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| 8-K - FORM 8-K - China Housing & Land Development, Inc. | v328852_8k.htm |
China Housing & Land Development
Inc. Announces
Third Quarter 2012 Financial Results
--Company Beats 3Q12 Revenue Guidance—
Xi’an, China – November 14, 2012 -- China Housing & Land Development, Inc. (“China Housing” or the “Company”; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2012.
Highlights for Q3 2012:
| · | Total revenue in the third quarter of 2012 decreased 17.4% to $28.9 million from $35.0 million in the second quarter of 2012 and decreased 9.0% from $32.1 million in the third quarter of 2011. |
| · | Total gross floor area (“GFA”) sales were 12,773 sq. meters during the third quarter of 2012, compared to 25,908 sq. meters in the second quarter of 2012 and 19,212 sq. meters in the third quarter of 2011. |
| · | Average residential selling price (“ASP”) in the third quarter of 2012 was RMB 6,359, compared with RMB 5,705 in the second quarter of 2012, and RMB 7,326 in the third quarter of 2011. |
| · | Gross profit decreased 31.5% to $5.6 million from $8.1 million in the second quarter of 2012 and decreased 41.7% from $9.5 million in the third quarter of 2011. Third quarter 2012 gross margin was 19.2% compared to 23.2% in the second quarter of 2012 and 29.7% in the third quarter of 2011. |
| · | SG&A expenses as a percentage of total revenue increased to 12.9%, compared to 11.3% in the second quarter of 2012 and increased from 9.1% in the third quarter of 2011. |
| · | Operating income decreased 52.9% to $1.4 million from $3.1 million in the second quarter of 2012, and decreased 76.3% from $6.1 million in the second quarter of 2011. |
| · | Net income attributable to the Company in the third quarter of 2012 was $0.9 million, or $0.03 per diluted share. |
Mr. Pingji Lu, China Housing’s Chairman, commented, “Our stronger-than-expected top line financial results and healthy average selling price trends were indicative of continued improvement in Xi’an’s real estate market. GFA sales were down sequentially largely because one core project, Puhua Phase II, was responsible for most of the revenue generation compared to past quarters when multiple projects contributed to our revenue stream. Average selling prices at our projects increased 11% to RMB 6,359 compared with RMB 5,705 in the second quarter of 2012 and each of our three projects in the third quarter showed ASP improvement.”
“As we evaluate the opportunities in our business in the coming months and quarters ahead, we expected continued improvement to our performance. In our fourth quarter, we expect our revenue performance to be better than the first three quarters of 2012 as we have two more projects scheduled to come online in a stabilized pricing environment. Looking out to 2013, we have an additional four projects under planning that are expected to commence pre-sales in the next twelve months in addition to our two new projects in the last quarter of this year. Together, these six new projects under planning represent a total of nearly 1.7 million square meters of unsold GFA. We believe the pricing environment will remain stable providing us with greater opportunities to increase our revenue and contract sales.”
Total revenue in the third quarter of 2012 decreased 17.4% to $28.9 million from $35.0 million in the second quarter of 2012 and decreased 9.0% from $32.1 million in the third quarter of 2011. In the third quarter of 2012, the majority of the Company’s revenue came from its Puhua Phase II project with additional revenue from its Puhua Phase I and JunJing III projects. Third quarter 2012 contract sales totaled $12.8 million compared to $24.8 million in the second quarter of 2012 and $21.9 million from the third quarter of 2011. Total gross floor area (“GFA”) sales were 12,773 sq. meters during the third quarter of 2012, compared to 25,908 sq. meters in the second quarter of 2012 and 19,212 sq. meters in the third quarter of 2011. The Company’s ASP in the third quarter of 2012 increased to RMB 6,359 compared to RMB 5,705 in the second quarter of 2012, and RMB 7,326 in the third quarter of 2011.
