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Highlights for the Second Quarter 2009:
-- Total revenues increased 71.2% to US$22.6 million compared to US$13.2
million in the second quarter of 2008, and increased 63.3% sequentially
from $13.8 million in the first quarter of 2009.
-- Total gross floor area ("GFA") sales were 31,141 sq. meters compared to
19,920 sq. meters in the second quarter of 2008 and 20,922 sq. meters
in the first quarter of 2009.
-- SG&A expenses as a percent of total revenue declined by approximately
210 basis points to 8.6% compared to 10.7% in the second quarter of
2008.
-- Operating income increased 989% to $5.1 million compared to $470,000 in
the second quarter of 2008 and increased 76.5% compared to $2.9 million
in the first quarter of 2009.
-- Net loss was (US$10.0 million) compared to a net income of US$1.1
million in the second quarter of 2008 and net income of $1.9 million in
the first quarter of 2009. Net loss was primarily due to a $13.1
million non-cash charge associated with the revaluation of derivatives
and warrants. Excluding the charge, non-GAAP net income would have been
$3.0 million.
-- Diluted net loss per share attributable to ordinary shareholders was
(US$0.32) compared to diluted earnings per share of US$0.03 in the
second quarter of 2008 and diluted earnings per share of $0.06 in the
first quarter of 2009. Excluding the non-cash charge, earnings per
share would have been $0.10 per share.
"We are pleased with our results for the second quarter, in which our revenues grew sequentially by 63.3% to $22.6 million. We are seeing stabilization in the Chinese housing market and believe we are well positioned to benefit from Government policies such as the 'Go West' policy to encourage migration into western cities, as well as government stimulus policies," said Mr. Pingji Lu, China Housing's Chairman. "China's overall economic growth continues to be strong, and in Xi'an, we are seeing double-digit economic growth, as more technology and multinational companies are moving into Xi'an and the surrounding areas. All these elements have contributed, and we believe will continue to contribute, to our success."
Financial Results for the 2009 Second Quarter
For the quarter ended June 30, 2009, the Company's revenues were $22.6 million, an increase of 71.2% year-over-year from $13.2 million in the second quarter last year, and an increase of 63.3% sequentially, from $13.8 million in the first quarter of 2009. This increase was primarily the result of pre-sales of the JunJing II Phase I project, and represented both an increase in total square meters sold, as well as higher selling price per square meter.
Total gross floor area ("GFA") sold were 31,141 sq. meters, as compared to 19,920 sq. meters in the second quarter of the prior year and 20,922 sq. meters in the first quarter of this year. Selling price per square meter of our current JunJing II Project increased to RMB 4,432 from RMB 4,269 in the first quarter, reflecting increasing strength in the marketplace.
Gross profit for the second quarter of 2009 was US$7.2 million, up 261.9% from $2.0 million in the same period of 2008, and up 66% sequentially from $4.3 million in the first quarter of this year. The gross profit margin for the second quarter was 31.9% compared with 15.0% in the same period last year, and up slightly from the first quarter gross margin of 31.4%. The year-over-year increase in gross margin is primarily due to the use of favorable pricing in the second quarter of 2008 for the initial marketing of the JunJing II project in order to attract market interest and encourage future sales.
Selling, general and administrative ("SG&A") expenses were US$1.9 million for the second quarter of 2009 compared to US$1.4 million for the second quarter of 2008 and US$1.4 million for the first quarter of 2009. As a percentage of total revenue, SG&A expenses declined year-over-year by approximately 210 basis points to 8.6% compared to 10.7% in the second quarter of 2008 and decreased 1.6% compared to 10.2% in the first quarter of 2009.
Operating income increased 989% to $5.1 million compared to $470,000 in the second quarter of 2008 and increased 76.5% compared to $2.9 million in the first quarter of 2009.
Net loss for the second quarter of 2009 was (US$10.0) million compared to a net income of US$1.1 million in the second quarter of 2008 and net income of $1.9 million in the first quarter of 2009. Diluted losses per share for the second quarter of 2009 was ($0.32), compared to diluted earnings per share of US$0.03 in the second quarter of 2008 and $0.06 in the first quarter of 2009. Net loss and diluted net loss per share were primarily due to a $13.1 million, or $0.42 per share, non-cash charge associated with the periodic revaluation of derivatives and warrants. Excluding this charge, net income and earnings per share would have been $3.0 million and $0.10 per diluted share.
As of June 30, 2009, China Housing reported US$10.1 million in cash compared to US$10.6 million at the end of the first quarter of 2009. Total debt was $48.5 million, down from $59.4 million at the end of the 2009 first quarter, as the Company repaid a portion of its $147 million revolving credit line. Net debt as a percent of total capital was 26.2% at the end of the second quarter of 2009 compared to 29.4% at end of the first quarter of 2009.
