China Housing & Land Development Inc. Announces Second Quarter 2014 Financial Results

XI’AN, China, August 14, 2014 /PRNewswire/ — China Housing & Land Development, Inc. (“China Housing” or the “Company”; Nasdaq: CHLN) today announced its financial results for the quarter ended June 30, 2014.

Highlights for Q2 2014:

  • Total revenue in the second quarter of 2014 was $44.1 million compared to $22.0 million in the first quarter of 2014 and $57.8 million in the second quarter of 2013.
  • Total gross floor area (“GFA”) sales were 30,408 sq. meters during the second quarter of 2014, compared with 20,416 sq. meters in the first quarter of 2014 and 48,439 sq. meters in the second quarter of 2013.
  • Average residential selling price (“ASP”) in the second quarter of 2014 was RMB 6,493, compared with RMB 5,919 in the first quarter of 2014, and RMB 7,499 in the second quarter of 2013.
  • Gross profit was $(816,509) in the second quarter of 2014 compared to $5.3 million in the first quarter of 2014 and $17.6 million in the second quarter of 2013. Second quarter 2014 gross margin was (-1.9)%, compared with 24.1% in the first quarter of 2014 and 30.4% in the second quarter of 2013.
  • SG&A expenses as a percentage of total revenue was 8.8%, from 18.1% in the first quarter of 2014 and 8.5% in the second quarter of 2013.
  • Operating loss was $6.6 million in the second quarter of 2014 compared to operating loss of $205 thousand in the first quarter of 2014, and operating income of $8.5 million in the second quarter of 2013.
  • Net loss attributable to the Company in the second quarter of 2014 was $6.8 million, or $(0.20) per diluted share, compared to a net loss of $774 thousand, or $(0.02) per diluted share, in the first quarter of 2014 and net income of $5.9 million, or $0.17 per diluted share, in the second quarter of 2013.

Mr. Pingji Lu, China Housing’s Chairman, commented, “While our second quarter contract sales came within the high end of projections, our profitability was impacted by revenue and cost adjustments at three of our projects as well as an impairment charge. Five projects contributed to the majority of our sales in the second quarter, led by our Park Plaza project. We also began to recognize revenues from our Puhua Phase IV project.”

“On a macro level, China’s real estate market environment is slowing with both sales and ASP’s on the decline. For the remainder of this year, we expect market conditions to remain challenging. In an effort to strengthen sales, we are implementing new incentives, including lowering down payment requirements for home buyers.”

“As we look at the second half of the year, we will concentrate on reducing our unit inventory and driving pre-sales at our Golden Bay and Puhua Phase IV projects. We have also delayed the pre-sales start dates of our Park Plaza Phase II and Ankang Project Phase II projects from the third quarter of this year to 2015 in an effort to reduce expenses and conserve our balance sheet until market conditions improve. Finally, we repurchased 131,600 shares totaling $0.3 million in the second quarter.”

Total revenue in the second quarter of 2014 increased 99.9% to $44.1 million from $22.0 million in the first quarter of 2014 and decreased 23.7% from $57.8 million in the second quarter of 2013. Other revenue in the second quarter of 2014 was $3.3 million, compared to $6.2 million in the first quarter of 2014 and $7.0 million in the second quarter of 2013.

In the second quarter of 2014, the majority of the Company’s real estate revenue came from its Park Plaza, Ankang, Puhua Phase Two and Three projects. Second quarter of 2014 contract sales totaled $31.7 million compared with $19.8 million in the first quarter of 2014 and $59.0 million in the second quarter of 2013. Total gross floor area (“GFA”) sales were 30,408 sq. meters during the second quarter of 2014, compared with 20,416 sq. meters in the first quarter of 2014 and 48,439 sq. meters in the second quarter of 2013. The Company’s ASP in the second quarter of 2014 was RMB 6,493, compared with RMB 5,919 in the first quarter of 2014, and RMB 7,499 in the second quarter of 2013.

