China HGS Announces Record Fiscal Year 2009 Results
HANZHONG,
Estate Inc. (OTC Bulletin Board: CAHS) (“China HGS” or “the Company”), a
leading residential property developer in Hanzhong,
financial results for the fiscal year ended
Fiscal Year 2009 Highlights
-- Revenues increased 65.0% year-over-year to $28.5 million
-- Gross profit increased 65.4% to $13.4 million with gross margin of
47.0%
-- Operating income increased 81.3% to $11.4 million
-- Net income increased 83.7% to $11.1 million, or $0.28 per diluted share
“Our record revenue and net income growth during the year reflects our
leading market position in Hanzhong and our growing recognition as a prominent
real estate developer. During the year, our efficient pricing strategy and
marketing efforts enhanced our market reputation driving rapid growth in sales
of our completed residential units,” commented Mr.
CEO of China HGS. “With the broad property market recovery in
experienced increasing pre-sales of our residential projects and favorable
pricing environment enhancing our overall profitability.”
Fiscal Year 2009 Results
Revenues for fiscal year ended
million
2008
increase in sales of the completed residential units at its two projects
located in Yang County and Hanzhong City. Sales from the Company’s Mingpin
Plaza project in Hanzhong contributed
total revenue. Sales from the Company’s
and Yangzhou Pearl Garden projects contributed approximately 21.7%, 20.0% and
18.2% of the year’s total revenue, respectively.
Gross profit for the fiscal year ended
million
margin was 47.0%, slightly above 46.9% for the same period a year ago.
Total operating expenses for fiscal year ended
approximately
year ago. Selling expenses rose 35.6% to
growth and increase in advertising expenses. General and administrative
expenses (“G&A”) amounted to
increase in G&A expenses was primarily attributable to sales growth, expenses
related to going public, and related consulting services. As a percentage of
revenue, operating expenses accounted for 6.9% of the year’s revenue, a
significant decline from 10.4% in the same period a year ago.
Operating income was
2009
margin was 40.1%, compared to 36.5% in the same period a year ago.
Interest expense for fiscal year ended
31.4% from the same period a year ago. The increase in interest expense was a
result of higher interest rate on the Company’s short term bank loan.
Net income for fiscal year ended
share, in the same period a year ago.
Financial Condition
As of
equivalents, down from
decline in the Company’s cash reserves was a result of growth and expansion of
construction activity and increase in land acquisition costs. The Company
expects cash flow from operating activities to turn positive in the first
quarter of fiscal year 2010. At the end of fiscal year 2009, the Company had
working capital of
stood at
Recent Events
In
rapid growth in sales of units at its Yangzhou Pearl Garden project in Yang
County,
Business Outlook
growth and rising level of disposable income which continues to drive demand
for residential real estate market. China HGS successfully sold all of the 192
apartment units of Phase I of the Yangzhou Pearl Garden Project and has sold
or reserved approximately 87.3% of the total apartment units of Phase II. As
of
estate projects under development, up 87.3% from the prior year.
The Company’s major projects under development include Mingzhu Xinju in
Hanzhong City and Yangzhou Pearl Garden in Yang County. During the quarter
ended
million
and Mingzhu Xinju Project. In the next three years, the Company plans to
maintain its leading position in the Hanzhong market and expand into nearby
markets with solid economic growth, including
to capitalize on the available high-growth opportunities.
“The recovery in the real estate market and sales pricing combined with
strong fundamentals of the Hanzhong market indicate positive future growth
opportunities for China HGS,” said Mr.
pipeline and abundant land reserves for future development, we expect the
ongoing positive trend of our financial performance to continue into fiscal
year 2010 and through fiscal year 2011. We believe our aggressive marketing
efforts, disciplined cost control, growing market recognition and competitive
pricing strategy will further contribute to our revenue growth and
profitability.”
Guidance for Fiscal 2009
China HGS expects revenue for first quarter of fiscal year 2010 ending
million
revenue for fiscal year 2010 ending
(
diluted earnings per share of
About China HGS Real Estate Inc.
China HGS Real Estate Inc., through its wholly-owned subsidiary, Shaanxi
Guangsha Investment and Development Group Co., Ltd., specializes in real
estate development in
real estate properties include multi-layer, sub-high-rise, and high-rise
apartment buildings. The Company possesses the national grade II real estate
qualification and was ranked as the No. 1 property developer in Hanzhong,
Forward-looking Statements:
This press release contains certain statements that may include
‘forward-looking statements’. All statements other than statements of
historical fact included herein are ‘forward-looking statements’. These
forward looking statements are often identified by the use of forward-looking
terminology such as ‘believes,’ ‘expects’ or similar expressions, involve
known and unknown risks and uncertainties. Although the Company believes that
the expectations reflected in these forward-looking statements are reasonable,
they do involve assumptions, risks and uncertainties, and these expectations
may prove to be incorrect. You should not place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release. The Company’s actual results could differ materially from those
anticipated in these forward-looking statements as a result of a variety of
factors, including those discussed in the Company’s periodic reports that are
filed with the Securities and Exchange Commission and available on its website
http://www.sec.gov . All forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by these factors. Other than as required under the securities laws,
the Company does not assume a duty to update these forward-looking statements.
--Financial Tables Follow--
CHINA HGS REAL ESTATE INC.
