China HGS Reports Second Quarter of Fiscal Year 2014 Results - Revenues Up by Approximately 157.5%

China HGS Reports Second Quarter of Fiscal Year 2014 Results - Revenues Up by
                             Approximately 157.5%

PR Newswire

HANZHONG, China, May 9, 2014

HANZHONG,China, May 9, 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 second quarter of fiscal 2014 ended
March 31, 2014 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

Highlights for the Quarter

  oTotal revenues for the second quarter of fiscal 2014 were approximately
    $49.9 million, an increase of 157.5% from approximately $19.4 million in
    the same quarter of fiscal 2013. Total revenues recognized from percentage
    of completion method were approximately $33.5 million, which accounted for
    67.2% of total revenues in the second quarter of fiscal 2014.
  oNet income for the second quarter of fiscal 2014 totaled approximately
    $13.4 million, an increase of approximately $7.7 million from the net
    income of approximately $5.8 million in the same period of last year. The
    increased net income in this quarter compared to the same quarter of last
    year was primarily due to the significantly increased revenue.
  oBasic and diluted net earnings per share ("EPS") attributable to
    shareholders for the second quarter of fiscal 2014 were $0.30, increased
    by 130.8% from $0.13 for the same quarter last year. 

"I am very pleased that the Company has delivered strong performance in this
quarter," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China
HGS. "During the second quarter, we sold a significant portion of commercial
units located in Yang County Pearl Garden Project and successfully delivered
two municipal roads constructed for the local government. We also experienced
significant sales progress in our newly constructed Mingzhu Beiyuan and
Oriental Garden real estate projects. These strong results demonstrate that
our growth strategy is working well and our execution is effective."

"As the government is cautiously implementing new policies and strategies to
manage a stable economic growth in China, new catalysts will drive the growth.
We have confidence that our strategy focusing on the real estate market in
Tier 3 and Tier 4 cities and counties in China remains sound and effective
going forward." Mr. Zhu continued. "For example, the new airport for the
greater Hanzhong area is near its completion and is expected to be in
operation in the second half of this year. The new airport will offer several
direct flights daily from Tier 1 cities such as Beijing, Shanghai and
Shenzhen, and many other regional flights, which we believe will add new
catalysts to the economic growth in the greater Hanzhong area. We expect that
the regional economy in the area which is our major market will get a boost
with the new catalysts." concluded Mr. Xiaojun Zhu.


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

Company contact:

Randy Xiong,
President of Capital Market
China Phone: (86) 091-62622612

                                                  March 31       September 30
                                                  2014           2013
Current assets:
Cash                                             $ 2,843,953    $ 5,878,101
Restricted cash                                     1,483,280      1,332,807
Advances to vendors                                 -              109,134
Cost and earnings in excess of billings             5,744,960      2,178,270
Real estate property development completed          9,472,719      11,607,164
Real estate property under development              -              1,580,670
Other current assets                                583,328        368,377
Total current assets                                20,128,240     23,054,523
Property, plant and equipment, net                  930,331        977,739
Real estate property development completed, net     2,183,887      7,619,811
of current portion
Security deposits for land use right                3,245,752      3,259,240
Real estate property under development, net of      199,704,185    142,916,601
current portion
Accounts receivable                                 3,161,946      -
Total Assets                                      $ 229,354,341  $ 177,827,914

Current liabilities:
Bank loan – current portion                       $ 11,360,132   $ 4,888,860
Accounts payable                                    25,424,259     22,527,686
Other payables                                      5,644,077      1,863,922
Construction deposits                               370,131        357,447
Billings in excess of cost and earnings             8,745,055      5,109,758
Customer deposits                                   6,005,135      6,130,466
Shareholder loan                                    9,356,374      1,810,000
Accrued expenses                                    2,731,959      2,896,539
Taxes payable                                      9,177,823      6,612,707
Total current liabilities                           78,814,945     52,197,385
Long-term bank loan, less current portion           12,983,008     11,407,340
Deferred tax liabilities                           1,742,989      650,067
Customer deposits, net of current portion           19,681,160     13,410,081
Construction deposits, net of current portion       1,009,683      1,013,877
Total liabilities                                   114,231,785    78,678,750
Commitments and Contingencies
Stockholders' equity
Common stock, $0.001 par value, 100,000,000
authorized, 45,050,000 shares issued and
March 31, 2014 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                                   79,763,614     63,257,918
Accumulated other comprehensive income              8,577,313      9,109,617
Total stockholders' equity                          115,122,556    99,149,164
Total Liabilities and Stockholders' Equity        $ 229,354,341  $ 177,827,914

