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China HGS Reports Second Quarter of Fiscal Year 2013 Results -- Revenue and Profit Up by Over 500%

 China HGS Reports Second Quarter of Fiscal Year 2013 Results -- Revenue and
                            Profit Up by Over 500%

PR Newswire

HANZHONG, China, May 13, 2013

HANZHONG, China, May 13, 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 second quarter of fiscal 2013
ended March 31, 2013.

Highlights for the Second Quarter of Fiscal 2013

  oTotal revenues for the second quarter of fiscal 2013 were $19.4 million,
    an increase of 573.4% from $2.9 million in the same period of fiscal 2012.
  oTotal gross floor area ("GFA") sold during the three months ended March
    31, 2013 was 41,474 square meters, more than 7 times from 4,938 square
    meters sold in the same period of fiscal 2012.
  oNet income for the second quarter of fiscal 2013 totaled $5.8 million, a
    significant increase compared to the net income of $0.9 million in the
    same period of fiscal 2012.
  oBasic and diluted net earnings per share ("EPS") attributable to
    shareholders for the second quarter of fiscal 2013 was $0.13, compared to
    $0.02 for the same periods of last year.

"We are pleased to report another solid quarter with significantly higher
revenues and net income than the same quarter of last year, reflecting a
continuous dynamic housing market in Tier 3 and Tier 4 cities and counties,"
commented Mr. Xiaojun Zhu, China HGS's Chairman and Chief Executive Officer.

"China's State Council recently announced new policies including levying a 20%
tax on profits from real estate resales to keep prices from mounting higher
the real estate market, with expectations that housing supply in major cities
will not be able to meet demands in the short term. The new policies are not
targeting at first time home buyers and we believe will have no significant
impact on the real estate market in Tier 3 and Tier 4 cities and counties
which our company is serving and where most housing purchasers are first time
home buyers," continued Mr. Zhu.

"During the second quarter of fiscal 2013, we made good progress on
construction of our three on-going projects-Mingzhu Beiyuan, Oriental Pearl
Garden, and Yangzhou Pearl Garden. Recently, the Company also received the
presale license of Mingzhu Beiyuan, which we expect will facilitate the
presales of this development. Once the construction is completed and the
presold units are delivered to purchasers, the presales receipts, currently
recorded as customer deposits, will contribute to the growth of our bottom
line," concluded Mr. Xiaojun Zhu.

Financial Results for the Second Quarter of Fiscal 2013

Revenues increased by 573.4% to approximately $19.4 million for the second
quarter of fiscal 2013 from approximately $2.9 million for the same period in
the last year.The total GFA sold during the second quarter of fiscal 2013 was
41,474 square meters, representing over 7 times increase from 4,938 square
meters completed and sold for the second quarter of fiscal 2012. During the
second quarter of fiscal 2013, the Company completed and delivered two
high-rise buildings in Yangzhou Pearl Garden project and recognized $8.2
million in revenue.

Gross profit was approximately $7.6 million for the second quarter of fiscal
2013 as compared to approximately $1.5 million for the same period of last
year. The overall gross profit as a percentage of real estate sales before
sales tax was 39.0%, decreased from 53.7% for the same quarter last year,
because most of revenues in the second quarter of fiscal 2013 were from
higher sales of residential apartments and lower sales of parking units which
have higher margin than residential apartments..

Total operating expenses increased by 164.9%to $1.4 million for the second
quarter of fiscal 2013 from $0.5 million for the same period of last year.The
increase in operating expenses consisted of an increase in selling expense
and, general and administration expenses, mainly attributable to more
promotions, sales commission, marketing and real estate development activities
as well as higher executive compensation, bonus, taxes and office
expense.However, as a percentage of total sales, operating expenses declined
to 7.3% from 18.6% in the same quarter of last year, demonstrating an improved
operating efficiency achieved in this quarter.

The Company reported net income of approximately $5.8 million for the second
quarter of fiscal 2013, as compared to net income of approximately $0.9
million for the same period of last year. The increase of $4.8 million in our
net income was primarily due to the increase in revenue.