Gross profit for the three months ended June 30, 2014 was $(816,509), from $5.3 million in the first quarter of 2014 and $17.6 million in the second quarter of 2013. Gross profit margin for the three months ended June 30, 2014 was (1.9)%, compared to 24.1% in the first quarter of 2014 and the 30.4% in the second quarter of 2013. The decrease of gross profit margin in the second quarter of 2014 is due to the adjustment of the total estimated revenue and cost of the Company’s Puhua Phase II, Puhua Phase III and Park Plaza Phase I projects as well as a $4.4 million impairment charge related to the Park Plaza Phase I project.

SG&A expense was $3.9 million in the second quarter of 2014, compared to $4.0 million in the first quarter of 2014 and $4.9 million in the second quarter of 2013. SG&A expense as a percentage of total revenue was 8.8%, compared with 18.1% in the first quarter of 2014 and 8.5% in the second quarter of 2013. The decrease in SG&A expense was mainly due to decreased advertising expenses during the second quarter of 2014.

Operating loss in the second quarter of 2014 was $6.6 million, compared to operating loss of $205 thousand in the first quarter of 2014, and operating income of $8.5 million in the second quarter of 2013. The year-over-year decrease was mainly due to reduced sales revenue and increased cost of sales.

Net loss attributable to China Housing in the second quarter of 2014 was $6.8 million, or ($0.20) per diluted share. This performance compares with net loss of $(774) thousand million, or $(0.02) per diluted share, in the first quarter of 2014 and net income of $5.9 million, or $0.17 per diluted share, in the second quarter of 2013.

Sequential Quarterly Revenue Breakout Comparison

Project

Q2 2014

Q1 2014

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

Park Plaza Phase One

15,503,089

12,092,922

9,117

8,265

44,689

94.5%

4,984,679

3,937,986

2,811

8,549

Puhua Phase Three

6,472,271

1,382,502

1,412

6,101

59,096

77.4%

2,663,265

1,963,774

1,788

6,700

Puhua Phase Two-East Region

6,890,399

5,969,853

4,875

7,631

89,107

78.7%

1,872,393

1,919,787

1,515

7,731

Ankang Phase One

7,386,849

4,972,520

7,596

4,079

56,970

56.1%

5,269,189

5,184,245

7,860

4,025

Puhua Four

3,485,109

6,192,960

6,323

6,102

135,439

24.9%

N/A

6,043,688

6,013

6,133

Projects Completed

Puhua Phase One

(284,182)

(284,182)

5,506

100%

677,091

421,314

189

13,629

Puhua Phase Two-West Region&New Coast Line

616,066

616,066

566

6,780

30,459

100%

(56,642)

98,430

107

5.600

JunJing III

309,952

309,952

259

7,445

647

100%

396,809

236,812

133

10,844

JunJing I

433,310

433,310

259

10,407

4,107

100%

Other Income

3,254,400

6,235,627

Total

44,067,263

31,685,903

30,408

6,493

22,042,411

19,806,036

20,416

5,919

Q-o-Q Change

99.9%

60.0%

48.9%

9.7%

(60.7%)

(36.1%)

(28.6%)

(10.3%)

Total debt outstanding as of June 30, 2014 was $327.9 million compared with $300.7 million on December 31, 2013. Net debt outstanding (total debt less cash and restricted cash) as of June 30, 2014 was $208.6 million compared with $161.8 million on December 31, 2013. The Company’s net debt as a percentage of total capital (net debt plus shareholders’ equity) was 62.7 percent on June 30, 2014 and 54.1 percent on December 31, 2013.

Q2 2014

Projects in Planning

Unsold

GFA

First

Pre-sales

Scheduled

(m2)

Golden Bay

326,494

Q4 2014

Textile City

630,000

Q2 2016

Park Plaza- Phase II

60,057

Q3 2015

Ankang Project- Phase II

207,794

Q1 2015

Total projects in planning

1,224,345

Third Quarter 2014 Outlook

Total contract sales for the third quarter 2014 are expected to be in the range of $22.5 million to $25.7 million, compared with $18.6 million in the third quarter of 2013. The Company is reporting revenues, which are subject to percentage of completion alterations.

