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

News provided by

China Housing & Land Development, Inc.

May 15, 2014, 06:00 ET

XI'AN, China, May 15, 2014 /PRNewswire/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended March 31, 2014.

Highlights for Q1 2014:

  • Total revenue in the first quarter of 2014 was $22.0 million compared to $56.1 million in the fourth quarter of 2013 and $51.4 million in the first quarter of 2013. 
  • Total gross floor area ("GFA") sales were 20,416 sq. meters during the first quarter of 2014, compared with 28,582 sq. meters in the fourth quarter of 2013 and 89,691 sq. meters in the first quarter of 2013.
  • Average residential selling price ("ASP") in the first quarter of 2014 was RMB 5,919, compared with RMB 6,600 in the fourth quarter of 2013, and RMB 5,695 in the first quarter of 2013.
  • Gross profit was $5.3 million in the first quarter of 2014 compared to $12.6 million in the fourth quarter of 2013 and $8.8 million in the first quarter of 2013. First quarter 2014 gross margin was 24.1%, compared with 22.4% in the fourth quarter of 2013 and 17.1% in the first quarter of 2013.
  • SG&A expenses as a percentage of total revenue increased to 18.1%, from 9.1% in the fourth quarter of 2013 and 6.1% in the first quarter of 2013.
  • Operating loss was $205 thousand in the first quarter of 2014 compared to operating income of $6.0 million in the fourth quarter of 2013, and operating income of $4.0 million in the first quarter of 2013.
  • Net loss attributable to the Company in the first quarter of 2014 was $774 thousand, or $(0.02) per diluted share, compared to net income of $3.9 million, or $0.11 per diluted share, in the fourth quarter of 2013 and $2.9 million, or $0.08 per diluted share, in the first quarter of 2013.

Mr. Pingji Lu, China Housing's Chairman, commented, "While the market environment was challenging in the first quarter, our revenue performance exceeded the mid-point of our revenue guidance by 38%. Four main projects contributed to the majority of our first quarter revenue along with $6.2 million in property management and construction revenue. We launched one new project in the first quarter, Puhua Phase Four."

"Overall market conditions remain uncertain. Sales of lower end units at our Ankang and Puhua Phase Four projects generally remain stable while sales at our higher end projects, such as Puhua Phase Two are not as strong as they could be as potential buyers in this category wait for greater clarity related to new government real estate policy before committing to new purchases. While Xi'an real estate market conditions remain soft, we believe in the long term strength of the housing market in and around the Xi'an region. Finally, we repurchased shares in the first quarter and intend to continue our share repurchase activity during the second quarter."

Total revenue in the first quarter of 2014 decreased 60.7% to $22.0 million from $56.1 million in the fourth quarter of 2013 and decreased 57.1% from $51.4 million in the first quarter of 2013. Other revenue in the first quarter of 2014 was $6.2 million, compared to $8.9 million in the fourth quarter of 2013 and $11.1 million in the first quarter of 2013.

In the first quarter of 2014, the majority of the Company's real estate revenue came from its Puhua Phase Two and Three projects, Park Plaza and Ankang projects. 2014 first quarter contract sales totaled $19.8 million compared with $31.0 million in the fourth quarter of 2013 and $82.4 million in the first quarter of 2013. Total gross floor area ("GFA") sales were 20,416 sq. meters during the first quarter of 2014, compared with 28,582 sq. meters in the fourth quarter of 2013 and 89,691 sq. meters in the first quarter of 2013. The Company's ASP in the first quarter of 2014 was RMB 5,919, compared with RMB 6,600 in the fourth quarter of 2013, and RMB 5,695 in the first quarter of 2013.

Gross profit for the three months ended March 31, 2014 was $5.4 million, representing a decrease of 57.7% from $12.6 million in the fourth quarter of 2013 and a 39.4% decrease from $8.8 million in the first quarter of 2013. Gross profit margin for the three months ended March 31, 2014 was 24.1%, compared to 22.4% in the fourth quarter of 2013 and the 17.1% in the first quarter of 2013. The increase in gross profit margin was mainly due to an adjustment on the total estimated cost of Park Plaza, Puhua Phase Two and Three projects, of which the accumulated impact was recorded in the first and fourth quarter of 2013 and caused the lower gross margin of those periods. The Company did not make any revision on the total estimated cost during the first quarter of 2014, thus there was no impact on the gross profit margin. Additionally, the Company initiated a group purchase sale on its Puhua Phase Three project at a discounted selling price during the first quarter of 2013 which also reduced the gross margin during that period. The 24.1% gross profit margin during the first quarter of 2014 was within the Company's normal historic range.

