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China HGS Reports Third Quarter of Fiscal Year 2014 Results

HANZHONG, China, Aug. 8, 2014 /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 third quarter of fiscal 2014 ended June 30, 2014 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 third quarter of fiscal 2014 were approximately $28.9 million, an increase of 302% from approximately $7.2 million in the same quarter of fiscal 2013. Total revenues recognized from percentage of completion method were approximately $24.2 million, which accounted for 84% of total revenues in the third quarter of fiscal 2014.
  • Net income for the third quarter of fiscal 2014 totaled approximately $8.2 million, an increase of approximately $5.9 million from the net income of approximately $2.3 million in the same period of last year. The increased net income in this quarter compared to the same quarter of last year was primarily due to the significantly increased revenue.    
  • Basic and diluted net earnings per share ("EPS") attributable to shareholders for the third quarter of fiscal 2014 were $0.18, increased by 260% from $0.05 for the same quarter last year.  

"We continued to deliver satisfactory results this quarter as compared to the same period of last year," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "The overall real estate market in China remains soft, however, it is generally stable in the Tier 3 and Tier 4 cities. We are also pleased to experience some increase in our average selling prices ("ASP") compared to the third quarter of last year. We believe that the demand for real estate in Tier 3 and Tier 4 cities and counties in China remained solid as the government policy such as the reform of "Hu-Kou" policy will continue to drive migrants to favor Tier 3 and Tier 4 cities and counties. We remain focused on providing quality housing with affordable pricing for growing new urban residents in these regions," concluded Mr. Xiaojun Zhu.

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, 2013, 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: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 



June 30,



September 30,




2014



2013


ASSETS









Current assets:









Cash


$

2,672,883



$

5,878,101


Restricted cash



1,702,740




1,332,807


Advances to vendors



-




109,134


Cost and earnings in excess of billings



6,888,871




2,178,270


Real estate property development completed



6,733,547




11,607,164


Real estate property under development



-




1,580,670


Other current assets



656,522




368,377


Total current assets



18,654,563




23,054,523











Property, plant and equipment, net



919,806




977,739


Real estate property development completed, net of current portion



3,163,831




7,619,811


Security deposits for land use right



3,248,652




3,259,240


Real estate property under development, net of current portion



231,621,911




142,916,601


Accounts receivable-Local government



3,164,770




-


Total Assets


$

260,773,533



$

177,827,914











LIABILITIES AND STOCKHOLDERS' EQUITY









Current liabilities:









Bank loan – current portion


$

9,745,955



$

4,888,860


Short-term loan -other



15,286,531




-


Accounts payable



25,173,845




22,527,686


Other payables



10,263,258




1,863,922


Construction deposits



367,560




357,447


Billings in excess of cost and earnings



8,656,785




5,109,758


Customer deposits



5,883,390




6,130,466


Shareholder loan



7,462,654




1,810,000


Accrued expenses



3,066,621




2,896,539


Taxes  payable



10,664,083




6,612,707


Total current liabilities



96,570,682




52,197,385


Long-term bank loan, less current portion



12,994,607




11,407,340


Deferred tax liabilities



2,323,962




650,067


Customer deposits, net of current portion



24,472,081




13,410,081


Construction deposits, net of current portion



1,004,087




1,013,877


Total liabilities



137,365,419




78,678,750


Commitments and Contingencies









Stockholders' equity









Common stock, $0.001 par value, 100,000,000 shares authorized, 45,050,000 shares
issued and outstanding June 30, 2014 and September 30, 2013



45,050




45,050


Additional paid-in capital



17,759,349




17,759,349


Statutory surplus



8,977,230




8,977,230


Retained earnings



87,924,885




63,257,918


Accumulated other comprehensive income



8,701,600




9,109,617


Total stockholders' equity



123,408,114




99,149,164


Total Liabilities and Stockholders' Equity


$

260,773,533



$

177,827,914


 

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME  AND COMPREHENSIVE INCOME

(Unaudited)

 



Three months ended June 30,



Nine months ended June 30,




2014


2013



2014


2013













Real estate sales


$

28,854,104


$

7,174,974



$

92,902,437


$

37,561,349


Less: Sales tax



1,746,835



489,971




5,700,706



2,349,413


  Cost of real estate sales



17,538,690



3,549,401




58,077,310



18,057,656


Gross profit



9,568,579



3,135,602




29,124,421



17,154,280
















Operating expenses















Selling and distribution expenses



154,007



184,518




522,273



643,526


General and administrative expenses



557,779



542,836




1,684,253



2,221,352


Total operating expenses



711,786



727,354




2,206,526



2,864,878

















Operating income



8,856,793



2,408,248




26,917,895


14,289,402

















Interest income



3,401



-




12,406



-


Interest (expense)



(17,793)



(18,100)




(164,304)



(54,300)


Other income (expenses) - net



-



(319)




-



7,640


Income before income taxes



8,842,401



2,389,829




26,765,997



14,242,742

















Provision for income taxes



681,130



127,284




2,099,030



704,400


Net income


$

8,161,271


$

2,262,545



$

24,666,967


$

13,538,342

















Other comprehensive income (loss)















Foreign currency translation adjustment



124,287



1,337,601




(408,017)



2,015,309

















Comprehensive income


$

8,285,558


$

3,600,146



$

24,258,950


$

15,553,651
















Basic and diluted income per common share















Basic


$

0.18


$

0.05



$

0.55


$

0.30


Diluted


$

0.18


$

0.05



$

0.55


$

0.30

















Weighted average common shares outstanding















Basic



45,050,000



45,050,000




45,050,000



45,050,000


Diluted



45,125,144



45,115,382




45,125,144



45,115,382


 

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 



Nine months ended




June 30,




2014



2013


Cash flows from operating activities









Net income


$

24,666,967



$

13,538,342


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









Deferred tax provision



1,681,415




-


Depreciation



54,933




67,151


Stock based compensation



-




7,612


Changes in assets and liabilities:









Accounts receivable



(3,174,981)




(2,474,262)


Advances to vendors



109,130




1,517,734


Loans to outside parties



-




(943,110)


Cost and earnings in excess of billings



(4,732,899)




-


Real estate property development completed



9,297,037




8,512,382


Real estate property under development



(87,876,687)




(33,833,410)


Other current and non-current assets



(290,275)




(120,144)


Accounts payables



2,728,118




8,968,016


Other payables



8,432,511




622,260


Billings in excess of cost and earnings



3,575,124




-


Customer deposits



10,913,504




5,127,523


Construction deposits



4,793




152,481


Accrued expenses



179,365




282,239


Taxes payable



4,085,999




446,139


Net cash provided by (used in) operating activities



(30,345,946)




1,870,953











Cash flow from financing activities









Restricted cash



(375,470)




(136,176)


Proceeds from shareholder loan



7,577,486




-


Repayment of shareholder loan



(1,906,593)




-


Proceeds from bank loan



8,147,834




-


Repayment of bank loan



(1,629,567)




-


Proceeds from short-term loan



15,335,854




-


Net cash provided by financing activities



27,149,544




(136,176)











Effect of changes of foreign exchange rate on cash



(8,816)




49,333


Net increase (decrease) in cash



(3,205,218)




1,784,110


Cash, beginning of period



5,878,101




1,104,686


Cash, end of period


$

2,672,883



$

2,888,796


Supplemental disclosures of cash flow information:









Interest paid


$

1,143,784



$

-


Income taxes paid


$

291,776



$

243,474


Non Cash transaction:









Transfer of security deposit for land use rights to real estate

under development


$

-



$

12,589,971


SOURCE China HGS Real Estate Inc.

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