Exhibit 99.1

 

China HGS Reports First Quarter of Fiscal Year 2019 Results


HANZHONG, CHINA – February 14 2019 – 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 first quarter of fiscal 2019 ended December 31, 2018 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 first quarter of fiscal 2019 were approximately $7.7 million, a decrease of 46.4% from approximately $14.4 million in the same quarter of fiscal 2018 due to less gross floor area sold during the current quarter.

 

lNet income for the first quarter of fiscal 2019 totaled approximately $0.5 million, a decrease of approximately 59.8% from the net income of approximately $1.2 million in the same period of last year.

 

lBasic and diluted net earnings per share (“EPS”) attributable to shareholders for the first quarter of fiscal 2019 were $0.01, compared to $0.03 for the same quarter of the 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, 2018, 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

 

 

 

 

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

  

   December 31,   September 30, 
   2018   2018 
ASSETS          
Current assets:          
Cash  $1,020,954   $3,267,020 
Restricted cash   3,765,220    3,508,557 
Contract receivables   10,933,593    12,582,965 
Real estate property development completed   58,359,777    58,999,178 
Real estate property under development   57,211,691    60,128,554 
Other current assets   1,567,545    1,408,826 
           
Total current assets   132,858,780    139,895,100 
           
Property, plant and equipment, net   697,603    718,366 
Real estate property development completed, net of current portion   1,216,321    1,217,650 
Security deposits   8,287,732    8,296,782 
Real estate property under development, net of current portion   215,610,918    215,431,915 
Due from local government for real estate property development completed   2,833,771    2,836,865 
           
Total Assets  $361,505,125   $368,396,678 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Construction loans  $72,028,216   $55,610,803 
Accounts payables   20,394,271    20,507,128 
Other payables   5,026,946    4,894,774 
Construction deposits   1,877,520    1,879,570 
Contract liabilities   6,202,762    5,844,189 
Customer deposits   18,359,022    20,234,072 
Shareholder loans   2,141,748    2,142,110 
Accrued expenses   2,923,409    3,006,150 
Taxes  payable   14,656,593    15,492,902 
           
Total current liabilities   143,610,487    129,611,698 
           
Deferred tax liabilities   2,235,352    2,068,257 
Tax payable - long term   4,955,367    4,960,779 
Customer deposits, net of current portion   1,912,588    1,914,677 
Construction loans, less current portion   45,531,384    66,885,378 
Construction deposits, net of current portion   1,276,659    1,278,053 
           
Total liabilities   199,521,837    206,718,842 
           
Commitments and Contingencies          
Stockholders' equity          
Common stock, $0.001 par value, 100,000,000 shares authorized, 45,050,000 shares issued and outstanding December 31, 2018 and September 30, 2018   45,050    45,050 
Additional paid-in capital   129,907,805    129,907,805 
Statutory surplus   9,925,794    9,925,794 
Retained earnings   31,287,262    30,803,052 
Accumulated other comprehensive deficit   (9,182,623)   (9,003,865)
Total stockholders' equity   161,983,288    161,677,836 
           
Total Liabilities and Stockholders' Equity  $361,505,125   $368,396,678 
           

 

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

(Unaudited)

  

   Three months ended December 31, 
   2018   2017 
Real estate sales  $7,737,196   $14,447,571 
Less: Sales tax   (142,111)   (25,216)
Cost of real estate sales   (5,923,184)   (12,000,541)
Gross profit   1,671,901    2,421,814 
Operating expenses          
Selling and distribution expenses   169,974    316,742 
General and administrative expenses   470,932    357,429 
Total operating expenses   640,906    674,171 
Operating income   1,030,995    1,747,643 
Interest expense, net   (105,231)   (128,621)
Other expense   (273,153)   - 
Income before income taxes   652,611    1,619,022 
Provision for income taxes   168,401    413,750 
Net income   484,210    1,205,272 
Other Comprehensive income          
Foreign currency translation adjustment   (178,758)   3,729,087 
Comprehensive income  $305,452   $4,934,359 
Basic and diluted income per common share          
Basic and diluted  $0.01   $0.03 
Weighted average common shares outstanding          
Basic and diluted   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)

  

   Three months ended December 31, 
   2018   2017 
Cash flows from operating activities          
Net income  $484,210   $1,205,272 
Adjustments to reconcile net income to net cash provided by operating activities:          
Deferred tax provision   168,401    145,714 
Depreciation   19,869    412,078 
Stock based compensation   -    14,900 
Changes in assets and liabilities:          
Contract receivables   1,626,468    (850,656)
Real estate property development completed   571,816    5,976,747 
Real estate property under development   2,423,593    (4,361,705)
Other current assets   (159,357)   236,266 
Accounts payables   (89,978)   (1,719,070)
Other payables   136,739    237,946 
Contract liabilities   362,900    429,205 
Customer deposits   (1,842,581)   492,982 
Construction deposits   -    (6,230)
Accrued expenses   (79,484)   (86,445)
Taxes payable   (552,602)   (61,119)
Net cash provided by operating activities   3,069,994    2,065,885 
           
Cash flow from investing activities          
Purchases of fixed assets   -    (390,392)
Net cash used in investing activities   -    (390,392)
           
Cash flow from financing activities          
Net proceeds (repayments) of shareholder loans   485,552    (122,484)
Repayments of bank loans   (5,261,559)   (863,438)
Net cash used in financing activities   (4,776,007)   (985,922)
           
Effect of changes of foreign exchange rate on cash and restricted cash   (283,390)   117,885 
Net increase (decrease) in cash and restricted cash   (1,989,403)   807,456 
Cash and restricted cash , beginning of period   6,775,577    4,716,604 
Cash and restricted cash, end of period  $4,786,174   $5,524,060 
Supplemental disclosures of cash flow information:          
Interest paid  $1,786,958   $1,481,263 
Income taxes paid  $102,591   $98,906 
           
Reconciliation to amounts on condensed consolidated balance sheets:          
Cash  $1,020,954   $2,694,175 
Restricted  $3,765,220   $2,829,885 
Total cash and restricted cash  $4,786,174   $5,524,060 

  

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

 

 

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