SG&A expense was $4.0 million in the first quarter of 2014, compared with $5.1 million in the fourth quarter of 2013 and $3.2 million in the first quarter of 2013. SG&A expense as a percentage of total revenue was 18.1%, compared with 9.1% in the fourth quarter of 2014 and 6.1% in the first quarter of 2013. The increase from the first quarter of 2013 in SG&A expense was mainly due to the increase of salaries and advertising expenses.

Operating loss in the first quarter of 2014 was $205 thousand, compared to operating income of $205 thousand in the fourth quarter of 2013, and $4.0 million in the first quarter of 2013. The year-over-year decrease in operating income was mainly due to reduced sales revenue.

Net loss attributable to China Housing in the first quarter of 2014 was $774 thousand, or ($0.02) per diluted share. This performance compares with net income of $3.9 million, or $0.11 per diluted share, in the fourth quarter of 2013 and net income of $2.9 million, or $0.08 per diluted share, in the first quarter of 2013.

Sequential Quarterly Revenue Breakout Comparison

Project

Q1 2014

Q4 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
Phase One

4,984,679

3,937,986

2,811

8,549

53,806

87%

17,872,157

9,946,924

6,942

8,727

Puhua Phase
Three

2,663,265

1,963,774

1,788

6,700

60,508

67%

11,454,315

6,111,757

5,511

6,754

Puhua Phase
Two-East
Region

1,872,393

1,919,787

1,515

7,731

93,982

73%

6,366,008

4,739,552

4,066

7,099

Ankang Phase
One

5,269,189

5,184,245

7,860

4,025

64,566

47%

9,317,653

6,145,128

9,374

3,992

Puhua Four

N/A

6,043,688

6,013

6,133

N/A

N/A

N/A

N/A

N/A

N/A

Projects Completed

Puhua Phase
One

677,091

421,314

189

13,629

5,506

100%

170,343

1,354,140

954

8.641

Puhua Phase
Two-West
Region&New
Coast Line

(56,642)

98,430

107

5.600

31,025

 

 

100%

2,024,106

2,679,234

1,736

9,399

JunJing III

396,809

236,812

133

10,844

906

100%

-73,562

-

-

-

JunJing II 
Phase One



518

100%

-

-

-

-

JunJing I

-

-

-

-

4,366

100%

-

-

-

-

Other Projects

-

-

-

-


-

-

-

Other Income

6,235,627




8,927,863


Total

22,042,411

19,806,036

20,416

5,919

315,183

-

56,058,883

30,976,735

28,583

6,600

Q-o-Q Change

(60.7%)

(36.1%)

(28.6%)

(10.3%)

125.8%

66.9%

60.2%

3.6%

Total debt outstanding as of March 31, 2014 was $317.6 million compared with $300.7 million on December 31, 2013. Net debt outstanding (total debt less cash and restricted cash) as of March 31, 2014 was $191.0 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 59.5 percent on March 31, 2014 and 54.1 percent on December 31, 2013.

Q1 2014

Projects in Planning

Unsold GFA

First Pre-sales Scheduled

(m2)

Golden Bay

326,494

Q4 2014

Textile City

630,000

Q2 2016

Park Plaza- Phase II

60,057

Q3 2014

Ankang Project- Phase II

207,794

Q3 2014

Total projects in planning

1,224,345

Second Quarter 2014 Outlook

Total contract revenue for the second quarter 2014 is expected to reach $28 million to $32 million, compared with $59 million in the second quarter of 2013. 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 the same day, May 15, 2014. Listeners may access the call by dialing +1-913-312-1501. To listen to the live webcast of the event, please go to http://public.viavid.com/player/index.php?id=109283. Listeners may access the call replay, which will be available through May 22, 2014, by dialing +1-858-384-5517; passcode: 2553975

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
Tel: +86 29.8258.2639 in Xi'an
Email: [email protected] / English and Chinese

Ms. Sandy Jin
Assistant CFO
Tel: +86 29.8258.2638 in Xi'an
Email: [email protected] / English and Chinese

