China HGS Announces First Quarter of Fiscal Year 2010 Results
HANZHONG,
Estate Inc. (OTC Bulletin Board: CAHS) (“China HGS” or the “Company”), a
leading residential property developer in Hanzhong,
financial results for the first quarter of its 2010 fiscal year ended
31, 2009
First Quarter Highlights
-- Revenues increased 18.4% year-over-year to $10.4 million
-- Gross profit increased 21.0% to $4.8 million with gross margin of 46.6%
-- Net income was $3.6 million, or $0.08 per diluted share
“In the first quarter of fiscal 2010, we witnessed strong demand for the
Projects II and III of Yangzhou Pearl Garden as well as continued Mingzhu
Xinju, generating net income in line with our expectations. Demand for our
residential projects remains strong and we are not materially affected by the
Chinese government’s recent tight monetary policies,” commented Mr.
Zhu
operate, our average selling price increased 5% to 10% in
expect this trend to continue throughout 2010.”
First Quarter Results
Revenues increased 18.4% to
comparable period of fiscal 2009. The revenue growth during this period was
attributable to stronger advertising and sales promotions and a larger
customer base. Sales from the Company’s Yangzhou Pearl Garden project
accounted for approximately 100% of the Company’s total revenue during the
quarter.
Gross profit increased 21.0% to
in the same period last year. Gross margin expanded almost 100 basis points to
46.6%, as compared to 45.6% in the same period a year ago.
Total operating expenses were
the same period a year ago. Selling and distribution expenses rose 130.1% to
brand awareness among customers in Yang County, a new market. General and
administrative expenses (“G&A”) were
The increase in G&A expenses was primarily related to legal and professional
expenses associated with being a publicly traded company. Operating expenses
as a percentage of revenue were 10.7%, as compared to 3.4% in the same period
last year.
Operating income was
2009
compared to 42.2% in the same period a year ago.
Net income was
million
earnings per share was calculated using weighted average shares of
approximately 45.1 million in the quarter ended
39.0 million a year ago. The increase was the result of increased shares
outstanding due to the reverse merger last year.
Financial Condition
As of
equivalents, up from
capital of
million
first quarter of fiscal 2010.
Business Outlook
Western Triangle, which includes some of the most developed cities in
including
approximately
Company’s major projects under development include
City and Yangzhou Pearl Garden in Yang County.
China HGS re-affirms its previously issued guidance for fiscal year ended
million to $49.0 million
$16.0 million
quarter of fiscal 2010 than in the first quarter, as migrant workers return
home to celebrate the Spring Festival, which marks the traditional sales
season for apartment units.
“Despite the fact that many national real estate developers have been
impacted by the government’s recent tight monetary policy, China HGS has not
been materially affected. We believe our projects in Hanzhong City and Yang
County have little speculative buying due to strong fundamentals and GDP
growth,” said Mr.
sheet with no long-term debt, we believe we will continue to capture
opportunities for revenue and profit growth in the year ahead.”
Conference Call
China HGS will conduct a conference call at
2010.
To participate in the live conference call, please dial the following
number five to ten minutes prior to the scheduled conference call time:
(877) 883-4655. International callers should dial: (706) 758-4585. When
prompted by the operator, enter conference ID number: 56336995.
A replay will be available for 14 days starting at
on
International callers should dial (706) 645-9291. When prompted, please enter
conference ID number: 56336995.