                Three months ended March      Six months ended March 31,
                2014           2013           2014           2013
Real estate     $ 49,907,770   $ 19,382,960   $ 64,048,333   $ 30,386,375
Less: Sales       3,007,183      1,148,725      3,953,871      1,859,442
of real estate    31,392,779     10,678,011     40,538,620     14,508,255
Gross profit      15,507,808     7,556,224      19,555,842     14,018,678
Selling and
distribution      253,916        297,914        368,266        459,008
General and
administrative    586,245        1,117,545      1,126,474      1,678,516
operating         840,161        1,415,459      1,494,740      2,137,524
Operating         14,667,647     6,140,765      18,061,102     11,881,154
Interest          4,446          -              9,005          -
Interest          (128,411)      (18,100)       (146,511)      (36,200)
Other income
(expenses) -      -              7              -              7,959
Income before     14,543,682     6,122,672      17,923,596     11,852,913
income taxes
Provision for     1,095,103      355,952        1,417,900      577,116
income taxes
Net income      $ 13,448,579   $ 5,766,720    $ 16,505,696   $ 11,275,797
translation       (939,669)      468,723        (532,304)      677,708

Comprehensive   $ 12,508,910   $ 6,235,443    $ 15,973,392   $ 11,953,505
Basic and
diluted income
per common
Basic           $ 0.30         $ 0.13         $ 0.37         $ 0.25
Diluted         $ 0.30         $ 0.13         $ 0.37         $ 0.25
average common

Basic             45,050,000     45,050,000     45,050,000     45,050,000
Diluted           45,126,214     45,116,695     45,126,214     45,090,074

                                           Six months ended
                                           March 31,
                                           2014               2013
Cash flows from operating activities
Net income                                 $ 16,505,696      $ 11,275,797
Adjustments to reconcile net income to
net cash used in operating

Deferred tax provision                       1,103,204       -
Depreciation                                 43,661            44,671
Stock based compensation                     -                 5,512
Changes in assets and liabilities:
Restricted cash                              (157,070)         (127,177)
Accounts receivable                          (3,183,853)       (4,030,621)
Advances to vendors                          109,435           (1,475,065)
Loans to outside parties                     -                 15,917
Security deposits for land use rights        -                 (398,329)
Cost and earnings in excess of billings      3,681,777         -
Real estate property development             7,542,703         7,834,524
Real estate property under development       (56,191,546)      (16,983,329)
Other current and non-current assets         (217,975)         (56,762)
Accounts payables                            3,010,516         1,302,987
Other payables                               3,814,113         652,305
Billings in excess of cost and earnings      (3,600,479)       -
Customer deposits                            6,269,755         401,479
Construction deposits                        14,260            95,605
Accrued expenses                             (154,580)         184,157
Taxes payable                                2,610,444         857,617
Net cash used in operating activities        (18,799,939)      (400,712)
Cash flow from financing activities
Proceeds from shareholder loan               7,598,660         -
Proceeds from bank loan                      8,170,602         -
Net cash provided by financing activities    15,769,262        -
Effect of changes of foreign exchange        (3,471)           8,219
rate on cash
Net decrease in cash                         (3,034,148)       (392,493)
Cash, beginning of period                    5,878,101         1,104,686
Cash, end of period                        $ 2,843,953       $ 712,193
Supplemental disclosures of cash flow
Interest paid                              $ 751,584         $ -
Income taxes paid                          $ 244,997         $ 37,408

SOURCE China HGS Real Estate Inc.

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