EX-99.1 2 v472889_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

China HGS Reports Third Quarter of Fiscal Year 2017 Results

 

HANZHONG, CHINA – August 11, 2017 – 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 third quarter of fiscal 2017 ended June 30, 2017 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 at www.sec.gov

 

Highlights for the Quarter

 

lTotal revenues for the third quarter of fiscal 2017 were approximately $15.7 million, an increase of 25.7% from approximately $12.5 million in the same quarter of fiscal 2016. Total revenues recognized from percentage of completion method were approximately $6.9 million, which accounted for 44.0% of total revenues in the third quarter of fiscal 2017.

 

lNet income for the third quarter of fiscal 2017 totaled approximately $1.6 million, a decrease of approximately 35.6% from the net income of approximately $2.4 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 lower margin residential properties, instead of higher margin commercial properties, sold during the third quarter of fiscal 2017.

 

lBasic and diluted net earnings per share (“EPS”) attributable to shareholders for the third quarter of fiscal 2017 were $0.03, compared to $0.05 for the same quarter last year.

 

Safe Harbor Statement

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, 2016, 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

 

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 CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

   June 30   September 30 
   2017   2016 
ASSETS          
Current assets:          
Cash  $3,294,128   $6,401,237 
Restricted cash   1,206,637    1,493,537 
Cost and earnings in excess of billings   12,663,464    11,891,230 
Real estate property development completed   89,509,976    113,185,929 
Real estate property under development   87,796,734    - 
Other current assets   2,070,244    2,722,036 
Total current assets   196,541,183    135,693,969 
Property, plant and equipment, net   831,638    792,650 
Real estate property development completed, net of current portion   1,630,388    1,657,055 
Security deposits for land use right   7,812,355    7,940,137 
Real estate property under development, net of current portion   158,848,636    207,384,015 
Due from local government for real estate property development completed   2,873,982    2,920,990 
           
Total Assets  $368,538,182   $356,388,816 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Other loans  $25,064,535   $6,125,753 
Accounts payable   24,295,058    30,574,497 
Other payables   3,912,671    5,200,807 
Construction deposits   1,459,073    1,911,158 
Billings in excess of cost and earnings   3,305,671    2,110,808 
Customer deposits   26,038,232    16,790,208 
Shareholder loan   1,810,000    2,709,523 
Accrued expenses   2,097,351    3,205,099 
Taxes payable   16,182,003    15,843,815 
Total current liabilities   104,164,594    84,471,668 
Deferred tax liabilities   5,113,166    5,107,887 
Customer deposits, net of current portion   2,389,627    10,687,272 
Other loans, less current portion   99,911,356    99,843,228 
Construction deposits, net of current portion   1,296,561    1,329,820 
Total liabilities   212,875,304    201,439,875 
Commitments and Contingencies          
Stockholders' equity          
Common stock, $0.001 par value, 100,000,000 shares          
authorized, 45,050,000 shares issued and outstanding          
June 30, 2017 and September 30, 2016   45,050    45,050 
Additional paid-in capital   129,838,272    129,793,572 
Statutory surplus   8,495,631    8,495,631 
Retained earnings   23,821,202    20,661,184 
Accumulated other comprehensive income   (6,537,277)   (4,046,496)
Total stockholders' equity   155,662,878    154,948,941 
           
Total Liabilities and Stockholders' Equity  $368,538,182   $356,388,816 

 

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CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

   Three months ended June 30,   Nine months ended June 30, 
   2017   2016   2017   2016 
                 
Real estate sales  $15,715,091   $12,497,413   $35,726,739   $25,205,879 
Less: Sales tax   (213,183)   (847,938)   (679,221)   (1,741,251)
Cost of real estate sales   (12,696,093)   (8,183,462)   (28,011,749)   (15,520,371)
Gross profit   2,805,815    3,466,013    7,035,769    7,944,257 
                     
Operating expenses                    
Selling and distribution expenses   147,082    71,959    425,167    288,138 
General and administrative expenses   651,773    609,428    2,275,336    1,668,790 
Total operating expenses   798,855    681,387    2,700,503    1,956,928 
                     
Operating income   2,006,960    2,784,626    4,335,266    5,987,329 
                     
Interest expense   (125,750)   (29,917)   (370,320)   (203,057)
Income before income taxes   1,881,210    2,754,709    3,964,946    5,784,272 
                     
Provision for income taxes   306,406    310,548    804,928    612,846 
Net income   1,574,804    2,444,161    3,160,018    5,171,426 
                     
Other comprehensive income (loss)                    
Foreign currency translation adjustment   2,377,825    (4,745,409)   (2,490,781)  $(7,029,987)
                     
Comprehensive income (loss)  $3,952,629   $(2,301,248)  $669,237   $(1,858,561)
                     
Basic and diluted income per common share                    
Basic and diluted  $0.03    $0. 05   $0.07   $0.11 
                     
Weighted average common shares outstanding                    
Basic and diluted   45,050,000    45,050,000    45,050,000    45,050,000 

 

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CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Nine months ended June 30, 
   2017   2016 
Cash flows from operating activities          
Net income  $3,160,018   $5,171,426 
Adjustments to reconcile net income to net cash used in operating activities:          
Deferred tax provision   86,471    383,850 
Stock based compensation   44,700    44,700 
Depreciation   38,433    59,658 
Changes in assets and liabilities:          
Cost and earnings in excess of billings   (952,473)   681,609 
Real estate property development completed   21,602,071    6,811,151 
Real estate property under development   (42,106,890)   (42,105,175)
Other current assets   600,966    (5,418,847)
Accounts payables   (5,720,568)   (15,187,183)
Other payables   (1,190,529)   (2,373,223)
Billings in excess of cost and earnings   1,214,641    (1,526,997)
Customer deposits   1,376,497    5,257,341
Construction deposits   (428,185)   (1,236,962)
Accrued expenses   (1,049,391)   (1,248,883)
Taxes payable   172,676    310,218 
Net cash used in operating activities   (22,737,925)   (50,377,317)
           
Cash flows from investing activities          
Purchases of fixed assets   (89,579)   (8,010)
Net cash used in investing activities   (89,579)   (8,010)
           
Cash flow from financing activities          
Restricted cash   259,829    145,758 
Proceeds from shareholder loan   4,067,944    840,077 
Repayments of shareholder loan   (4,942,772)   (840,077)
Repayments of bank loans   -    (6,165,703)
Proceeds from other loans   26,470,159    62,793,918 
Repayments of other loans   (5,997,059)   (5,559,922)
Net cash provided by financing activities   19,858,101    51,214,051 
           
Effect of changes of foreign exchange rate on cash   (137,706)   (77,278)
Net increase(decrease) in cash   (3,107,109)   751,446 
Cash, beginning of period   6,401,237    1,333,919 
Cash, end of period  $3,294,128   $2,085,365 
Supplemental disclosures of cash flow information:          
Interest paid  $4,243,756   $2,843,145 
Income taxes paid  $681,772   $369,885 

 

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