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. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2009 AND SEPTEMBER 30, 2009 (UNAUDITED)
(In U.S. Dollars)
December 31, September 30,
2009 2009
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $1,942,513 $820,783
Restricted cash 613,431 $412,373
Loans to outside parties, net of
allowance 3,956,006 $1,762,022
Due from related party
Real estate property development
completed 6,067,557 2,392,003
Real estate property under
development 38,906,520 42,522,287
Other current assets 88,808 71,985
Total current assets 51,574,835 47,981,453
Property, plant and equipment, net 695,945 713,008
Total assets $52,270,780 $48,694,461
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term loans $585,035 $672,751
Accounts payable 872,997 730,838
Other payables 1,113,839 1,021,147
Customer deposits 13,806,359 14,900,334
Accrued expenses 763,948 125,742
Taxes payable 1,695,482 1,380,694
Total current liabilities 18,837,660 18,831,506
Stockholders' equity:
Common stock, $.001 par value,
100,000,000 shares authorized,
45,050,000 shares issued and
outstanding as of December 31,
2009 and September 30, 2009,
respectively 45,050 45,050
Additional paid-in capital 17,632,348 17,632,348
Statutory surplus 11,473,560 7,904,531
Retained earnings 3,199,920 3,092,499
Accumulated other comprehensive
income 1,951,903 1,950,766
Total stockholders' equity 33,433,120 29,862,955
Total liabilities and stockholders'
equity $52,270,780 $48,694,461
CHINA HGS REAL ESTATE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008 (UNAUDITED)
(In U.S. Dollars)
Three months ended December 31,
2009 2008
Real estate sales, net of sales
taxes of $663,246 and $545,470,
respectively $10,390,857 $8,776,343
Cost of real estate sales,
exclusive of depreciation 5,552,590 4,776,439
Gross profit 4,838,267 3,999,904
Operating expenses
Selling and distribution expenses 299,081 129,953
General and administrative
expenses 817,230 168,474
Total operating expenses 1,116,311 298,427
Operating income 3,721,956 3,701,477
Other income (expenses)
Interest expenses (14,752) (41,571)
Other expenses 0 (309)
Total other income (expenses) 14,752 41,880
Income before income taxes 3,707,204 3,659,597
Provision for income taxes 138,176 137,250
Net income 3,569,028 3,522,347
Other comprehensive income
Foreign currency translation
adjustment 1136 978
Comprehensive income $3,570,164 $3,523,325
Basic and diluted income per
common share
- Basic $0.08 $0.09
- Diluted $0.08 $0.09
Weighted average common shares
outstanding:
- Basic 45,050,000 39,000,000
- Diluted 45,050,000 39,000,000
CHINA HGS REAL ESTATE INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008 (UNAUDITED)
(In U.S. Dollars)
Three months ended December 31,
2009 2008
Cash flows from operating activities
Net income $3,569,028 $3,522,965
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation 14,246 11,344
Loss on disposal of fixed assets 2,861 308
Changes in assets and liabilities
(Increase) decrease in
Restricted cash (201,068) 54,437
Accounts receivable 0 (14,784)
Loans to outside parties (2,194,256) (350,664)
Real estate property development
completed (3,676,043) 4,776,439
Real estate property under
development 3,618,875 (2,533,239)
Due from related party
Other current assets (16,823) (214,034)
(Increase) decrease in
Accounts payables 142,141 (349,649)
Other payables 92,647 (522,620)
Customer deposits (1,095,034) (6,788,087)
Accrued expenses 638,308 (38,501)
Taxes payable 314,761 365,454
Net cash provided by (used in)
operating activities 1,209,643 (2,081,245)
Cash flow from investing activities
Addition of fixed assets 0 (343,447)
Proceeds from disposal of fixed
assets 0 0
Net cash used in investing
activities 0 (343,447)
Cash flow from financing activities
Proceeds from shareholder loans 0 (412,360)
Repayment of short-term loans (87,770) 0
Capital contribution 0 (437,750)
Net cash provided by (used in)
financing activities (87,770) (850,111)
Effect of changes of foreign
exchange rate on cash and
cash equivalents (143) (504)
Net increase (decrease) in cash and
cash equivalents 1,121,730 (1,574,007)
Cash and cash equivalents, beginning
of year 820,783 2,121,060
Cash and cash equivalents, end of
period $1,942,513 $546,983
Supplemental disclosure of cash flow
information
Interest paid $13,337 $42,733
Income taxes paid $31,411 $78,430
Non-cash financing activities
Capital contribution converted from
dividend payable $0 $5,483,508
Capital contribution converted from
retained earnings $0 $10,788,349
Capital contribution converted from
surplus $0 $799,137
For more information, please contact:
Company Contact:
Mr. Ran Xiong, Deputy GM
Email: xr968@163.net
Phone: +86-916-2622612
Investor Relations Contact:
CCG Investor Relations
Crocker Coulson, President
Email: crocker.coulson@ccgir.com
Phone: +1-646-213-1915 (NY office)
Elaine Ketchmere, Partner
Email: elaine.ketchmere@ccgir.com
Phone: +1-310-954-1345 (LA office)
SOURCE China HGS Real Estate Inc.