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Xinyuan Real Estate Co., Ltd. Announces Third Quarter 2012 Financial Results

Date : 11/09/2012 @ 4:30PM
Source : PR Newswire (US)
Stock : Xinyuan Real Estate CO Ltd American Depositary Shares (XIN)
Quote : 2.75  0.0 (0.00%) @ 8:23PM
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Xinyuan Real Estate Co., Ltd. Announces Third Quarter 2012 Financial Results

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Xinyuan Real Estate Co., Ltd. Announces Third Quarter 2012 Financial Results

BEIJING, Nov. 9, 2012 /PRNewswire/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan" or "the Company") (NYSE: XIN), a residential real estate developer with primary focus on high growth, strategic Tier II cities in China, today announced its unaudited financial results for the third quarter of 2012.

Highlights for the Third Quarter 2012 

  • Total third quarter revenues were US$226.1 million, a 6.0% increase from US$213.3 million reported in the third quarter of 2011,  a 10.7% decrease from US$253.1 million recorded in the second quarter of 2012, and within the range of its third quarter guidance forecast.
  • Contract sales totaled US$229.8 million, a 10.6% decrease from US$257.1 million recorded in the third quarter of 2011, a 10.9% decrease from US$258.0 million recorded in the second quarter of 2012 but above the range of its third quarter guidance forecast.
  • Total gross floor area ("GFA") sales were 170,700 square meters, a 9.5% decrease from 188,700 square meters sold in the third quarter of 2011 and a 12.2% decrease from 194,500 square meters sold in the second quarter of 2012.
  • Selling, General, and Administrative ("SG&A") expenses as a percent of total revenue totaled 6.6% compared to 6.7% in the third quarter of 2011 and 6.2% in the second quarter of 2012.
  • Net income totaled US$31.9 million, a 2.2% increase from US$31.2 million reported in the third quarter of 2011, a 54.0% decrease from US$69.4 million in the second quarter of 2012, and within the range of its third quarter guidance forecast.
  • Diluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$0.44, compared to diluted net earnings per ADS of US$0.42, in the third quarter of 2011 and US$0.94 per ADS, in the second quarter of 2012.   
  • Cash and cash equivalents, including restricted cash, increased by US$3.9 million to US$608.6 million as of September 30, 2012 from US$604.7 million as of June 30, 2012. Short and long term debt increased by US$21.8 million to US$250.7 million compared to US$228.9 million as of June 30, 2012.
  • In the third quarter of 2012 the Company purchased 1,151,741 ADS's on the open market at a total cost of approximately US$3.2 million under its US$20.0 million share repurchase program announced in the second quarter of 2012. On October 31, 2012 the Company paid a quarterly dividend of US$0.04 per ADS to shareholders of record on October 25, 2012.
  • On August 9, 2012, the Company acquired a parcel of land in Suzhou for a purchase price of US$42.6 million. Based on the proposed development plan, the estimated gross floor area is approximately 128,000 square meters. On September 29, 2012, the Company acquired a parcel of land in Beijing for a total consideration of US$162.4 million.  The total site area of 57,862 square meters and the estimated gross floor area is approximately 130,000 square meters. These two acquisitions bring the number of projects under planning in China to five, all scheduled to commence presales in 2013.
  • In the third quarter of 2012, the Company acquired two projects in the United States.  The Company paid US$10.0 million to acquire 15 finished luxury condominium units in Irvine, California and acquired a 92,000 square foot parcel of land in the Williamsburg neighborhood of Brooklyn, New York for US$54.2 million, on which 216 condominium units are planned to be built with net sellable floor area of approximately 400,000 square feet.

Mr. Yong Zhang, Xinyuan's Chairman and Chief Executive Officer said, "We are very satisfied that our third quarter profit exceeded our guidance forecast despite the continuation of purchase and mortgage restriction policies by the Chinese government.  Overall consumer demand for our projects remained stable and average selling prices increased on a sequential basis at the majority of our projects.  In the third quarter, we acquired two parcels of land in China in the cities of Suzhou and Beijing.  As land prices in China remain at reasonable levels, we plan to acquire more land parcels by auction and direct negotiation to strengthen our project pipeline for enhanced growth over the next several years.  We remain highly confident in our strategy to offer affordable developments projects in China."