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

China Housing Investor Relations Department
Tel: +1 646.308.1285

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES


Unaudited Interim Condensed Consolidated Balance Sheets

As of March 31, 2014 and December 31, 2013













March 31,

2014

December 31,

2013

ASSETS





Cash

$

14,935,316

$

21,320,071

Cash - restricted

111,640,172

117,534,900

Accounts receivable, net of allowance for doubtful






accounts of $578,825 and $594,382, respectively

40,941,976

41,158,998

Construction in excess of billing

2,051,830

2,106,975

Other receivables, prepaid expenses and other assets, net

7,904,290

6,197,023

Real estate held for development or sale

343,326,886

289,474,812

Property and equipment, net

34,567,530

36,281,168

Advances to suppliers

1,114,193

697,823

Deposits on land use rights

27,507,078

59,155,165

Intangible asset, net

28,736,931

42,453,473

Goodwill

1,918,405

1,969,964

Deferred financing costs

765,257

1,142,715


         Total assets

$

615,409,864

$

619,493,087









LIABILITIES





Accounts payable

$

42,182,920

$

59,400,262

Advances from customers

50,099,123

45,441,402

Accrued expenses

15,675,466

17,439,541

Income tax payable

23,331,748

24,534,095

Other taxes payable

7,931,818

7,139,870

Other payables


14,362,353

12,755,824

Loans from employees

30,265,105

25,759,453

Loans payable

287,309,110

274,917,332

Deferred tax liability

14,400,496

14,782,118


Total liabilities

485,558,139

482,169,897









SHAREHOLDERS' EQUITY





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






Issued 34,882,538 and 35,849,204, respectively

34,882

35,849

Additional paid in capital

51,480,460

51,347,620

Treasury stock

(318,915)

(2,400,288)

Statutory reserves

11,535,242

11,535,242

Retained earnings

45,523,830

48,696,878

Accumulated other comprehensive income

21,596,226

28,107,889


Total shareholders' equity

129,851,725

137,323,190












Total liabilities and shareholders' equity

$

615,409,864

$

619,493,087










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 Statements of Operations
For The Three Months Ended March 31, 2014 and 2013





March 31, 2014

March 31, 2013

REVENUES





Real estate sales

$

15,806,784

$

40,291,817

Other revenue

6,235,627

11,099,124

Total revenues

22,042,411

51,390,941








COST OF REVENUES





Cost of real estate sales

12,716,886

33,086,100

Cost of other revenue

4,009,457

9,535,899

Total cost of revenues

16,726,343

42,621,999








Gross margin

5,316,068

8,768,942








OPERATING EXPENSES





Selling, general and administrative expenses

3,989,482

3,158,003

Stock-based compensation

132,840

97,537

Other expenses

3,907

59,982

Financing expense


1,394,530

1,446,786

Total operating expenses

5,520,759

4,762,308








Write off of property


563,710

-








(Loss)income before provision for income taxes

(768,401)

4,006,634









Provision for income taxes

17,036

1,198,003

Recovery of deferred income taxes

(11,384)

(64,635)

Provision for income taxes

5,652

1,133,368








NET (LOSS) INCOME

$

(774,053)

$

2,873,266








WEIGHTED AVERAGE SHARES OUTSTANDING





Basic

34,518,158

35,086,599









Diluted

34,518,158

35,086,599








NET (LOSS) INCOME PER SHARE





Basic

$

(0.02)

$

0.08









Diluted

$

(0.02)

$

0.08









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 Statements of Cash Flows

For The Three Months Ended March 31, 2014 and 2013








March 31,

March 31,







2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES:






Net (loss) income



$

(774,053)

$

2,873,266

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





Depreciation

591,907

485,870



Stock-based compensation

132,840

97,537



Write off of property



563,710

-



Amortization of intangible assets

12,610,339

55,367



Recovery of provision for deferred income taxes

(11,384)

(64,635)


(Increase) decrease in assets:








Accounts receivable



(876,377)

(7,320,730)



Construction in excess of billing

-

(657,272)



Other receivable, prepaid expenses and other assets

(1,735,046)

(4,699,079)



Real estate held for development or sale

(62,583,224)

14,768,453



Advance to suppliers

(443,760)

4,306



Deposit on land use rights

30,665,151

-



Deferred finance costs

188,146

40,127


Increase (decrease) in liabilities:








Accounts payable

(15,956,843)

(10,714,367)



Advances from customers

5,956,860

(3,058,201)



Accrued expense



(1,344,586)

5,577,855



Other payables

1,975,624

348,905



Income and other taxes payable

426,456

2,804,031




Net cash (used in) provided by operating activities

(30,614,240)

541,433












CASH FLOWS FROM INVESTING ACTIVITIES:






Purchase of property and equipment

(382,635)

(632,764)




Net cash used in investing activities

(382,635)

(632,764)












CASH FLOWS FROM FINANCING ACTIVITIES:






Change in restricted cash

2,871,458

278,129

Loans from external parties

24,648,464

42,985,007

Payments on loans payable

(7,374,873)

(6,620,495)

Loans from or repayment to employees, net

5,277,131

4,913,176

Purchase of treasury stock

(318,589)

-




Net cash provided by financing activities

25,103,591

41,555,817












(DECREASE)/INCREASE IN CASH

(5,893,284)

41,464,486












Effects on foreign currency exchange

(491,471)

132,798












CASH, beginning of period

21,320,071

6,121,448












CASH, end of period

$

14,935,316

$

47,718,732













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

SOURCE China Housing & Land Development, Inc.

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