China HGS Reports Second Quarter of Fiscal Year 2017 Results

HANZHONG, China, May 12, 2017 /PRNewswire/ -- China HGS Real Estate Inc. 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 2017 ended March 31, 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

Total revenues for the second quarter of fiscal 2017 were approximately $11.1 million, an increase of 62.2% from approximately $6.9 million in the same quarter of fiscal 2016.
Net income for the second quarter of fiscal 2017 totaled approximately $0.8 million, a decrease of approximately 36.7% from the net income of approximately $1.3 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 second quarter of fiscal 2017
Basic and diluted net earnings per share ("EPS") attributable to shareholders for the second quarter of fiscal 2017 were $0.02, compared to $0.03 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. 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)

	March 31,		September 30,
	2017		2016
ASSETS
Current assets:
Cash	$	2,290,389	$	6,401,237
Restricted cash		1,100,447		1,493,537
Cost and earnings in excess of billings		12,340,490		11,891,230
Real estate property development completed		94,437,309		113,185,929
Real estate property under development		94,376,792		-
Other current assets		2,008,185		2,722,036
Total current assets		206,553,612		135,693,969
Property, plant and equipment, net		737,396		792,650
Real estate property development completed, net of current portion		1,605,777		1,657,055
Security deposits for land use right		7,694,430		7,940,137
Real estate property under development, net of current portion		153,223,559		207,384,015
Due from local government for real estate property development completed		2,830,600		2,920,990
Total Assets	$	372,645,374	$	356,388,816
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Other loans		11,872,385		6,125,753
Accounts payable		24,604,226		30,574,497
Other payables		5,057,405		5,200,807
Construction deposits		1,437,652		1,911,158
Billings in excess of cost and earnings		2,078,686		2,110,808
Customer deposits		16,662,127		16,790,208
Shareholder loan		3,175,644		2,709,523
Accrued expenses		2,873,536		3,205,099
Taxes payable		15,912,799		15,843,815
Total current liabilities		83,674,460		84,471,668
Deferred tax liabilities		4,949,824		5,107,887
Customer deposits, net of current portion		13,856,184		10,687,272
Other loans, less current portion		117,192,568		99,843,228
Construction deposits, net of current portion		1,276,989		1,329,820
Total liabilities		220,950,025		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 March 31, 2017 and September 30, 2016		45,050		45,050
Additional paid-in capital		129,823,372		129,793,572
Statutory surplus		8,495,631		8,495,631
Retained earnings		22,246,398		20,661,184
Accumulated other comprehensive income		(8,915,102)		(4,046,496)
Total stockholders' equity		151,695,349		154,948,941

Total Liabilities and Stockholders' Equity	$	372,645,374	$	356,388,816

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 (LOSS)
(Unaudited)

	Three months ended March 31,				Six months ended March 31,
	2017		2016		2017		2016

Real estate sales	$	11,113,794	$	6,851,859	$	20,011,648	$	12,708,466
Less: Sales tax		(353,436)		(481,325)		(466,038)		(893,313)
Cost of real estate sales		(8,254,621)		(4,128,020)		(15,315,656)		(7,336,909)
Gross profit		2,505,737		2,242,514		4,229,954		4,478,244

Operating expenses
Selling and distribution expenses		131,851		126,026		278,085		216,179
General and administrative expenses		1,150,833		580,851		1,623,563		1,059,362
Total operating expenses		1,282,684		706,877		1,901,648		1,275,541

Operating income		1,223,053		1,535,637		2,328,306		3,202,703

Interest expense		(123,447)		(69,094)		(244,570)		(173,140)
Income before income taxes		1,099,606		1,466,543		2,083,736		3,029,563

Provision for income taxes		276,524		166,502		498,522		302,298
Net income		823,082		1,300,041		1,585,214		2,727,265

Other comprehensive income (loss)
Foreign currency translation adjustment		1,357,385		1,054,539		(4,868,606)		(2,284,578)

Comprehensive income (loss)	$	2,180,467	$	2,354,580	$	(3,283,392)	$	442,687

Basic and diluted income per common share
Basic and diluted	$	0.02		$ 0.03	$	0.04	$	0.06

Weighted average common shares outstanding
Basic and diluted		45,050,000		45,050,000		45,050,000		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,
	2017		2016
Cash flows from operating activities
Net income	$	1,585,214	$	2,727,265
Adjustments to reconcile net income to net cash used in operating activities:
Deferred tax provision		-		154,618
Stock based compensation		29,800		29,800
Depreciation		30,837		39,909
Changes in assets and liabilities:

Advances to vendors		-		(22,979)
Cost and earnings in excess of billings		(820,187)		876,158
Real estate property development completed		15,301,222		4,416,727
Real estate property under development		(46,802,444)		(21,468,295)
Other current assets		631,894		(2,336,254)
Accounts payables		(5,042,313)		(13,409,544)
Other payables		17,601		714,978
Billings in excess of cost and earnings		33,317		(972,219)
Customer deposits		3,905,190		6,092,375
Construction deposits		(427,586)		(465,792)
Accrued expenses		(245,158)		(437,604)
Taxes payable		561,290		442,578
Net cash used in operating activities		(31,241,323)		(23,618,279)

Cash flow from financing activities
Restricted cash		348,127		(64,102)
Proceeds from shareholder loan		495,742		842,975
Repayment of shareholder loan		-		(357,298)
Repayment of bank loans		-		(4,640,228)
Proceeds from other loans		26,470,545		33,746,140
Repayment of other loans		-		(5,579,101)
Net cash provided by financing activities		27,314,414		23,948,386

Effect of changes of foreign exchange rate on cash		(183,939)		(18,343)
Net increase (decrease) in cash		(4,110,848)		311,764
Cash, beginning of period		6,401,237		1,333,919
Cash, end of period	$	2,290,389	$	1,645,683
Supplemental disclosures of cash flow information:
Interest paid	$	2,781,494	$	961,149
Income taxes paid	$	355,975	$	162,762

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/china-hgs-reports-second-quarter-of-fiscal-year-2017-results-300456719.html

SOURCE China HGS Real Estate Inc.

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China HGS Reports Second Quarter of Fiscal Year 2017 Results