"At the same time, we are confident that our newly acquired development project in the United States will serve as a new revenue growth channel for Xinyuan, particularly with the American real estate market in recovery mode.  We will continue to return shareholder value through our quarterly dividend payments and share repurchase program."

Financial Results for the Third Quarter 2012

Contract Sales

Contract sales totaled US$229.8 million in the third quarter compared to US$257.1 million in the third quarter of 2011 and US$258.0 million in the second quarter of 2012. The Company's GFA sales were 170,700 square meters in the third quarter of 2012 versus 188,700 square meters in the third quarter of 2011 and 194,500 square meters in the second quarter of 2012. The average selling price per square meter sold was RMB8,505 (US$1,346) in the third quarter of 2012 versus RMB8,857 (US$1,362) in the third quarter of 2011 and RMB8,367 (US$1,326) in the second quarter of 2012.  

Breakdown of GFA Sales and ASP's by Project


Q3 2011

Q2 2012

Q3 2012

Unsold


GFA

ASP

GFA

ASP

GFA

ASP

GFA

Project

(m2 000)

(Rmb)

(m2 000)

(Rmb)

(m2 000)

(Rmb)

(m2 000)

Chengdu Splendid I

7.6

5,674

3.4

5,739

4.0

5,693

8.4

Chengdu Splendid II

21.0

6,916

20.8

6,905

8.9

7,078

1.8

Zhengzhou Modern City

17.4

8,808

12.2

8,399

3.0

14,671

7.4

Zhengzhou Royal Palace

12.1

14,388

18.6

10,058

19.6

10,303

66.0

Zhengzhou Century East B

25.7

8,705

21.1

8,503

30.8

8,355

54.6

Kunshan Intl City Garden

14.0

9,786

17.8

7,942

41.7

7,851

61.3

Suzhou Intl City Garden

20.6

10,969

27.5

10,716

10.1

10,843

3.1

Xuzhou Colorful Garden

7.6

8,785

0.3

6,554

-

-

-

Jinan Xinyuan Splendid

22.9

9,482

33.8

7,783

43.6

7,956

385.5

Zhengzhou Yipinxiangshan II

38.8

6,928

36.2

7,192

8.7

8,637

13.8

Others

1.0

-

2.8

-

0.3

-

3.2

  Total

188.7

8,857

194.5

8,367

170.7

8,505

605.1

Revenue under the Percentage of Completion Method

In the third quarter of 2012, the Company's total revenue using the percentage of completion method was US$226.1million compared to US$213.3 million in the third quarter of 2011 and US$253.1 million in the second quarter of 2012. Construction delays occurred at the Company's Jinan Xinyuan Splendid project due to technical piling issues from an unexpected geological situation resulting in a lower than expected percentage of completion for revenue recognition purposes.

Gross Profit

Gross profit for the third quarter of 2012 was US$65.5 million, or 29.0% of revenue, compared to gross profit of US$63.8 million, or 29.9% of revenue, in the third quarter of 2011 and a gross profit of US$77.5 million, or 30.6% of revenue, in the second quarter of 2012.

The Company revised total project cost and sales projections for certain projects resulting in the recognition of a US$0.3 million reduction of cumulative gross profit in the third quarter of 2012 under the percentage of completion method. This negative change of estimates was largely due to the Company's decision to endure contractual penalties at its Xuzhou Colorful Garden project by delaying delivery in order to rectify roof leakage issues before delivering apartments to Xinyuan's customers.