Gross profit for the three months ended September 30, 2012 was $5.6 million, representing a decrease of 31.5% from $8.1 million in the second quarter of 2012 and a 41.7% decrease from $9.5 million in the same period of 2011. Gross profit margin for the three months ended September 30, 2012 was 19.2%, which is below the 29.7% in the same period of 2011 and the 23.2% in the second quarter of 2012. The decrease in gross profit and gross profit margin was mainly due to an adjustment of total estimated project costs, which the Company recorded the accumulated impact of these adjustments in the third quarter of 2012.
SG&A expense was $3.7 million in the third quarter of 2012, compared to $4.0 million in the second quarter of 2012 and $2.9 million in the third quarter of 2011. SG&A expense as a percentage of total revenue was 12.9%, compared to 11.3% in the second quarter of 2012 and 9.1% in the third quarter of 2011. The year-over-year increase in SG&A expense was primarily due to increased employee salaries, which contributed to the higher administrative expenses.
Operating income in the third quarter of 2012 was $1.4 million, or 5.0% of total revenue, decreased from $3.1 million, or 8.7% of total revenue, in the second quarter of 2012, and decreased from $6.1 million, or 19.0% of total revenue in the third quarter of 2011. The year-over-year decrease was mainly due to the reduced gross margin during the three months ended September 30, 2012 in connection with change of estimates in our projects.
Net income attributable to China Housing in the third quarter of 2012 was $0.9 million, or $0.03 per diluted share. This performance compares to a net income of $1.9 million in the second quarter of 2012.
Sequential Quarterly Revenue Breakout Comparison
| Project | Q3 2012 | Q2 2012 | ||||||||
| Recognized Revenue | Contract Sales | GFA Sold | ASP | Unsold GFA | POC | Recognized Revenue | Contract Sales | GFA Sold | ASP | |
| ($) | ($) | (m2) | (RMB) | (m2) | ($) | ($) | (m2) | (RMB) | ||
| Projects Under Construction | ||||||||||
| Puhua Phase One | 3,814,640 | 2,474,085 | 1,716 | 9,157 | 12,314 | 98.9% | 12,043,477 | 6,029,952 | 4,980 | 7,666 |
| Puhua Phase Two | 15,421,851 | 9,544,391 | 10,476 | 5,785 | 150,630 | 74.1% | 14,541,350 | 15,973,143 | 19,343 | 5,228 |
| JunJing III | 4,863,938 | 753,382 | 539 | 8,878 | 1,738 | 91.4% | 4,313,484 | 2,285,239 | 1,857 | 7,790 |
| Projects Completed | ||||||||||
| JunJing II Phase One | - | - | - | - | 817 | 100% | - | - | - | - |
| JunJing I | - | - | - | - | 4,825 | 100% | (828,763) | (828,763) | (272) | 19,938 |
| Additional Project | 18,897 | 18,897 | 42 | 2,888 | - | - | - | - | - | |
| Other Income | 4,798,239 | - | - | 4,945,971 | - | - | ||||
| Total | 28,917,565 | 12,790,755 | 12,773 | 6,359 | 164,682 | - | 35,015,520 | 23,459,571 | 25,908 | 5,705 |
| Q-o-Q Change | -17.4% | -45.5% | -50.7% | 11.5% | ||||||
Total debt outstanding as of September 30, 2012 was $198.3 million compared with $192.4 million on December 31, 2011. Net debt outstanding (total debt less cash and restricted cash) as of September 30, 2012 was $103.6 million compared with $64.7 million on December 31, 2011. The Company’s net debt as a percentage of total capital (net debt plus shareholders’ equity) was 43.3 percent on September 30, 2012 and 33.4 percent on December 31, 2011
| Q3 2012 | ||
| Projects in Planning |
Unsold GFA |
First Pre-sales Scheduled |
| (m2) | ||
| Puhua Phase Three | 177,193 | Q4 2012 |
| Ankang Project | 243,152 | Q4 2012 |
| Park Plaza | 141,822 | Q1 2013 |
| Golden Bay | 252,540 | Q2 2013 |
| Puhua Phase Four | 216,611 | Q3 2013 |
| Textile City | 630,000 | Q3 2013 |
| Total projects in planning | 1,661,318 | |
2012 Fourth Quarter Outlook
Total recognized revenue for the 2012 fourth quarter is expected to reach $25.0 to $27.0 million, compared to $28.9 million in the 2012 third quarter and $47.9 million in the same period of 2011. 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 November 14th, 2012. Listeners may access the call by dialing #1- 785-424-1826. 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 November 21st, 2012, by dialing #1-858-384-5517; passcode: 11700.