(FORMERLY CHINA ARGO SCIENCES CORP.)
CONSOLIDATED BALANCE SHEETS
As of
September 30,
2009 2008
ASSETS
Current assets:
Cash & cash equivalents $820,783 $2,121,060
Restricted cash 412,373 596,258
Accounts receivable - net of allowance for
doubtful accounts -- 7,294
Loans to outside parties, net of allowance 1,762,022 210,037
Real estate property development completed 2,392,003 13,657,042
Real estate property under development 42,522,287 22,699,749
Other current assets 71,985 29,175
Total current assets 47,981,453 39,320,615
Property, plant and equipment, net 713,008 401,635
Total Assets $48,694,461 $39,722,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term loans $672,751 $1,312,891
Accounts payable 730,838 1,251,733
Other payables 1,021,147 1,072,600
Customer deposits 14,900,334 17,398,247
Accrued expenses 125,742 40,279
Taxes payable 1,380,694 339,009
Total current liabilities 18,831,506 21,414,759
Stockholders' equity
Common stock, $0.001 par value, 100,000,000
shares authorized, 45,050,000 shares and
39,000,000 shares issued and outstanding as
of September 30, 2009 and 2008,
respectively 45,050 39,000
Additional paid-in capital 17,632,348 127,682
Statutory surplus 2,330,259 2,023,641
Retained earnings 7,904,531 14,224,594
Accumulated other comprehensive income 1,950,767 1,892,575
Total stockholders' equity 29,862,955 18,307,491
Total Liabilities and Stockholders' Equity $48,694,461 $39,722,250
CHINA HGS REAL ESTATE INC.
(FORMERLY CHINA ARGO SCIENCES CORP.)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30,
2009 2008
Real estate sale, net of sales tax of
$1,745,490 and $1,155,106, respectively $28,459,176 $17,249,539
Cost of real estate sales, exclusive of
depreciation 15,084,017 9,161,948
Gross profit 13,375,159 8,087,591
Operating expenses
Selling and distribution expense 353,907 261,030
General and administrative expense 1,618,926 1,537,524
Total operating expenses 1,972,833 1,798,554
Operating income 11,402,326 6,289,037
Other expenses
Interest expenses 121,372 92,347
Other expenses 309 53,442
Total other expenses 121,681 145,789
Income before income taxes 11,280,645 6,143,248
Provision for income taxes 223,095 123,517
Net income $11,057,550 $6,019,731
Other comprehensive income
Foreign currency translation adjustment $58,191 $1,287,479
Comprehensive income $11,115,741 $7,307,210
Basic and diluted income per common share
Basic $0.28 $0.15
Diluted $0.28 $0.15
Weighted average common shares outstanding
Basic 39,513,836 39,000,000
Diluted 39,513,836 39,000,000
CHINA HGS REAL ESTATE INC.
(FORMERLY CHINA ARGO SCIENCES CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,
2009 2008
Cash flows from operating activities
Net income $11,057,550 $6,019,731
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation 66,589 35,348
Loss on disposal of fixed assets 309 42,191
Changes in assets and liabilities:
(Increase) decrease in -
Restricted cash 185,205 187,971
Accounts receivable 7,304 --
Loans to outside parties (1,549,723) (194,051)
Real estate property development
completed 11,287,430 (8,612,453)
Real estate property under
development (19,742,469) 4,412,656
Other current assets (42,686) (16,356)
Increase (decrease) in -
Accounts payables (523,516) (1,372,573)
Other payables (54,137) 526,568
Customer deposits (2,539,616) (5,867,984)
Accrued expenses 85,264 (70,190)
Taxes payable 1,039,661 317,074
Net cash used in operating
activities (722,835) (4,592,068)
Cash flow from investing activities
Purchase of fixed assets (376,898) (401,928)
Proceeds from disposal of fixed assets -- 114,674
Net cash used in investing
activities (376,898) (287,254)
Cash flow from financing activities
Proceeds from (repayment for)
shareholder loans (438,263) 421,905
Repayment of short-term loans (204,523) (70,317)
Capital contribution 438,722 --
Net cash provided by (used
in) financing activities (203,063) 351,588
Effect of changes of foreign exchange rate
on cash and cash equivalent 2,520 432,045
Net decrease in cash and cash equivalents (1,300,276) (4,095,689)
Cash and cash equivalents, beginning of
year 2,121,060 6,216,749
Cash and cash equivalents, end of year $820,783 $2,121,060
Supplemental disclosures of cash flow
information:
Interest paid $109,420 $96,895
Income taxes paid $14,002 $42,190
Non-cash financing activities:
Capital contribution converted from
dividend payable $5,483,508 $--
Capital contribution converted from
retained earnings $10,788,349 $--
Capital contribution converted from
surplus $799,137 $--
For more information, please contact:
Company Contact:
Mr. Ran Xiong, Deputy GM
Email: xr968@163.net
Tel: +86-916-2622612
Investor Relations Contact:
CCG Investor Relations
Crocker Coulson, President
Email: crocker.coulson@ccgir.com
Tel: +1-646-213-1915 (NY office)
Elaine Ketchmere, Partner
Email: elaine.ketchmere@ccgir.com
Tel: +1-310-954-1345 (LA office)
SOURCE China HGS Real Estate Inc.