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

News provided by

China Housing & Land Development, Inc.

Mar 24, 2014, 06:28 ET

XI'AN, China, March 24, 2014 /PRNewswire/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended December 31, 2013.

Highlights for Q4 2013:

  • Total revenue in the fourth quarter of 2013 was $56.1 million compared to $24.8 million in the third quarter of 2013 and $61.5 million in the fourth quarter of 2012. 
  • Total gross floor area ("GFA") sales were 28,582 sq. meters during the fourth quarter of 2013, compared with 17,846 sq. meters in the third quarter of 2013 and 27,853 sq. meters in the fourth quarter of 2012.
  • Average residential selling price ("ASP") in the fourth quarter of 2013 was RMB 6,600, compared with RMB 6,369 in the third quarter of 2013, and RMB 5,137 in the fourth quarter of 2012.
  • Gross profit was $12.6 million in the fourth quarter of 2013 compared to $4.9 million in the third quarter of 2013 and $21.1 million in the fourth quarter of 2012. Fourth quarter 2013 gross margin was 22.4%, compared with 19.8% in the third quarter of 2013 and 34.3% in the fourth quarter of 2012.
  • SG&A expenses as a percentage of total revenue decreased to 9.1%, from 15.2% in the third quarter of 2013 and 9.3% in the fourth quarter of 2012.
  • Operating income was $6.0 million in the fourth quarter of 2013 compared to operating loss of $0.7 million in the third quarter of 2013, and operating income of $14.8 million in the fourth quarter of 2012.
  • Net income attributable to the Company in the fourth quarter of 2013 was $3.9 million, or $0.11 per diluted share, compared to net loss of $0.8 million, or $(0.11) per diluted share, in the third quarter of 2013 and $11.5 million, or $0.33 per diluted share, in the fourth quarter of 2012.

Mr. Pingji Lu, China Housing's Chairman, commented, "Our fourth financial performance was better than our original guidance forecast. The increase was due to a completion percentage that was higher than our expectation, resulting in greater recognized revenue in the fourth quarter. The majority of our fourth quarter revenue was generated by our Park Plaza, Puhua Phase Three and Ankang projects."

"We are making progress balancing our unit inventory more effectively so that we can offer a broader array of apartment units to prospective low, mid and high end buyers. Ensuring greater unit availability in each of these tiers is important as we face more challenging conditions as overall market demand appears to be softening. For our projects under planning, we're actively observing buyer patterns so we can accelerate the most relevant projects by unit category to adequately suit buyer demand. Despite an uncertain market environment, we believe our current broader category of inventory can better meet the market demand," concluded Chairman Lu.

Total revenue in the fourth quarter of 2013 increased 126.2% to $56.1 million from $24.8 million in the third quarter of 2013 and decreased 8.8% from $61.5 million in the fourth quarter of 2012. Other revenue in the fourth quarter of 2013 was $8.9 million, compared to $3.8 million in the third quarter of 2013 and $21.3 million in the fourth quarter of 2012.

In the fourth quarter of 2013, the majority of the Company's real estate revenue came from its Puhua Phase Two and Three projects, Park Plaza and Ankang projects. Fourth quarter 2013 contract sales totaled $31.0 million compared with $18.6 million in the third quarter of 2013 and $22.9 million in the fourth quarter of 2012. Total gross floor area ("GFA") sales were 28,582 sq. meters during the fourth quarter of 2013, compared with 17,847 sq. meters in the third quarter of 2013 and 27,853 sq. meters in the fourth quarter of 2012. The Company's ASP in the fourth quarter of 2013 was RMB 6,600, compared with RMB 6,369 in the third quarter of 2013, and RMB 5,137 in the fourth quarter of 2012.

Gross profit for the three months ended December 31, 2013 was $12.6 million, representing an increase of 157.1% from $4.9 million in the third quarter of 2013 and a 40.3% decrease from $21.1 million in the fourth quarter of 2012. Gross profit margin for the three months ended December 31, 2013 was 22.4%, compared to 19.8% in the third quarter of 2013 and the 34.3% in the fourth quarter of 2012. The year-over-year decrease in gross profit margin was mainly due to an adjustment on the total estimate cost of Park Plaza, Puhua Phase Two and Three projects, of which the accumulated impacted was recorded in the fourth quarter of 2013  For the full 2013 year, gross margin was 22.4%.

SG&A expense was $5.1 million in the fourth quarter of 2013, compared with $3.8 million in the third quarter of 2013 and $5.7 million in the fourth quarter of 2012. SG&A expense as a percentage of total revenue was 9.1%, compared with 15.2% in the third quarter of 2013 and 9.3% in the fourth quarter of 2012. The year-over-year decrease in SG&A expense was mainly due to lower advertising expense and decreased sales commission associated with decreased revenue. .

Operating income in the fourth quarter of 2013 was $6.0 million compared to an operating loss of $0.7 million in the third quarter of 2013, and operating income of $14.8 million in the fourth quarter of 2012. The year-over-year decrease in operating income was mainly due to reduced sales revenue and lower profit margin.