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: chuang@chldinc.com
Ms. Jing Lu
Chief Operating Officer, Board Secretary,
and Investor Relations Officer
+86 29.8258.2639 in Xi’an
jinglu@chldinc.com / English and Chinese
Mr. Shuai Luo
Investor Relations
+86 29.8258.2632 in Xi’an
Laurentluo@chldinc.com/ English and Chinese
Mr. Bill Zima, ICR
+86 10 6583 7511
William.Zima@icrinc.com
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, 2012 and December 31, 2011
(Unaudited)
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 9,945,932 | $ | 22,014,953 | ||||
| Cash - restricted | 84,810,432 | 105,720,400 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $572,685 and $571,857, respectively | 15,338,313 | 20,253,706 | ||||||
| Other receivables, prepaid expenses and other assets, net | 4,560,501 | 1,483,758 | ||||||
| Real estate held for development or sale | 227,267,782 | 163,482,316 | ||||||
| Property and equipment, net | 38,007,612 | 33,018,990 | ||||||
| Advance to suppliers | 2,500,544 | 889,965 | ||||||
| Deposits on land use rights | 42,375,958 | 65,286,137 | ||||||
| Intangible assets, net | 54,062,887 | 54,148,953 | ||||||
| Goodwill | 1,897,526 | 1,894,782 | ||||||
| Deferred tax asset | - | 308,248 | ||||||
| Deferred financing costs | 272,310 | 253,569 | ||||||
| Total assets | $ | 481,039,797 | $ | 468,755,777 | ||||
| LIABILITIES | ||||||||
| Accounts payable | $ | 44,364,975 | $ | 44,275,965 | ||||
| Advances from customers | 51,804,582 | 57,541,251 | ||||||
| Accrued expenses | 11,973,368 | 8,380,041 | ||||||
| Income and other taxes payable | 16,885,902 | 14,386,133 | ||||||
| Other payables | 7,753,735 | 7,474,035 | ||||||
| Loans from employees | 19,911,533 | 14,887,431 | ||||||
| Loans payable | 142,332,730 | 148,402,690 | ||||||
| Deferred tax liability | 14,465,340 | 14,861,462 | ||||||
| Warrants liability | - | 4,162 | ||||||
| Fair value of embedded derivatives | - | 330,629 | ||||||
| Convertible debt | 9,893,765 | 9,165,591 | ||||||
| Mandatorily redeemable non-controlling interests in Subsidiaries | 26,183,964 | 19,935,482 | ||||||
| Total liabilities | 345,569,894 | 339,644,872 | ||||||
| SHAREHOLDERS’EQUITY | ||||||||
| Common stock: $.001 par value, authorized 100,000,000 shares | ||||||||
| Issued35,438,079 and 35,078,639, respectively | 35,438 | 35,079 | ||||||
| Additional paid in capital | 49,870,733 | 48,961,658 | ||||||
| Treasury stock at cost 351,480 shares and 337,800 shares, respectively | (434,240 | ) | (420,098 | ) | ||||
| Statutory reserves | 7,857,612 | 7,857,612 | ||||||
| Retained earnings | 55,585,254 | 50,555,460 | ||||||
| Accumulated other comprehensive income | 22,555,106 | 22,121,194 | ||||||
| Total shareholders’ equity | 135,469,903 | 129,110,905 | ||||||
| Total liabilities and shareholders’ equity | $ | 481,039,797 | $ | 468,755,777 | ||||
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
For The Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
| 3 Months | 3 Months | 9 Months | 9 Months | |||||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | September 30, 2011 | |||||||||||||