Sequential Quarterly Revenue Breakout Comparison
Q1 2009
Revenue
Project Recognized GFA Sold ASP
($) (m2) (Rmb)
JunJing II Phase One 10,305,262 19,197 4,269
JunJing II Phase Two 0 -- --
Puhua Project 0 -- --
Tsining-24G 862,593 750 7,850
JunJing I 1,580,565 642 16,801
Additional Projects 177,449 403 3,009
Other Income 918,814 -- --
Total 13,844,683 20,922 4,756
Q2 2009
Project Revenue
Recognized GFA Sold ASP
($) (m2) (Rmb)
JunJing II Phase One 20,020,886 28,367 4,358
JunJing II Phase Two 960,176 2,456 5,283
Puhua Project 0 -- --
Tsining-24G 1,018,023 630 11,038
JunJing I (1,018,606) (788) 8,825
Additional Projects 200,460 476 2,873
Other Income 1,420,979 -- --
Total 22,601,919 31,141 4,430
Q-o-Q change 63.3% 48.8% (6.85%)
Mr. Lu concluded, "We are thrilled with the response to our three current projects -- JunJing II Phases I and II and Puhua -- and are moving ahead with additional new developments that we believe will bode well for our future growth. We believe that we have a strong portfolio of projects in process and a solid pipeline for future revenues. We believe that our geographic location, combined with our solid balance sheet and experienced management will enable us to continue to benefit from the positive economic and migration trends within China."
Conference Call Information
China Housing's management will host an earnings conference call on August 13, 2009 at 8:00 a.m. U.S. Eastern Time. Listeners may access the call by dialing #1-913-312-1469. 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 August 20th, by dialing #1-719-457-0820; passcode: 2571094.
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 and only Chinese real estate development company traded on NASDAQ. The Company's news releases, project information, photographs, and more are available on the internet at http://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 are 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.
Notes to Unaudited Financial Information
This release contains unaudited financial information which is subject to year end audit adjustments. In addition, we are in the process of conducting further evaluations of our internal control over financial reporting for compliance with the requirements of Section 404 under the Sarbanes-Oxley Act. We make no representation of management's assessment regarding internal control over financial reporting or include an attestation report of the Company's independent auditors due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between our audited financial statements and this unaudited financial information.
CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES
Consolidated Condensed Statements of Income and Other Comprehensive
Income
As of June 30, 2009 and 2008
3 Months Ended 3 Months Ended
30-Jun 30-Jun
2009 2008
(Unaudited) (Unaudited)
REVENUE
Sale of properties $21,180,940 $13,055,230
Other income 1,420,979 189,260
Total revenue 22,601,919 13,244,490
COSTS AND EXPENSES
Cost of properties and land 15,394,470 11,252,721
Selling, general and administrative
expenses 1,942,946 1,418,750
Stock based compensation -- --
Other expense 150,327 103,344
Interest expense 446,899 658,443
Accretion expense on convertible debt 296,164 253,558
Change in fair value of embedded
derivatives 5,836,616 (738,999)
Change in fair value of warrants 7,222,727 (946,563)
Total costs and expense 31,290,149 12,001,254
(Loss) income before provision for
income taxes and minority interest (8,688,230) 1,243,236
(Recovery) provision for income taxes 1,347,914 107,357
Net income (10,036,144) 1,135,879
Less: net loss attributable to non-
controlling interest (145,899) --
Net income attributable to China
Housing & Land Development, Inc. (9,890,245) 1,135,879
Gain on foreign exchange 51,713 1,735,766
COMPREHENSIVE INCOME $(9,838,532) $2,871,645
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 30,932,745 30,143,757
Diluted 30,938,070 30,311,201
EARNINGS PER SHARE
Basic $(0.32) $0.04
Diluted $(0.32) $0.03
CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheets
As of June 30, 2009 and December 31, 2008
June 30, December 31,
2009 2008
(Unaudited)
ASSETS
Cash $10,113,600 $37,425,340
Cash - restricted 751,173 805,012
Accounts receivable, net of allowance
for doubtful accounts of $1,001,487
and $1,278,156, respectively 3,860,834 813,122
Other receivables, prepaid expenses
and other assets 800,396 446,497
Notes receivable, net 684,959 811,695