Conference Call Information

Management will host a conference call at 7:30 am ET on August 14, 2014. Listeners may access the call by dialing +1-913-312-1301. To listen to the live webcast of the event, please go to http://public.viavid.com/player/index.php?id=110631. Listeners may access the call replay, which will be available through August 21, 2014, by dialing +1-858-384-5517; passcode: 2120628.

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. 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

Unaudited Interim Condensed Consolidated Balance Sheets

As of June 30, 2014 and December 31, 2013

June 30,

2014

December 31,

2013

ASSETS

Cash

$

7,457,666

$

21,320,071

Cash – restricted

111,932,658

117,534,900

Short-term investment

21,537,169

Accounts receivable, net of allowance for doubtful

accounts of $580,020 and $594,382, respectively

39,075,926

41,158,998

Construction in excess of billing

2,056,063

2,106,975

Other receivables, prepaid expenses and other assets, net

8,878,046

6,197,023

Real estate held for development or sale

356,226,571

289,474,812

Property and equipment, net

42,075,148

36,281,168

Advances to suppliers

1,579,662

697,823

Deposits on land use rights

16,280,063

59,155,165

Intangible asset, net

23,464,677

42,453,473

Goodwill

1,922,363

1,969,964

Deferred financing costs

724,978

1,142,715

Total assets

$

633,210,990

$

619,493,087

LIABILITIES

Accounts payable

$

58,336,793

$

59,400,262

Advances from customers

44,010,242

45,441,402

Accrued expenses

16,544,275

17,439,541

Income tax payable

23,310,900

24,534,095

Other taxes payable

9,751,086

7,139,870

Other payables

14,633,114

12,755,824

Loans from employees

30,809,108

25,759,453

Loans payable

297,137,495

274,917,332

Deferred tax liability

14,390,811

14,782,118

Total liabilities

508,923,824

482,169,897

SHAREHOLDERS’ EQUITY

Common stock: $.001 par value, authorized 100,000,000 shares; Issued 34,848,158 and 35,849,204, respectively

34,848

35,849

Additional paid in capital

52,483,510

51,347,620

Treasury stock

(115,759)

(2,400,288)

Statutory reserves

11,535,242

11,535,242

Retained earnings

38,239,701

48,696,878

Accumulated other comprehensive income

22,109,624

28,107,889

Total shareholders’ equity

124,287,166

137,323,190

Total liabilities and shareholders’ equity

$

633,210,990

$

619,493,087

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

Unaudited Interim Condensed Consolidated Statements of Operations

For The Three and Six Months Ended June 30, 2014 and 2013

3 Months

3 Months

6 Months

6 Months

June 30,
2014

June 30,
2013

June 30,
2014

June 30,
2013

REVENUES

Real estate sales

$

40,812,863

$

50,757,630

$

56,619,647

$

91,049,447

Other revenue

3,254,400

6,996,473

9,490,027

18,095,597

Total revenues

44,067,263

57,754,103

66,109,674

109,145,044

COST OF SALES

Cost of real estate sales

43,491,234

35,950,062

56,208,120

69,036,162

Cost of other revenue

1,392,538

4,232,921

5,401,995

13,768,820

Total cost of revenues

44,883,772

40,182,983

61,610,115

82,804,982

Gross margin

(816,509)

17,571,120

4,499,559

26,340,062

OPERATING EXPENSES

Selling, general, and administrative expenses

3,876,829

4,901,936

7,866,311

8,059,940

Stock-based compensation

1,003,464

1,006,736

1,136,304

1,104,273

Other expenses

10,113

390,567

14,020

450,550

Financing expense

939,852

2,807,094

2,334,382

4,253,880

Total operating expenses

5,830,258

9,106,333

11,351,017

13,868,643

Write off of property

563,710

Loss before provision for income taxes

(6,646,767)

