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Xinyuan Real Estate Co., Ltd. Announces Fourth Quarter 2018 Financial Results

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BEIJING, Feb. 15, 2019 /PRNewswire/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan" or the "Company") (NYSE:XIN), an NYSE-listed real estate developer and property manager operating primarily in China and also in other countries, today announced its unaudited financial results for the fourth quarter ended December 31, 2018.

Fourth Quarter 2018 Highlights

  • On January 1, 2018, the Company adopted ASC 606 to recognize revenue for contracts executed after the adoption on an "over time" basis using costs incurred, an input measure. As such, fourth quarter results reflect the adoption of ASC 606 and may not be directly comparable to prior periods.
  • Contract sales decreased 12.1% to US$724.0 million from US$823.3 million in the fourth quarter of 2017 and increased 26.7% from US$571.3 million in the third quarter of 2018.
  • Total revenue increased 49.1% to US$1,081.8 million from US$725.7 million in the fourth quarter of 2017 and increased 81.7% from US$595.5 million in the third quarter of 2018.
  • Gross profit increased 72.0% to US$310.2 million, or 28.7% of total revenue, from US$180.3 million, or 24.8% of total revenue, in the fourth quarter of 2017 and increased 107.9% from US$149.2 million, or 25.1% of total revenue, in the third quarter of 2018.
  • Selling, General and Administrative ("SG&A") expenses as a percentage of total revenue decreased to 9.9% from 10.8% in the fourth quarter of 2017 and increase from 8.0% in the third quarter of 2018.
  • Net income increased 194.4% to US$104.2 million from US$35.4 million in the fourth quarter of 2017, and increased 336.0% from US$23.9 million in the third quarter of 2018.
  • Diluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$1.15 compared to US$0.50 in the fourth quarter of 2017 and US$0.31 in the third quarter of 2018.

Full Year 2018 Highlights

  • For the year ended December 31, 2018, contract sales decreased 8.2% to US$2,264.5 million from US$2,465.7 million in 2017. GFA sales decreased 22.2% to 1,066,782 square meters from 1,371,621 square meters in 2017.
  • Total revenues increased 11.6% to US$2,207.2 million from US$1,976.9 million in 2017.
  • Gross profit was US$607.5 million, or 27.5% of revenue in 2018, compared to a gross profit of US$459.6 million, or 23.2% of revenue in 2017.
  • SG&A expenses were US$241.1 million, or 10.9% of revenue in 2018, compared to US$212.6 million, or 10.8% of revenue in 2017.
  • Net income was US$106.1 million in 2018 compared to US$80.1 million in 2017. Diluted earnings per ADS were US$1.15 in 2018 compared to US$0.97 per ADS in 2017.

Mr. Yong Zhang, Xinyuan's Chairman, stated, "We are pleased that Xinyuan has maintained strong growth despite the downward pressure on sales across the industry. The total amount of contracts signed in 2018 was US$3,223.6 million, representing 42.4% growth compared to US$2,263.0 million achieved in 2017. Correspondingly, our full year total revenue increased by double digits. Due to the successful selection and execution of our projects, gross profit margin for the year reached 27.5%, resulting in bottom line growth of more than 30%, well above our forecast of 15-20%. Our contract sales in 2018 decreased year over year, mainly because we only included contracts qualified for revenue recognition. As those excluded contracts meet the revenue recognition requirement, our contract sales will recover in the coming quarters."

"During the fourth quarter, we commenced pre-sales on ten new projects in China that reflected our strategy in tier-two cities, which made significant contributions to our total GFA sales and total contract sales," continued Mr. Zhang, "We also invested in our future growth by expanding our land bank with the acquisitions of Huzhou Silk Town and Xingyang Splendid New Project. Our under planning stage projects in China, U.S, and Malaysia continued to proceed as planned, and our UK project made further progress in both construction and sales."

"The macro economic environment and government restriction policies still pose certain challenges for our industry. However, Xinyuan's operating strategy and strong execution capabilities are the foundations of our steady growth. We will remain focused on selecting quality tier-one and tier-two city projects and will supplement our core business with value-added services in a strategic way to solidify our leading market position. We maintain our commitment to controlling our financial leverage and maximizing Xinyuan's financial health. We are optimistic in the outlook for our industry and long-term growth. We are also pleased to offer another quarterly dividend payment to our shareholders," concluded Mr. Zhang.

Fourth Quarter 2018 Financial Results

Contract Sales

Contract sales in China totaled US$724.0 million in the fourth quarter compared to US$817.1 million in the fourth quarter of 2017 and US$571.3 million in the third quarter of 2018.

The Company's GFA sales in China were 355,609 square meters in the fourth quarter of 2018 compared to 443,600 square meters in the fourth quarter of 2017 and 277,500 square meters in the third quarter of 2018.

The average selling price ("ASP") per square meter sold in China was RMB13,461 (US$2,036) in the fourth quarter of 2018 compared to RMB12,118 (US$1,794) in the fourth quarter of 2017 and RMB13,406 (US$2,059) in the third quarter of 2018.

The Company commenced pre-sales of ten new projects in the fourth quarter of 2018, Zhengzhou Hangmei International Wisdom City II, Dalian International Health Technology Town I, Qingdao Royal Dragon Bay, Jinan Royal Spring Bay, Xinyuan Golden Water View City, Zhengzhou Fancy City III, Zhengzhou International New City III C, Zhengzhou International New City IV, Suzhou Galaxy Bay, and Suzhou Gusu Shade I. The presales contributed 46.5% and 48.9% of total GFA sales and total contract sales, respectively.

Breakdown of GFA Sales and ASPs by Project in China

Project

Q4 2017

Q3 2018

Q4 2018

GFA

ASP

GFA

ASP

GFA

ASP

(m2, 000s)

(RMB)

(m2, 000s)

(RMB)

(m2, 000s)

(RMB)

Xingyang Splendid II

1.6

11,650

1.2

13,900

0.7

10,354

Kunshan Royal Palace

1.3

24,232

-

-

-

-

Jinan Royal Palace

35.5

12,404

25.9

16,426

1.4

9,548

Xuzhou Colorful City

31.4

11,246

0.1

10,989

1.9

29,363

Chengdu Thriving Family

15.8

10,724

1.1

8,012

-

-

Changsha Xinyuan Splendid

4.2

18,379

0.2

19,771

4.2

12,796

Sanya Yazhou Bay No.1

2.7

27,497

(0.9)

23,515

0.2

4,995

Xi'an Metropolitan

21.2

9,719

1.8

10,546

1.7

10,592

Zhengzhou Xindo Park

11.3

11,110

4.1

8,015

0.1

8,651

Jinan Xin Central

16.9

11,477

1.3

12,839

3.6

16,789

Henan Xin Central I

9.5

12,890

0.3

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