Selling, General and Administrative Expenses

SG&A expenses were US$14.9 million for the third quarter of 2012 compared to US$14.2 million for the third quarter of 2011 and US$15.8 million for the second quarter of 2012. As a percentage of total revenue, SG&A expenses were 6.6% compared to 6.7% in the third quarter of 2011 and 6.2% in the second quarter of 2012.

Net Income

Net income for the third quarter of 2012 was US$31.9 million compared to US$31.2 million for the same period in 2011, and US$69.4 million in the second quarter of 2012. Net margin was 14.1%, compared to 14.6% in the third quarter of 2011 and 27.4% in the second quarter of 2012.  Diluted earnings per ADS were US$0.44, compared to US$0.42 per ADS in the same period in 2011, and US$0.94 per ADS in the second quarter of 2012. 

Balance Sheet

As of September 30, 2012, the Company reported US$608.6 million in cash and cash equivalents (including restricted cash) compared to US$604.7 million as of June 30, 2012. Total debt outstanding was US$250.7 million, an increase of US$21.8 million compared to US$228.9 million at the end of the second quarter of 2012. The value of the Company's real estate property under development at the end of the third quarter was US$631.9 million compared to US$635.3 million at the end of the second quarter of 2012.  In the third quarter, the Company made payments of US$160 million related to Xuzhou, Suzhou, and Beijing land acquisitions with an additional US$63 million payable on these purchases in the fourth quarter of 2012. Also in the third quarter, the Company made payments of US$36 million on its Irvine, California and Brooklyn, New York project acquisitions while incurring short term debt of US$29 million on the Brooklyn project.

Project Status

Below is a summary table of projects that were active in the third quarter of 2012.


GFA

Contract Sales

 Project Cost % Complete

(m2 000)

(US$ million)

      Project

Total Active Projects

Sold to date

Total Active Projects

Sales to date

%


Sold

Chengdu Splendid I

231.0

222.6

196.1

185.2

94.4%

94.9%

Chengdu Splendid II

216.9

215.1

231.7

229.9

99.2%

93.1%

Zhengzhou Modern City        

226.4

219.0

308.6

288.2

93.4%

84.2%

Zhengzhou Royal Palace

132.2

66.2

219.8

129.2

58.8%

73.3%

Zhengzhou Century East B

166.5

111.9

235.4

150.6

64.0%

76.9%

Kunshan Intl City Garden

498.3

437.0

586.9

503.9

85.9%

96.4%

Suzhou Intl City Garden

204.9

201.8

326.2

320.5

98.2%

98.1%

Xuzhou Colorful Garden

101.8

101.8

119.2

119.2

100.0%

93.1%

Jinan Xinyuan Splendid

565.4

179.9

761.9

237.3

31.1%

65.7%

Zhengzhou Yipinxiangshan II

198.5

184.7

228.1

212.7

93.3%

81.3%

Others remaining GFA

3.2






Total active projects

2,545.1

1,940.0

3,213.9

2,376.7

73.9%

83.4%

As of September 30, 2012, unsold GFA in active projects fell to 605,100 square meters with all but four projects more than 90% sold. The Company's total sellable GFA for both active projects and projects under planning was approximately 1,253,100 square meters. Below is a summary of all projects at Xinyuan that are in the planning stage:


Unsold GFA 
(m2 000)

Pre sales
Scheduled

Zhengzhou Century East A

77.3

 

Q1 2013

Newly Acquired  Zhengzhou Land

208.3

Q3 2013

Newly Acquired Xuzhou Land

117.6

Q3 2013

Newly Acquired  Suzhou Land

125.2

Q3 2013

Newly Acquired Beijing Land

119.6

Q3 2013

Total projects under planning

648.0


Total active projects

605.1


Total all Xinyuan projects

1,253.1


Fourth Quarter and Full Year 2012 Outlook

With several projects nearly sold out, the Company's sellable inventory is expected to decrease until new projects are brought on line in 2013. The Company expects contract sales in the fourth quarter of 2012 to be in the range of US$150-160 million.  For the fourth quarter, revenue under the percentage of completion method is expected to range between US$140 and US$150 million and net income is expected to be in the range of US$17 to US$20 million.