As of March 31, 2013, the Company had total cash and restricted cash balance
of approximately $1.9 million, decreased by $0.3 million compared to
approximately $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)
                                                   March 31,   September 30,
                                                   2013         2012
ASSETS
Current assets:
Cash                                             $ 712,193      $ 1,104,686
Restricted cash                                    1,217,523      1,080,985
Accounts receivable                                4,040,848      -
Advances to vendors                                4,066,690      2,566,422
Loans to outside parties, net                      5,174          20,957
Real estate property development completed         12,803,437     19,534,088
Real estate property under development             5,444,570      8,590,275
Other current assets                               230,206        171,863
Total current assets                               28,520,641     33,069,276
Property, plant and equipment, net                 1,000,968      1,037,080
Real estate property development completed, net    5,787,356      6,691,813
of current portion
Security deposits for land use right               23,485,479     22,894,698
Real estate property under development, net of     76,734,184     56,021,787
current portion
Total Assets                                     $ 135,528,628  $ 119,714,654
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                 $ 5,167,190    $ 3,828,880
Other payables                                     1,877,500      1,213,394
Construction deposits                              297,409        301,318
Customer deposits                                  9,404,479      11,597,422
Shareholder loan                                   1,810,000      1,810,000
Accrued expenses                                   2,508,137      2,305,086
Taxes payable                                      5,232,511      4,336,458
Total current liabilities                          26,297,226     25,392,558
Construction deposits, net of current portion      973,761        864,259
Customer deposits, net of current portion          20,584,780     17,743,993
Total liabilities                                  47,855,767     44,000,810
Commitments and Contingencies
Stockholders' equity
Common stock, $0.001 par value, 100,000,000
shares
authorized, 45,050,000 shares issued and
outstanding
March 31, 2013 and September 30, 2012            $ 45,050       $ 45,050
Additional paid-in capital                         17,755,849     17,750,337
Statutory surplus                                  6,549,354      6,549,354
Retained earnings                                  56,170,026     44,894,229
Accumulated other comprehensive income             7,152,582      6,474,874
Total stockholders' equity                         87,672,861     75,713,844
Total Liabilities and Stockholders' Equity       $ 135,528,628  $ 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 March 31,     Six months ended March 31,
                2013            2012           2013            2012
Real estate     $ 19,382,960    $ 2,878,446    $ 30,386,375    $ 5,380,427
sales
Sales tax         (1,148,725)     (193,579)      (1,859,442)     (369,484)
Cost of real      (10,678,011)    (1,139,329)    (14,508,255)    (2,021,229)
estate sales
Gross profit      7,556,224       1,545,538      14,018,678      2,989,714
Operating
expenses
Selling and
distribution      297,914         39,432         459,008         81,873
expenses
General and
administrative    1,117,545       494,873        1,678,516       813,645
expenses
Total
operating         1,415,459       534,305        2,137,524       895,518
expenses
Operating         6,140,765       1,011,233      11,881,154      2,094,196
income
Interest          -               63             -               14,000
income
Interest          (18,100)        (18,100)       (36,200)        (36,200)
(expense)
Other income
(expenses) -      7               -              7,959           -
net
Income before     6,122,672       993,196        11,852,913      2,071,996
income taxes
Provision for     355,952         47,945         577,116         96,283
income taxes
Net income      $ 5,766,720     $ 945,251      $ 11,275,797    $ 1,975,713
Other
comprehensive
income
Foreign
currency        $ 468,723       $ 459,860      $ 677,708       $ 804,449
translation
adjustment
Comprehensive   $ 6,235,443     $ 1,405,111    $ 11,953,505    $ 2,780,162
income
Basic and
diluted income
per common
share
Basic           $ 0.13          $ 0.02         $ 0.25          $ 0.04
Diluted         $ 0.13          $ 0.02         $ 0.25          $ 0.04
Weighted
average common
shares
outstanding
Basic             45,050,000      45,050,000     45,050,000      45,050,000
Diluted           45,116,695      45,050,000     45,090,074      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)
                                  Six months ended

                                  March 31,
                                  2013             2012
Cash flows from operating
activities
Net income                       $ 11,275,797     $ 1,975,713
Adjustments to reconcile net
income to net cash (used in)
provided by
operating activities:
Depreciation                        44,671           44,416
Stock Based Compensation            5,512            16,634
Provision for losses on loans to    -                7,830
outside parties
Changes in assets and
liabilities:
Restricted cash                     (127,177)        (159,548)
Advances to vendors                 (1,475,065)      2,017,926
Loans to outside parties            15,917           863,917
Security deposits for land use      (398,329)        (11,682,885)
rights
Accounts receivable                 (4,030,621)      -
Real estate property development    7.834,524        1,712,880
completed
Real estate property under          (16,983,329)     (5,305,964)
development
Other current assets                (56,762)         (57,933)
Accounts payables                   1,302,987        (4,517,307)
Other payables                      652,305          441,900
Customer deposits                   401,479          6,926,080
Construction Deposits               95,605           (152,238)
Accrued expenses                    184,157          (46,889)
Taxes payable                       857,617          62,413
Net cash used in operating          (400,712)        (7,853,055)
activities
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        8,219            68,664
exchange rate on cash
Net decrease increase in cash      (392,493)        (7,784,391)
Cash, beginning of period           1,104,686        8,837,795
Cash, end of period               $ 712,193        $ 1,053,404
Supplemental disclosures of cash
flow information:
Interest paid                     $ -              $ -
Income taxes paid                 $ 37,408         $ 59,368
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, China Phone: (86)
091-62622612Email: randy.xiong@chinahgs.com
 
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