)


(173,140)

Income before income taxes

1,099,606


1,466,543


2,083,736


3,029,563
















Provision for income taxes

276,524


166,502


498,522


302,298

Net income

823,082


1,300,041


1,585,214


2,727,265
















Other comprehensive income (loss)














Foreign currency translation adjustment

1,357,385


1,054,539


(4,868,606)


(2,284,578)
















Comprehensive income (loss)

$

2,180,467

$

2,354,580

$

(3,283,392)

$

442,687
















Basic and diluted income per common share














Basic and diluted

$

0.02


$ 0.03

$

0.04

$

0.06
















Weighted average common shares outstanding














Basic and diluted



45,050,000


45,050,000


45,050,000


45,050,000

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

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)





Six months ended March 31,


2017

2016

Cash flows from operating activities






Net income

$

1,585,214

$

2,727,265

Adjustments to reconcile net income to net cash used in operating activities:






Deferred tax provision

-


154,618

Stock based compensation

29,800


29,800

Depreciation

30,837


39,909

Changes in assets and liabilities:














Advances to vendors

-


(22,979)

Cost and earnings in excess of billings

(820,187)


876,158

Real estate property development completed

15,301,222


4,416,727

Real estate property under development

(46,802,444)


(21,468,295)

Other current assets

631,894


(2,336,254)

Accounts payables

(5,042,313)


(13,409,544)

Other payables

17,601


714,978

Billings in excess of cost and earnings

33,317


(972,219)

Customer deposits

3,905,190


6,092,375

Construction deposits

(427,586)


(465,792)

Accrued expenses

(245,158)


(437,604)

Taxes payable

561,290


442,578

Net cash used in operating activities

(31,241,323)


(23,618,279)








Cash flow from financing activities






Restricted cash

348,127


(64,102)

Proceeds from shareholder loan

495,742


842,975

Repayment of shareholder loan

-


(357,298)

Repayment of bank loans

-


(4,640,228)

Proceeds from other loans

26,470,545


33,746,140

Repayment of other loans

-


(5,579,101)

Net cash provided by financing activities

27,314,414


23,948,386








Effect of changes of foreign exchange rate on cash

(183,939)


(18,343)

Net increase (decrease) in cash

(4,110,848)


311,764

Cash, beginning of period

6,401,237


1,333,919

Cash, end of period

$

2,290,389

$

1,645,683

Supplemental disclosures of cash flow information:






Interest paid

$

2,781,494

$

961,149

Income taxes paid

$

355,975

$

162,762

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

SOURCE China HGS Real Estate Inc.

Related Links

http://www.chinahgs.com

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