For the full year 2012, contract sales are expected to be in the range of US$790 to US$800 million. Revenue under the percentage of completion method is expected to also range between US$790 and US$800 million and net income is expected to be in the range of US$140 to US$143 million.                                                                                                                                         

Conference Call Information

Xinyuan's management will host an earnings conference call on November 9th, 2012 at 8:00 a.m. U.S. Eastern Time. Listeners may access the call by dialing 1-719-325-2393. A webcast will also be available through the Company's investor relations website at http://www.xyre.com.  Listeners may access the replay by dialing 1-858-384-5517, access code: 4244340.

About Xinyuan Real Estate Co., Ltd.

Xinyuan Real Estate Co., Ltd. ("Xinyuan") (NYSE: XIN) is a developer of large scale, high quality residential real estate projects aimed at providing middle-income consumers with a comfortable and convenient community lifestyle. Xinyuan focuses on China's Tier I and II cities, characterized as larger, more developed urban areas with above average GDP and population growth rates. Xinyuan has expanded its network to cover a total population of over 64.7 million people in eight strategically selected cities, comprising Beijing, Hefei, Jinan, Kunshan, Suzhou, Zhengzhou, Xuzhou and Chengdu. Xinyuan's U.S. development arm, XIN Development Group International, Inc. ("XIN") is a pioneer amongst Chinese real estate residential developers, entering the US market with three projects in 2012.  Xinyuan is the first real estate developer from China to be listed on the New York Stock Exchange. For more information, please visit http://www.xyre.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements are made under the ''safe harbor'' provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "confident" and similar statements. Statements that are not historical facts, including statements concerning our beliefs, forecasts, estimates and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including, but not limited to, the risk that: our financing costs are subject to changes in interest rates; our results of operations may fluctuate from period to period; the recognition of our real estate revenue and costs relies on our estimation of total project sales value and costs; we may be unable to acquire desired development sales at commercially reasonable costs; increases in the price of raw materials may increase our cost of sales and reduce our earnings; we are heavily dependent on the performance of the residential property market in China, which is at a relatively early development stage; PRC economic, political and social conditions as well as government policies can affect our business; the market price of our ADSs may be volatile, and other risks outlined in our public filings with the Securities and Exchange Commission, including our annual report on Form 20-F/A for the year ended December 31, 2011. All information provided in this press release is as of November 9, 2012. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Notes to Unaudited Financial Information

This release contains unaudited financial information which is subject to year end audit adjustments. Adjustments to the financial statements may be identified when the audit work is completed, which could result in significant differences between our audited financial statements and this unaudited financial information.

For more information, please contact:

In China:
Mr. Tom Gurnee
Chief Financial Officer
Tel: +86 (10) 8588-9390
Email: tom.gurnee@xyre.com

Ms. Helen Zhang
Financial Controller
Tel: +86 (10) 8588-9255
Email: yuan.z@xyre.com

ICR, LLC
In U.S.: +1-646-308-1472
In China: +86 (10) 6583-7511
Email: William.zima@icrinc.com

 

 (Financial Tables on Following Pages)








XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All US$ amounts and number of shares data in thousands, except per share data)









Three months ended


September 30,


June 30,


September 30,



2012


2012


2011



(unaudited)


(unaudited)


(unaudited)









Revenue                                                                         

226,062


253,059


213,272









Cost of revenue

(160,576)


(175,569)


(149,464)


Gross profit

65,486


77,490


63,808









Selling and distribution expenses

(5,220)


(4,825)


(6,773)


General and administrative expenses

(9,667)


(10,974)


(7,453)









Operating income

50,599


61,691


49,582









Interest income

2,827


1,923


1,230


Income from operations before income taxes

53,426


63,614


50,812


Income taxes

(21,498)


5,752


(19,591)


Net income

31,928


69,366


31,221


Less: net income attributable to non-controlling interest

-


410


(59)