Net income attributable to China Housing in the fourth quarter of 2013 was $3.9 million, or $0.11 per diluted share. This performance compares with net loss of $0.8 million, or $(0.02) per diluted share, in the third quarter of 2013 and net income of $11.5 million, or $0.33 per diluted share, in the fourth quarter of 2012.

Sequential Quarterly Revenue Breakout Comparison

Project

Q4 2013




Q3 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

17,872,157

9,946,924

6,942

8,727

56,617

83.23%

6,541,366

5,659,081

4,002

8,661

Puhua Phase Three

11,454,315

6,111,757

5,511

6,754

62,296

65.3%

3,449,098

3,685,035

3,675

6,143

Puhua Phase
Two-East
Region

6,366,008

4,739,552

4,066

7,099

91,389

83.22%

5,979,885

3,470,786

3,240

6,560

Ankang

9,317,653

6,145,128

9,374

3,992

190,659

41.44%

3,304,218

3,571,860

5,474

4,000

Projects Completed

Puhua Phase One

170,343

1,354,140

954

8.641

5,695

100%

642,927

889,021

662

8,232

Puhua Phase
Two-West Region&New
Coast Line

2,024,106

2,679,234

1,736

9,399

31,132

100%

231,686

387,717

327

7,264

JunJing III

-73,562

-

-

-

1,039

100%

-116,995

-116,995

-166

--

JunJing II
Phase One

-

-

-

-

518

100%

481,746

481,746

299

9,855

JunJing I

-

-

-

-

4,366

100%

528,465

528,465

333

9,277

Other Projects

-

-

-

-

-

-

-

Other Income

8,927,863




3,788,434

-

-

Total

56,058,883

30,976,735

28,583

6,600

443,711

-

24,830,830

18,556,716

17,846

6,369

Q-o-Q Change

125.8%

66.9%

60.2%

3.6%

-57%

-68.6%

-63.2%

-15.1%

Total debt outstanding as of December 31, 2013 was $300.7 million compared with $202.6 million on December 31, 2012. Net debt outstanding (total debt less cash and restricted cash) as of December 31, 2013 was $161.8 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 54 percent on December 31, 2013 and 41.7 percent on December 31, 2012.

Q4 2013

Projects in Planning

Unsold GFA

First Pre-sales
Scheduled

(m2)

Golden Bay

250,000

Q3 2014

Puhua Phase Four

263,833

Q1 2014

Textile City

630,000

Q1 2015

Total projects in planning

1,143,833

2014 First Quarter Outlook guidance

Total recognized revenue for the 2014 first quarter is expected to reach $15 million to $17 million, compared with $54.4 million in the first 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 8:00 am ET on Monday, March 24, 2014. Listeners may access the call by dialing +1-913-312-1267. To listen to the live webcast of the event, please go to http://public.viavid.com; event number: 108416. Listeners may access the call replay, which will be available through March 31, 2014, by dialing +1-858-384-5517; passcode: 5602978.

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

Consolidated Balance Sheets

As of December 31, 2013 and 2012




2013

2012

ASSETS





    Cash

$

21,320,071

$

6,121,448

    Cash - restricted

117,534,900

110,576,248

    Accounts receivable, net of allowance for doubtful
        accounts of $594,382 and $577,713, respectively

41,158,998

26,429,332

    Construction in excess of billing

2,106,975

1,484,626

    Other receivables, prepaid expenses and other assets, net

7,188,153

6,854,325

    Real estate held for development or sale

289,474,812

212,371,875

    Property and equipment, net

36,281,168

33,837,346

    Advances to suppliers

697,823

1,363,817

    Deposits on land use rights

59,155,165

42,748,017

    Intangible assets, net

42,453,473

54,482,252

    Goodwill

1,969,964

1,914,186

    Deferred financing costs

151,585

194,162

         Total assets

$

619,493,087

$

498,377,634

LIABILITIES





    Accounts payable

$

59,400,262

$

55,142,928

    Advances from customers

45,441,402

49,297,915

    Accrued expenses

17,439,541

22,229,514

    Income tax payable

24,534,095

19,865,906

    Other taxes payable

7,139,870

3,861,158

    Other payables

12,755,824

11,228,553

    Loans from employees

25,759,453

27,868,785

    Loans payable

274,917,332

174,749,368

    Deferred tax liability

14,782,118

14,521,613

    Total liabilities

482,169,897

378,765,740

SHAREHOLDERS' EQUITY





    Common stock: $.001 par value, authorized 100,000,000 
        shares; issued 35,849,204 and 35,438,079, respectively

35,849

35,438

    Additional paid in capital

51,347,620

49,972,174

    Treasury stock at cost; 1,166,369 shares and 351,480
        shares, respectively

(2,400,288)

(434,240)

    Statutory reserves

11,535,242

9,903,457

    Retained earnings

48,696,878

38,573,966

    Accumulated other comprehensive income

28,107,889

21,561,099

    Total shareholders' equity

137,323,190

119,611,894

           Total liabilities and shareholders' equity

$

619,493,087

$

498,377,634

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

CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES

 