Other taxes prepaid 2,286,955 545,979
Real estate held for development or
sale 106,219,713 60,650,011
Property and equipment, net 12,975,105 12,391,501
Assets held for sale 14,292,560 14,308,691
Advance to suppliers 689,565 704,275
Deposits on land use rights 26,586,901 47,333,287
Intangible assets, net 41,630,027 46,043,660
Goodwill 815,955 --
Deferred Financing Costs 544,726 622,118
Total assets 222,272,469 222,901,188
LIABILITIES
Accounts payable $13,729,345 $10,525,158
Advances from customers 10,305,087 9,264,385
Accrued expenses 4,461,524 3,539,842
Payable for acquisition of businesses 7,649,891 8,429,889
Income taxes payable 10,203,902 8,078,709
Other payables 3,145,809 5,183,251
Loans from employees 2,185,880 1,517,039
Loans payable 24,450,236 35,617,442
Deferred tax liability 11,497,938 11,510,915
Warrants liability 7,983,626 1,117,143
Fair value of embedded derivatives 6,472,976 760,398
Convertible debt 14,199,920 13,621,934
Total liabilities 116,286,134 109,166,105
SHAREHOLDERS' EQUITY
Common stock: $.001 par value,
authorized 100,000,000 shares issued
and outstanding 30,948,340 and
30,893,757, respectively 30,948 30,894
Additional paid in capital 31,658,301 31,390,750
Common stock subscribed 320,815 --
Statutory reserves 3,696,038 3,541,226
Retained earnings 31,277,536 39,265,062
Accumulated other comprehensive
income 10,086,381 10,397,801
Non-controlling interest 28,916,316 29,109,350
Total shareholders' equity 105,986,335 113,735,083
Total liabilities and shareholders'
equity $222,272,469 $222,901,188
Consolidated Condensed Statements of Cash Flows
For The Six Month Periods Ended June 30, 2009 and 2008
30-Jun 30-Jun
2009 2008
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $(8,180,560) $1,183,564
Adjustments to reconcile net income
to cash
provided by (used in) operating
activities:
Minority interest in subsidiaries -- --
Bad debt recovery (275,265) --
Depreciation 315,026 183,657
Exchange loss -- 103,344
Gain on disposal of fixed assets (16,200) 14,844
Gain on income tax settlement -- --
Amortization of deferred financing
costs 77,391 67,367
Change in fair value of warrants 7,055,488 (956,052)
Change in fair value of embedded
derivatives 5,712,578 (454,488)
Accretion expense convertible debt 577,986 425,241
Non-cash proceeds from sales (23,804) (2,923,177)
(Increase) decrease in assets:
Accounts receivable (2,689,972) (1,871,161)
Other taxes prepaid (1,790,793) --
Real estate held for development or
sale (33,922,050) (14,440,226)
Advance to suppliers 13,738 375,487
Refund (deposit) on land use rights 13,363,368 (1,594,144)
Other receivable prepaid expenses 952,254 233,934
Increase (decrease) in liabilities:
Accounts payable 3,205,445 5,654,551
Advances from customers 922,457 3,869,507
Accrued expense 790,270 902,519
Other payable (3,191,392) 694,784
Income and other taxes payable 2,031,450 553,396
Net cash provided by (used in)
operating activities $(15,072,585) $(7,977,053)
CASH FLOWS FROM INVESTING ACTIVITIES:
Change in restricted cash 52,887 (2,437,759)
Purchase of buildings, equipment and
automobiles (478,557) (123,516)
Notes receivable collected 149,549 71,614
Cash acquired in business
combinations 519,309 --
Proceed from sale of fixed assets 194,006 858,755
Net cash provided by (used in)
investing activities $437,194 $(1,630,906)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Proceeds from issuance of
convertible debt -- 19,230,370
Investment and advances from minority
shareholder 267,605 14,168,119
Loan from bank (11,127,389) --
Payments on loans -- --
Loans to or from employees, net 670,493 (659,605)
Repayment of loan from New Land
previous shareholders (2,553,242) (3,476,856)
Proceeds from issuance of common
stock and warrants 320,815 8,415
Net cash provided by financing
activities $(12,401,718) $29,270,443
INCREASE IN CASH (27,037,109) 19,662,484
EFFECTS ON FOREIGN CURRENCY EXCHANGE (254,631) 752,116
CASH, beginning of year 37,425,340 2,351,015
CASH, end of year $10,133,600 $22,765,615
For further information, please contact:
China Housing
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
Tel: +86-29-8258-2632 (in Xi'an)
Email: jinglu@chldinc.com (English and Chinese)
ICR
Mr. Bill Zima
Tel: +1-203-682-8200 (in United States)
Email: William.Zima@icrinc.com
Ms. Annie Chen
Tel: +86-10-6599-7966 (in Beijing)
Email: Annie.Chen@icrinc.com
SOURCE China Housing & Land Development, Inc.
http://www.chldinc.com
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