Net income attributable to shareholders

31,928


68,956


31,280









Earnings per share:







 Basic

0.44


0.95


0.42


 Diluted

0.44


0.94


0.42


Shares used in computation:







 Basic

71,839


72,955


75,507


 Diluted

72,076


73,480


75,507











 

 

XINYUAN REAL ESTATE CO., LTD. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(All US$ amounts and number of shares data in thousands, except per share data)







 Nine months ended


September 30,


September 30,


2012


2011


(unaudited)


(unaudited)

Revenue

651,705


487,738





Cost of revenue

(459,502)


(344,370)

Gross profit

192,203


143,368





Selling expenses

(13,517)


(12,564)

General and administrative expenses

(29,134)


(19,225)





Operating income

149,552


111,579





Interest income

6,078


2,712





Exchange gains

-


56





Income from operations before income taxes

155,630


114,347





Income taxes

(31,091)


(39,651)





Net income

124,539


74,696

Less: net income attributable to non-controlling interest

1,110


593





Net income attributable to shareholders

123,429


74,103





Earnings per share:




 Basic

1.70


0.98

 Diluted

1.70


0.98

Shares used in computation:




 Basic

72,521


76,220

 Diluted

72,750


76,220

 

 


XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(All US$ amounts and number of shares data in thousands)



September 30,


June 30,

December 31,




2012


2012

2011




 (unaudited)


 (unaudited)

(audited)


ASSETS







Current assets







Cash and cash equivalents


443,091


421,378

319,218


Restricted cash


165,537


183,286

168,384


Accounts receivable


2,876


6,598

20,806


Other receivables


8,831


14,759

13,352


Other deposits and prepayments


216,296


75,838

60,006


Advances to suppliers


14,056


18,427

13,579


Real estate property development completed


1,939


2,328

6,775


Real estate property under development


631,945


635,255

761,871


Other current assets


18,566


8,855

659


Total current assets


1,503,137


1,366,724

1,364,650









Real estate properties held for lease, net


21,715


23,538

18,527


Property and equipment, net


2,580


2,691

2,981


Other long-term investment


239


240

242


Deferred tax asset


1,529


1,519

1,307


Other assets


2,280


2,471

2,907









TOTAL ASSETS


1,531,480


1,397,183

1,390,614











 


XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED BALANCE SHEETS


(All US$ amounts and number of shares data in thousands)




September 30,


June 30,

December 31,





2012


2012

2011





(unaudited)


(unaudited)

(audited)


LIABILITIES AND








SHAREHOLDERS' EQUITY








Current liabilities








Accounts payable



254,369


209,634

235,911


Short-term bank loans



56,763


66,819

42,950


Customer deposits



131,002


106,426

69,524


Income tax payable



35,977


30,524

69,909


Deferred tax liabilities



43,142


32,712

22,175


Other payables and accrued liabilities



53,437


52,755

50,970


Payroll and welfare payable



10,746


8,247

7,018


Current portion of long-term bank loans and other debt

168,941


162,115

129,403










Total current liabilities



754,377


669,232

627,860










Non- current liabilities








Long-term bank loans



25,000


-

73,482


Unrecognized tax benefits



8,765


8,787

13,824


Other long-term debt



-


-

39,709


TOTAL LIABILITIES



788,142


678,019

754,875










Shareholders' equity








Common shares



15


15

15


Treasury shares



(13,667)


(10,496)

(7,959)


Additional paid-in capital



511,331


510,894

509,713


Statutory reserves



33,579


33,579

33,579


Retained earnings



212,080


185,172

99,280


TOTAL SHAREHOLDERS' EQUITY



743,338


719,164

634,628










Non-controlling interest



-


-

1,111










TOTAL EQUITY



743,338


719,164

635,739










TOTAL LIABILITIES AND EQUITY



1,531,480


1,397,183

1,390,614











 

SOURCE Xinyuan Real Estate Co., Ltd.

Copyright 2012 PR Newswire



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