| REVENUES | ||||||||||||||||
| Real estate sales | $ | 24,119,326 | $ | 26,711,856 | $ | 74,623,218 | $ | 61,941,929 | ||||||||
| Other income | 4,798,239 | 5,387,137 | 12,811,638 | 12,966,952 | ||||||||||||
| Total revenues | 28,917,565 | 32,098,993 | 87,434,856 | 74,908,881 | ||||||||||||
| COST OF SALES | ||||||||||||||||
| Cost of real estate sales | 19,231,940 | 18,829,374 | 56,580,709 | 46,618,588 | ||||||||||||
| Cost of other revenue | 4,134,356 | 3,743,196 | 10,166,314 | 7,927,620 | ||||||||||||
| Total cost of revenues | 23,366,296 | 22,572,570 | 66,747,023 | 54,546,208 | ||||||||||||
| Gross margin | 5,551,269 | 9,526,423 | 20,687,833 | 20,362,673 | ||||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Selling, general, and administrative expenses | 3,717,423 | 2,913,008 | 10,697,177 | 9,667,449 | ||||||||||||
| Stock-based compensation | 96,438 | 96,438 | 909,434 | 114,258 | ||||||||||||
| Other (income) expenses | (22,503 | ) | 54,267 | 42,385 | 444,745 | |||||||||||
| Interest expense | 63,764 | 148,739 | 394,712 | 1,111,347 | ||||||||||||
| Accretion expense on convertible debt | 254,023 | 217,391 | 728,174 | 761,195 | ||||||||||||
| Total operating expenses | 4,109,145 | 3,429,843 | 12,771,882 | 12,098,994 | ||||||||||||
| CHANGES IN FAIR VALUE OF DERIVATIVES | ||||||||||||||||
| Change in fair value of embedded derivatives | (109,344 | ) | (60,705 | ) | (330,628 | ) | (1,522,937 | ) | ||||||||
| Change in fair value of warrants | (976 | ) | 58,937 | (4,162 | ) | (1,055,337 | ) | |||||||||
| Total changes in fair value of derivatives | (110,320 | ) | (1,768 | ) | (334,790 | ) | (2,578,274 | ) | ||||||||
| Income before provision for income taxes | 1,552,444 | 6,098,348 | 8,250,741 | 10,841,953 | ||||||||||||
| Provision for income taxes | 975,645 | 1,758,024 | 3,317,157 | 3,529,614 | ||||||||||||
| Recovery of deferred income taxes | (310,834 | ) | (62,542 | ) | (96,210 | ) | (134,510 | ) | ||||||||
| NET INCOME | $ | 887,633 | $ | 4,402,866 | $ | 5,029,794 | $ | 7,446,849 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||
| Basic | 35,086,599 | 35,071,915 | 34,911,173 | 34,683,383 | ||||||||||||
| Diluted | 35,086,599 | 36,687,624 | 34,911,173 | 36,299,092 | ||||||||||||
| NET INCOME PER SHARE | ||||||||||||||||
| Basic | 0.03 | 0.13 | 0.14 | 0.21 | ||||||||||||
| Diluted | 0.03 | 0.12 | 0.14 | 0.18 | ||||||||||||
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
For The Three and Nine Months Ended September 30, 2012 and 2011
(Unaudited)
| 3 Months | 3 Months | 9 Months | 9 Months | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||
| NET INCOME | $ | 887,633 | $ | 4,402,866 | $ | 5,029,794 | $ | 7,446,849 | ||||||||
| OTHER COMPREHENSIVE INCOME | ||||||||||||||||
| Gain in foreign exchange | 2,303,737 | 2,107,334 | 433,912 | 5,191,323 | ||||||||||||
| COMPREHENSIVE INCOME | $ | 3,191,370 | $ | 6,510,200 | $ | 5,463,706 | $ | 12,638,172 | ||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.