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
 
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