Consolidated Statements of Operations

For The Years Ended December 31, 2013 and 2012



2013

2012

REVENUES





Real estate sales

$

159,222,863

$

115,299,428

Other revenue

30,811,894

28,075,201

Total revenues

190,034,757

143,374,629







COST OF REVENUES





Cost of real estate sales

124,152,403

78,612,305

Cost of other revenue

22,056,802

24,168,489

Total cost of revenues

146,209,205

102,780,794







Gross margin

43,825,552

40,593,835







OPERATING EXPENSES





Selling, general, and administrative expenses

16,968,686

16,415,255

Stock-based compensation

1,375,857

1,010,875

Other expenses

400,247

122,651

Financing expense

7,317,008

557,336

Accretion expense on convertible debt

-

954,979

Total operating expenses

26,061,798

19,061,096







CHANGE IN FAIR VALUE OF DERIVATIVES





Change in fair value of embedded derivatives

-

(330,628)

Change in fair value of warrants

-

(4,162)

Total change in fair value of derivatives

-

(334,790)














Loss (gain) from disposal of property and equipment

1,107,212

(6,086,257)

Income before provision for income taxes



16,656,542

27,953,786







Provision for current income taxes

5,039,240

7,910,373

Recovery of deferred taxes

(137,395)

(167,358)

Provision for income taxes

4,901,845

7,743,015







NET INCOME

$

11,754,697

$

20,210,771







WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING





Basic

35,127,877

34,954,909







Diluted

35,127,877

36,548,485







EARNINGS PER SHARE





Basic

$

0.33

$

0.58







Diluted

$

0.33

$

0.57

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

CHINA HOUSING & LAND DEVELOPMENT, INC., AND SUBSIDIARIES


Consolidated Statements of Comprehensive Income

For The Years Ended December 31, 2013 and 2012



2013

2012





NET INCOME

$

11,754,697

$

20,210,771







OTHER COMPREHENSIVE INCOME





    Foreign currency translation adjustment

6,546,790

1,471,275

COMPREHENSIVE INCOME


$

18,301,487

$

21,682,046







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

CHINA HOUSING & LAND DEVELOPMENT INC., AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For The Years Ended December 31, 2013 and 2012








December 31,

December 31,


2013

2012

 CASH FLOWS FROM OPERATING ACTIVITIES:





 Net income

$

11,754,697

$

20,210,771

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





 Bad debt recovery

(164)

-

 Depreciation

2,598,326

2,065,380

 Stock-based compensation

1,375,857

1,010,875

 Loss(gain) on disposal of property and equipment

1,107,212

(6,086,257)

 Amortization of deferred financing costs

-

156,064

 Amortization of intangible assets

13,498,819

218,480

 Recovery of deferred taxes

(137,395)

(167,358)

 Change in fair value of embedded derivatives

-

(330,628)

 Change in fair value of warrants

-

(4,162)

 Accretion expense on convertible debt

-

954,979

 Accretion expense on mandatorily redeemable
 noncontrolling interests

-

(1,542,039)

 (Increase) decrease in assets:





 Accounts receivable

(13,637,800)

619,790

 Construction in excess of billing

(574,056)

(1,481,534)

 Other receivables, prepaid expenses and other assets, net

(468,501)

(5,061,576)

 Real estate held for development or sale

(70,989,071)

(76,702,170)

 Advances to suppliers

693,807

(454,840)

 (Deposit) refund on land use rights

(15,071,133)

22,754,848

 Increase (decrease) in liabilities:





 Accounts payable

2,834,646

10,349,314

 Advances from customers

(5,243,032)

(9,459,510)

 Accrued expenses

(5,274,375)

22,144,899

 Other payables

1,185,307

3,665,900

 Income and other taxes payable

7,572,979

7,289,569

 Net cash used in operating activities

(68,773,877)

(9,849,205)







 CASH FLOWS FROM INVESTING ACTIVITIES:





 Purchase of property and equipment

(5,793,142)

(10,723,887)

 Proceeds from sale of property and equipment

654,321

5,480,530

 Net cash used in investing activities

(5,138,821)

(5,243,357)







 CASH FLOWS FROM FINANCING ACTIVITIES:





 Change in restricted cash

(3,694,203)

(4,001,058)

 Loans from banks

98,841,999

99,673,042

 Loans from Days Hotel, Shanghai Xinying Fund LLC,
 Changcheng Financing Company Limited

46,269,017

51,538,584

 Repayments on loans payable

(49,173,393)

(123,698,502)

 Loans from employees

(2,902,615)

12,730,011

 Repayment for mandatorily redeemable non-controlling
 interest in Subsidiaries

-

(27,112,369)

 Repayment of convertible debt

-

(9,645,570)

 Purchase of treasury stock

(1,966,047)

(14,142)

 Net cash provided by (used in) financing activities

87,374,758

(530,004)







INCREASE (DECREASE) IN CASH

13,462,060

(15,622,566)







 Effects on foreign currency exchange

1,736,563

(270,939)







 Cash, beginning of year

6,121,448

22,014,953







 Cash, end of year

$

21,320,071

$

6,121,448

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

SOURCE China Housing & Land Development, Inc.

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