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

XI'AN, China, May 15, 2013 /PRNewswire/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended March 31, 2013.

Highlights for Q1 2013:

• Total revenue in the first quarter of 2013 was $54.4 million compared to $61.5 million in the fourth quarter of 2012 and $23.5 million in the first quarter of 2012.  First quarter recognized revenue significantly exceeded the Company's first quarter revenue forecast range of $28 to $30 million.
• Total gross floor area ("GFA") sales were 89,691 sq. meters during the first quarter of 2013, compared to 27,853 sq. meters in the fourth quarter of 2012 and 17,090 sq. meters in the first quarter of 2012.
• Average residential selling price ("ASP") in the first quarter of 2013 was RMB 5,695, compared with RMB 5,137 in the fourth quarter of 2012, and RMB 7,407 in the first quarter of 2012.
• Gross profit was $9.0 million in the first quarter of 2013 compared to $21.1 million in the fourth quarter of 2012 and $7.0 million in the first quarter of 2012. First quarter 2013 gross margin was 16.6%, compared to 34.3% in the fourth quarter of 2012 and 29.9% in the first quarter of 2012.
• SG&A expenses as a percentage of total revenue decreased to 5.8%, compared to 9.3% in the fourth quarter of 2012 and 12.9% in the first quarter of 2012.
• Operating income was $4.8 million in the first quarter of 2013 compared to $14.8 million in the fourth quarter of 2012, and $3.6 million in the first quarter of 2012.
• Net income attributable to the Company in the first quarter of 2013 was $3.1 million, or $0.09 per diluted share.

Mr. Pingji Lu, China Housing's Chairman, commented, "We are very pleased to start off 2013 with a strong quarter as our top line significantly exceeded our first quarter guidance forecast. The fundamentals in the Xi'an housing market remained healthy in the first quarter and our residential sales were stable in terms of both average selling prices and transaction volume. We commenced pre-sales of two new projects in the first quarter, Park Plaza and Puhua Phase III, both of which experienced strong demand in their first weeks on the market." 

"In the first quarter, we experienced a lower gross margin level which was due to an adjustment on the total estimated project cost at our Puhua Phase Two project and from lower gross profit associated with sales of low income residential units at our Ankang project. Additionally, we initiated a group purchase sale on our Puhua Phase Three project at a discounted selling price last quarter to improve our cash position which also impacted first quarter profit margins. We remain confident we can maintain our full year gross profit margin goal of 25% to 30%."

"As we implement effective cost control measures at each of our development projects, we expect SG&A expenses as a percent of total revenue to normalize at around 10% for the full year. As the market shows continued signs of stability, we anticipate sustained levels of ASP and unit demand at our major projects in the second quarter. For the remainder of 2013, we remain focused on the execution of our four core development projects as well as the launch of Golden Bay which we expect will commence pre-sales in the third quarter.  We are encouraged with our opportunities in Xi'an's real estate market and believe 2013 can be a strong year for China Housing," concluded Mr. Lu.

Total revenue in the first quarter of 2013 decreased 11.7% to $54.4 million from $61.5 million in the fourth quarter of 2012 and increased 131.4% from $23.5 million in the first quarter of 2012. Other revenue in the first quarter of 2013 decreased to $11.1 million from $21.3 million in the fourth quarter of 2012 and increased from $3.1 million in the first quarter of 2012. The year-over-year increase was due to the revenue contribution from the construction of low income residential buildings for the Company's Ankang project.

In the first quarter of 2013, the majority of the Company's real estate revenue came from its Puhua Phase III and Park Plaza projects with additional revenue from Puhua Phase II project.  First quarter 2013 contract sales totaled $82.4 million compared to $22.9 million in the fourth quarter of 2012 and $20.1 million in the first quarter of 2012.  Total gross floor area ("GFA") sales were 89,691 sq. meters during the first quarter of 2013, compared to 27,853 sq. meters in the fourth quarter of 2012 and 17,090 sq. meters in the first quarter of 2012. The Company's ASP in the first quarter of 2013 was RMB 5,695, compared with RMB 5,137 in the fourth quarter of 2012, and RMB 7,407 in the first quarter of 2012. During the first quarter, the Company commenced presales at its Puhua Phase III and Park Plaza projects.

Gross profit for the three months ended March 31, 2013 was $9.0 million, representing a decrease of 57.1% from $21.1 million in the fourth quarter of 2012 and a 28.7% increase from $7.0 million in the same period of 2012. Gross profit margin for the three months ended March 31, 2013 was 16.6%, which is below the 29.9% in the same period of 2012 and the 34.3% in the fourth quarter of 2012. The decrease in gross profit margin was mainly due to an adjustment on the total estimated project cost at the Company's Puhua Phase Two project and from lower gross profit associated with sales of low income residential units at the Company's Ankang project.  Additionally, the Company initiated a group purchase sale on its Puhua Phase Three project at a discounted selling price last quarter to improve our cash position which also impacted first quarter profit margins. The Company continues to expect full year gross margin in the 25% to 30% range for 2013.

SG&A expense was $3.2 million in the first quarter of 2013, compared to $5.7 million in the fourth quarter of 2012 and $3.0 million in the first quarter of 2012. SG&A expense as a percentage of total revenue was 5.8%, compared to 9.3% in the fourth quarter of 2012 and 12.9% in the first quarter of 2012. The year-over-year increase in SG&A expense is due to increased advertising expenses in connection with additional development projects beginning pre-sales and from increased employee salary expenses. 

Operating income in the first quarter of 2013 was $4.3 million, or 7.9% of total revenue, compared to $14.8 million, or 24.1% of total revenue, in the fourth quarter of 2012, and $3.4 million, or 14.5% of total revenue in the first quarter of 2012. The year-over-year increase in operating income was mainly due to increased sales revenue from new projects.

Net income attributable to China Housing in the first quarter of 2013 was $3.1 million, or $0.09 per diluted share. This performance compares to net income of $11.5 million, or $0.33 per diluted share, in the fourth quarter of 2012 and net income of $2.2 million, or $0.06 per diluted share, in the first quarter of 2012.

Sequential Quarterly Revenue Breakout Comparison

Total debt outstanding as of March 31, 2013 was $243.8 million compared with $202.6 million on December 31, 2012. Net debt outstanding (total debt less cash and restricted cash) as of March 31, 2013 was $85.5 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 35.8 percent on March 31, 2013 and 36.6 percent on December 31, 2012

2013 Second Quarter Outlook

Total recognized revenue for the 2013 second quarter is expected to reach $34 million to $36 million, compared to $54.4 million in the 2013 first quarter and $35.0 million in the second 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 May 15, 2013.  Listeners may access the call by dialing #1-913-312-1489. 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 May 22, 2013, by dialing #1-858-384-5517; passcode: 8325823.

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. Shuai Luo, CFA
Investor Relations
+86 29.8258.2632 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

SOURCE China Housing & Land Development, Inc.

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