China HGS Reports First Quarter of Fiscal Year 2013 Results - Revenue Up by Over 300% and Profit Up by Over 400% PR Newswire HANZHONG, China, Feb. 6, 2013 HANZHONG, China, Feb. 6, 2013 /PRNewswire-FirstCall/ -- 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 first quarter of fiscal 2013 ended December 31, 2012. Highlights for the First Quarter of Fiscal 2013 oTotal revenues for the first quarter of fiscal 2013 were $11.0 million, an increase of 339.8% from $2.5 million in the first quarter of fiscal 2012 oTotal gross floor area ("GFA") sold during the first quarter of fiscal 2013 was 13,028 square meters, more than tripled from 3,877.4 square meters sold in the first quarter of fiscal 2012 oNet income totaled $5.5 million, a significant increase compared to the net income of $1.0 million in the first quarter of fiscal 2012 oBasic and diluted net earnings per share ("EPS") attributable to shareholders were $0.12, compared to $0.02 for the first quarter of fiscal 2012 "We are pleased to report strong financial results for the first quarter of fiscal 2013. We achieved significantly higher revenues and net income than the same quarter of last year, demonstrating our improved operational performance and higher returns on invested capital," commented Mr. Xiaojun Zhu, China HGS's Chairman and Chief Executive Officer. "Despite the purchase and mortgage restriction policies imposed on real estate market remained in effect, we experienced higher sales activities in the quarter driven by our sales and promotion efforts. These results are very encouraging. We believe the fundamentals underpinning real estate demand in Tier 3 and Tier 4 cities and counties remain strong as the population continues to grow in these cities and counties driven by increased urbanization." "We now look ahead to 2013 with expectations for somewhat relaxed government policies on the real estate industry and some rebound in the Chinese housing market," continued Mr. Zhu. "Given these expectations, we have been focusing on the investment in three large projects – Mingzhu Beiyuan, Oriental Pearl Garden, and Yangzhou Pearl Garden. We expect to complete the construction of these three multi-building large apartment complexes in two to three years. We have already started pre-sales and signed some sales contracts with buyers. We expect these three large projects to provide us significant revenue and income growth in 2014 and beyond," concluded Mr. Xiaojun Zhu. Financial Results for the First Quarter of Fiscal 2013 Revenues increased by 339.8% to approximately $11.0 million for the first quarter of fiscal 2013 from approximately $2.5 million for the same period in the last year.The total GFA sold during the quarter was 13,028 square meters, representing over three times increase from 3,877 square meters sold in the same quarter of last year. A significant portion of revenue during the first quarter of fiscal 2013 was from the sales of our commercial units inventory in NanDajie Project (Mingzhu Xinju project) with a total GFA of 4,545.88 square meters for a total contract amount of approximately $5.4 million. Gross profit was approximately $6.5 million for the first quarter of fiscal 2013 as compared to approximately $1.4 million for the first quarter of fiscal 2012, representing an increase of $5.1 million. The higher gross profit was mainly attributable to the increase in sales. The overall gross profit as a percentage of revenue increased to 58.7% during the first quarter of fiscal 2013 from 57.7% for the same quarter of last year, mainly due to higher sales of commercial units, which have higher average selling price per square meter compared to that of residential properties. Total operating expenses increased to $722,065 for the first quarter of fiscal 2013 from $361,213 for the first quarter of fiscal 2012 as a result of more sales and marketing activities, increased sales commission, higher executive compensation, taxes, and office expenses. However, as a percentage of total sales, operating expenses declined to 6.6% from 14.4% in the same quarter of last year, demonstrating an improved operating efficiency achieved in this quarter, The Company reported net income of approximately $5.5 million for the first quarter of fiscal 2013, as compared to net income of $1.0 million for the first quarter of fiscal 2012, representing an increase of $4.5 million. The higher net income was primarily due to the increase in revenue. As of December 31, 2012, the Company had total cash and restricted cash balance of approximately $1.7 million, decreased by $0.5 million compared to $2.2 million cash and restricted cash balance as of September 30, 2012. SafeHarborStatement 