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China HGS Reports First Quarter of Fiscal Year 2014 Results -- Revenues Up by Approximately 29%

China HGS Reports First Quarter of Fiscal Year 2014 Results -- Revenues Up by                               Approximately 29%  PR Newswire  HANZHONG, China, Feb. 7, 2014  HANZHONG, China, Feb. 7, 2014 /PRNewswire/ -- 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 2014 ended December 31, 2013 with the U.S. Securities and Exchange Commission. An electronic copy of the quarterly report on Form 10-Q can be accessed on the SEC's website atwww.sec.gov.  Highlights for the Quarter    oTotal revenues for the first quarter of fiscal 2014 were approximately     $14.1 million, an increase of 28.5% from approximately $11.0 million in     the same quarter of fiscal 2013. Total revenues recognized from percentage     of completion method were approximately $12.9 million, which accounted for     91.6% of total revenues in the first quarter of fiscal 2014.   oNet income for the first quarter of fiscal 2014 totaled approximately $3.1     million, a decrease of approximately $2.4 million from the net income of     approximately $5.5 million in the same period of last year. The decreased     profit margin in this quarter compared to the same quarter of last year     was primarily due to the mix of sold properties. More residential     properties, which have lower average selling price per unit, were sold in     this quarter, while more commercial properties, which have higher average     selling price per unit, were sold in the same quarter of last year.   oBasic and diluted net earnings per share ("EPS") attributable to     shareholders for the first quarter of fiscal 2014 were $0.07, compared to     $0.12 for the same quarter last year.  "I am pleased with the recent sales progress under presale stage," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "We believe that the demand for real estate in Tier 3 and Tier 4 cities and counties in China remained solid as a result of continuous urbanization and growing personal income. The government recently also announced intention to promote migration to Tier 3 and Tier 4 cities, while restrict migration to Tier 1 and Tier 2 cities. We expect that new policies forthcoming for further urbanization in China will focus more on development of Tier 3 and Tier 4 cities, which will attract more first-time home buyers to these less crowded cities from non-city population. As a leading regional developer, the Company will continue to focus its development on selected Tier 3 and Tier 4 cities, maximize the benefits of new government policies, and provide quality housing with affordable pricing for growing new urban residents in these cities," concluded Mr. Xiaojun Zhu.  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, 2013, 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.  Company contact:  Randy Xiong, President of Capital Market China Phone: (86) 091-62622612 Email: randy.xiong@chinahgs.com  CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)                                                December 31     September 30                                                2013            2013 ASSETS Current assets:  Cash                                     $  3,233,673    $  5,878,101  Restricted cash                              1,302,610       1,332,807  Advances to vendors                          198,144         109,134  Cost and earnings in excess of billings      5,391,207       2,178,270  Real estate property development             11,413,583      11,607,164 completed  Real estate property under development       1,708,660       1,580,670  Other current assets                         459,689         368,377  Total current assets                         23,707,566      23,054,523 Property, plant and equipment, net                962,283         977,739 Real estate property development completed,       7,330,449       7,619,811 net of current portion Security deposits for land use right              3,272,144       3,259,240 Real estate property under development, net       170,227,294     142,916,601 of current portion  Total Assets                              $  205,499,736  $  $177,827,914   LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:  Bank loan – current portion               $  4,908,216    $  4,888,860  Accounts payable                             26,864,280      22,527,686  Other payables                               3,639,846       1,863,922  Construction deposits                        373,139         357,447  Billings in excess of cost and earnings      6,081,624       5,109,758  Customer deposits                            7,051,799       6,130,466  Shareholder loan                             6,145,591       1,810,000  Accrued expenses                             2,803,811       2,896,539  Taxes payable                                5,956,308       6,612,707  Total current liabilities                    63,824,614      52,197,385 Long-term bank loan, less current portion         19,632,865      11,407,340 Deferred tax liabilities                         958,212         650,067 Customer deposits, net of current portion         17,452,508      13,410,081 Construction deposits, net of current portion     1,017,892       1,013,877  Total liabilities                            102,886,091     78,678,750  Commitments and Contingencies Stockholders' equity  Common stock, $0.001 par value, 100,000,000 shares  authorized, 45,050,000 shares issued and outstanding  December 31, 2013 and September 30, 2013     45,050          45,050  Additional paid-in capital                   17,759,349      17,759,349  Statutory surplus                            8,977,230       8,977,230  Retained earnings                            66,315,034      63,257,918  Accumulated other comprehensive income       9,516,982       9,109,617  Total stockholders' equity                   102,613,645     99,149,164  Total Liabilities and Stockholders'       $  205,499,736  $  177,827,914 Equity    CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)                                             Three months ended December 31,                                             2013              2012 Real estate sales                           $  14,140,563     $ 11,003,415 Less: Sales tax                                (946,688)        (710,717)  Cost of real estate sales            (9,145,841)      (3,830,244) Gross profit                                   4,048,034        6,462,454 Operating expenses Selling and distribution expenses              114,350          161,094 General and administrative expenses            540,229          560,971 Total operating expenses                       654,579          722,065 Operating income                               3,393,455        5,740,389 Interest income                                4,559            - Interest expense                               (18,100)         (18,100) Other income - net                            -                7,952 Income before income taxes                    3,379,914        5,730,241 Provision for income taxes                     322,797          221,164 Net income                                     3,057,117        5,509,077 Other comprehensive income Foreign currency translation adjustment        407,365          208,985 Comprehensive income                        $  3,464,482      $ 5,718,062 Basic and diluted income per common share Basic                                       $  0.07           $ 0.12 Diluted                                     $  0.07           $ 0.12 Weighted average common shares outstanding Basic                                          45,050,000       45,050,000 Diluted                                        45,127,025       45,050,000    CHINA HGS REAL ESTATE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)                                             Three months ended December 31,                                             2013               2012 Cash flows from operating activities Net income                                 $  3,057,117       $  5,509,077 Adjustments to reconcile net income to net cash used in operating  activities:  Deferred tax provision            304,878            -  Depreciation                              19,283             22,404  Stock based compensation                  -                  3,412 Changes in assets and liabilities:  Restricted cash                           35,394             (77,263)  Accounts receivable                       -                  (4,664,334)  Advances to vendors                       (88,377)           (1,806,155)  Loans to outside parties                  -                  15,903  Cost and earnings in excess of            (3,197,042)        - billings  Real estate property development          557,801            3,830,244 completed  Real estate property under                (26,805,615)       (6,376,199) development  Other current assets                      (89,649)           (9,542)  Accounts payables                         4,237,763          306,655  Other payables                            1,764,531          178,775  Billings in excess of cost and            949,475            - earnings  Customer deposits                         4,875,305          3,019,617  Construction deposits                     14,245             (731)  Accrued expenses                          (103,277)          90,860  Taxes payable                             (681,032)          (627,900) Net cash used in operating activities          (15,149,200)       (585,177) Cash flow from financing activities  Proceeds from shareholder loan            4,325,754          -  Proceeds from bank loan                   8,161,800          - Net cash provided by financing activities      12,487,554         - Effect of changes of foreign exchange          17,218             4,359 rate on cash Net decrease in cash                          (2,644,428)        (580,818) Cash, beginning of period                      5,878,101          1,104,686 Cash, end of period                         $  3,233,673       $  523,868 Supplemental disclosures of cash flow information: Interest paid                               $  355,757         $  - Income taxes paid                           $  185,313         $  404,003    SOURCE China HGS Real Estate Inc.  Website: http://www.chinahgs.com