8,464,787

(7,415,168)

12,471,419

Provision for current income taxes

128,422

2,660,911

145,458

3,858,913

Recovery of provision for deferred taxes

(11,148)

(50,013 )

(22,532)

(114,648 )

Provision for income taxes

117,274

2,610,898

122,926

3,744,265

NET (LOSS) INCOME

$

(6,764,041)

$

5,853,889

$

(7,538,094)

$

8,727,154

WEIGHTED AVERAGE SHARES OUTSTANDING

Basic

34,497,920

35,086,599

34,560,976

35,086,599

Diluted

34,497,920

35,244,724

34,560,976

35,166,098

NET (LOSS) INCOME PER SHARE

Basic

$

(0.20)

$

0.17

$

(0.22)

$

0.25

Diluted

$

(0.20)

$

0.17

$

(0.22)

$

0.25

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES

Unaudited Interim Condensed Consolidated Statements of Comprehensive (Loss) Income

For The Three and Six Months Ended June 30, 2014 and 2013

3 Months

3 Months

6 Months

6 Months

June 30,

June 30,

June 30,

June 30,

2014

2013

2014

2013

NET INCOME (LOSS)

$

(6,764,041)

$

5,853,889

$

(7,538,094)

$

8,727,154

OTHER COMPREHENSIVE INCOME (LOSS)

Gain (Loss) on foreign exchange

513,397

2,691,556

(5,998,266)

3,419,601

COMPREHENSIVE (LOSS) INCOME

$

(6,250,643)

$

8,545,445

$

(13,536,359)

$

12,146,755

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES

Unaudited Interim Condensed Consolidated Statements of Cash Flows

For The Six Months Ended June 30, 2014 and 2013

June 30,

2014

June 30,

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$

(7,538,094)

$

8,727,154

Adjustments to reconcile net income to cash provided by (used in) operating activities:

Depreciation

1,194,943

1,307,424

Stock-based compensation

1,136,304

1,104,273

Loss on disposal of property and equipment

563,710

Amortization of deferred financing costs

40,071

Amortization of intangible assets

17,885,532

111,356

Recovery of provision for deferred income taxes

(22,532)

(114,648 )

(Increase) decrease in assets:

Accounts receivable

1,065,542

(20,188,803 )

Construction in excess of billing

559,202

Other receivable, prepaid expenses and other assets

(2,712,898)

(1,019,295)

Real estate held for development or sale

(74,720,712)

12,438,798

Advance to suppliers

(905,607)

921,102

Deposit on land use rights

41,899,123

Deferred finance costs

229,850

Increase (decrease) in liabilities:

Accounts payable

39,088

(3,206,184 )

Advances from customers

(208,062)

(3,842,509 )

Accrued expense and interests

(510,917)

(5,140,839 )

Other payables

2,215,782

1,132,342

Income and other taxes payable

2,177,039

5,464,411

Net cash used in operating activities

(18,208,909)

(1,706,145 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(8,387,891)

(1,310,211 )

Purchase of short-term investment

(21,537,169)

Net cash used in investing activities

(29,925,060)

(1,310,211 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Change in restricted cash

2,809,595

7,297

Loans from banks

38,586,481

89,372,766

Loans from external parties

10,006,351

42,985,007

Payments on loans payable

(21,818,551)

(30,019,910 )

Loans from or repayment to employees, net

5,756,562

(5,328,304 )

Purchase of treasury stock

(635,970)

Net cash provided by financing activities

34,704,468

97,016,856

INCREASE IN CASH

(13,429,501)

94,000,500

Effects on foreign currency exchange

(432,904)

838,852

CASH, beginning of period

21,320,071

6,121,448

CASH, end of period

$

7,457,666

$

100,960,800

The accompanying notes are an integral part of these interim condensed consolidated financial statements.