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, 2012, 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. CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, September 30, 2012 2012 ASSETS Current assets: Cash $ 523,868 $ 1,104,686 Restricted cash 1,161,158 1,080,985 Accounts receivable 4,654,636 - Advances to vendors 4,376,112 2,566,422 Loanstooutsideparties,net 5,146 20,957 Realestatepropertydevelopmentcompleted 15,912,612 19,534,088 Real estate property under development 9,582,760 8,590,275 Other current assets 181,873 171,863 Total current assets 36,398,165 33,069,276 Property, plant and equipment, net 1,017,668 1,037,080 Realestatepropertydevelopmentcompleted,netofcurrentportion 6,565,509 6,691,813 Security deposits for land use right 22,959,737 22,894,698 Real estate property under development, net of current portion 61,575,793 56,021,787 Total Assets $ 128,516,872 $ 119,714,654 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,145,774 $ 3,828,880 Other payables 1,395,244 1,213,394 Construction deposits 301,773 301,318 Customer deposits 13,875,722 11,597,422 Shareholder loan 1,810,000 1,810,000 Accrued expenses 2,402,089 2,305,086 Taxes payable 3,722,182 4,336,458 Total current liabilities 27,652,784 25,392,558 Construction deposits, net of current portion 866,385 864,259 Customer deposits, net of current portion 18,562,385 17,743,993 Total liabilities 47,081,554 44,000,810 Commitments and Contingencies Stockholders' equity Commonstock,$0.001parvalue,100,000,000shares authorized,45,050,000sharesissuedandoutstanding December 31, 2012 and September 30, 2012 $ 45,050 $ 45,050 Additional paid-in capital 17,753,749 17,750,337 Statutory surplus 6,549,354 6,549,354 Retained earnings 50,403,306 44,894,229 Accumulated other comprehensive income 6,683,859 6,474,874 Total stockholders' equity 81,435,318 75,713,844 Total Liabilities and Stockholders' Equity $ 128,516,872 $ 119,714,654 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited) Three months ended December 31, 2012 2011 Real estate sales $ 11,003,415 $ 2,501,981 Less: Sales tax (710,717) (175,905) Cost of real estate sales (3,830,244) (881,900) Gross profit 6,462,454 1,444,176 Operating expenses Selling and distribution expenses 161,094 42,441 General and administrative expenses 560,971 318,772 Total operating expenses 722,065 361,213 Operating income 5,740,389 1,082,963 Interest expense (18,100) (4,163) Other income - net 7,952 - Income before income taxes 5,730,241 1,078,800 Provision for income taxes 221,164 48,338 Net income 5,509,077 1,030,462 Other comprehensive income Foreign currency translation adjustment 208,985 $ 344,589 Comprehensive income $ 5,718,062 $ 1,375,051 Basic and diluted income per common share Basic $ 0.12 $ 0.02 Diluted $ 0.12 $ 0.02 Weightedaveragecommonsharesoutstanding Basic 45,050,000 45,050,000 Diluted 45,050,000 45,050,000 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three months ended December 31, 2012 2011 Cash flows from operating activities Net income $ 5,509,077 $ 1,030,462 Adjustmentstoreconcilenetincometonetusedinoperatingactivities: Depreciation 22,404 22,081 Stock based compensation 3,412 12,175 Changes in assets and liabilities: Restricted cash (77,263) (5,750) Accounts receivable (4,664,334) - Advances to vendors (1,806,155) 51,748 Loans to outside parties 15,903 579,495 Security deposits for land use rights - (9,136,065) Real estate property development completed 3,830,244 881,900 Real estate property under development (6,376,199) (1,898,986) Other current assets (9,542) (15,367) Accounts payables 306,655 (3,203,189) Other payables 178,775 310,247 Customer deposits 3,019,617 3,021,626 Construction deposits (731) 6,272 Accrued expenses 90,860 (122,461) Taxes payable (627,900) (32,172) Net cash used in operating activities $ (585,177) $ (8,497,984) Cash flow from financing activities Proceeds from shareholder loan - 3,142,332 Repayment of shareholder loan - (3,142,332) Net cash provided by financing activities $ - $ - Effect of changes of foreign exchange rate on cash 4,359 25,795 Net decrease in cash (580,818) (8,472,189) Cash, beginning of period 1,104,686 8,837,795 Cash, end of period $ 523,868 $ 365,606 Supplemental disclosures of cash flow information: Interest paid $ - $ - Income taxes paid $ 404,003 $ 18,817 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. SOURCE China HGS Real Estate Inc. Website: http://www.chinahgs.com Contact: Randy Xiong, President of Capital Market, +86-091-6262-2612, email@example.com
China HGS Reports First Quarter of Fiscal Year 2013 Results - Revenue Up by Over 300% and Profit Up by Over 400%
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