BEIJING, Nov. 9 /PRNewswire-Asia/ -- Xinyuan Real Estate Co., Ltd.
("Xinyuan" or "the Company") (NYSE:XIN), a residential real estate
developer with a focus on high growth, strategic Tier II cities in
China, today announced its unaudited financial results for the
third quarter ended September 30, 2009. Highlights for the Third
Quarter 2009 -- Total revenues were US$128.2 million, compared to
US$91.8 million in the second quarter of 2009 and US$83.0 million
for the same period of 2008. -- Contract sales totaled US$159.0
million in the third quarter of 2009 versus US$100.5 million in the
second quarter of 2009 and $69.7 million for the third quarter of
2008. -- Total gross floor area ("GFA") sales were 184,500 square
meters, compared to 128,500 square meters in the second quarter of
2009 and 93,900 square meters for the same period of 2008. --
Selling, General, and Administrative ("SG&A") expenses as a
percent of total revenue declined to 7.0% compared to 8.1% in the
second quarter of 2009 and 16.3% for the third quarter of 2008. --
Net income was US$15.4 million, compared to net income of US$3.9
million in the second quarter of 2009 and US$7.9 million for the
same period of 2008. -- Diluted net income per share attributable
to ordinary shareholders was US$0.10, equivalent to US$0.20 per
American Depositary Share ("ADS") compared to diluted net income
per share of US$0.02, equivalent to US$0.04 per ADS in the second
quarter of 2009, and diluted net income per share of US$0.05,
equivalent to US$0.10 per ADS in the third quarter of 2008. -- Cash
and cash equivalents, including restricted cash, increased by
US$67.6 million to US$304.5 million as of September 30, 2009 from
US$236.9 million as of June 30, 2009. -- Debt decreased by US$28.8
million to US$333.0 million compared to US$361.8 million as of June
30, 2009. -- One new land parcel was acquired in September and
three land parcels were acquired in October. -- The Company updates
2009 full year financial guidance "Our third quarter revenue
accelerated significantly on both a sequential and year-over-year
basis as all of our active projects realized growth in average
selling prices ("ASPs") and GFA sales during the quarter. Combined
with the cost reduction actions we have taken over the past several
quarters, we were able to report a significant improvement in our
overall profitability. Our balance sheet also continued to
strengthen as we generated more than US$67 million of cash during
the quarter, while reducing our outstanding borrowings," said Mr.
Yong Zhang, Xinyuan's Chairman and Chief Executive Officer. "The
growth in the Chinese economy is driving urbanization, real estate
demand and further development, and we expect these positive
conditions to continue. Xinyuan is well-positioned against this
favorable backdrop as our strategy continues to focus on
high-quality developments in attractive, high- growth markets."
Financial Results for the Third Quarter For the quarter ended
September 30, 2009, the Company's total revenue using the
percentage of completion method was US US$128.2 million compared to
US$91.8 million in the second quarter ended June 30, 2009 and
US$83.0 million in the third quarter of 2008. The Company GFA sales
were 184,500 square meters in the third quarter of 2009, versus
128,500 square meters in the third quarter of 2009, and 93,900
square meters in the third quarter of 2008. Contract sales totaled
US$159.0 million in the third quarter compared to US$100.5 million
in the second quarter and the average selling price per square
meter sold (ASP) increased by 10.2% reaching RMB5,886 (US$862) for
the third quarter of 2009 compared to RMB5,343 (US$782) for the
second quarter of 2009. Breakdown of GFA Sales and ASP's by Project
Q1 2009 Q2 2009 Q3 2009 Unsold GFA ASP GFA ASP GFA ASP GFA Project
(m2 000) (Rmb) (m2 000) (Rmb) (m2 000) (Rmb) (m2 000) Chengdu
Splendid 6.8 4,100 24.3 4,296 34.9 4,723 151.1 Henan Colorful
Garden 14.9 5,452 32.5 5,674 33.4 6,411 64.0 Kunshan Intl City
Garden 8.9 4,749 36.0 4,864 59.1 5,758 381.8 Shandong Intl City
Garden 10.8 5,402 19.5 5,152 33.6 5,248 25.5 Suzhou Colorful Garden
1.3 7,344 6.7 7,641 11.7 8,384 11.6 Suzhou Intl City Garden 3.1
6,863 8.3 7,515 8.8 8,071 158.8 Others 1.4 10,558 1.1 7,210 3.1
7,002 2.6 Total 47.1 5,405 128.5 5,343 184.5 5,886 795.4 Gross
Profit Gross profit for the third quarter of 2009 was US$26.1
million, or 20.4% of revenue, compared to gross profit of US$15.5
million, or 16.8% of revenue, in the second quarter of 2009 and
US$18.4 million, or 22.2% of revenue, in the third quarter of 2008.
The Company revised total project cost and sales cost estimates for
certain projects such that US$6.6 million of cumulative gross
profit was recognized in the third quarter under the percentage of
completion method due to a change in estimates. This was primarily
driven by a US$12.3 million increase in estimated sales of the
Henan Colorful Garden project as it became clear based on sales
activity in the third quarter that this mature project would exceed
earlier ASP projections. The increase in the sales estimate for
this project resulted in higher gross profit of US$6.4 million.
Selling, General, and Administrative Expenses SG&A expenses
were US$9.0 million for the third quarter of 2009 compared to
US$7.5 million for the second quarter of 2009 and US$13.5 million
for the third quarter of 2008. As a percentage of total revenue,
SG&A expenses declined to 7.0% compared to 8.1% in the second
quarter of 2009 and 16.3% in the third quarter of 2008. Advertising
and promotion expenses increased by US$0.8 million, from US$1.8
million in the second quarter 2009 to US$2.6 million in the third
quarter 2009 as the Company continued to increase traffic and take
advantage of an improved selling environment. Compensation costs
increased by US$0.6 million compared to the second quarter of 2009
due to higher variable compensation as we accrued pro rata for full
annual bonuses as it became evident that the Company would exceed
its 2009 sales targets. Stock-based compensation totaled US$0.8
million in the third quarter of 2009 versus US$0.9 million in the
second quarter of 2009 and US$1.5 million in the third quarter of
2008. Total company headcount was 384 employees as of September 30,
2009, down from 397 as of June 30, 2009 and 645 as of December 31,
2008. Share of Income of Equity Investee In the third quarter of
2009, the Company recognized book income of US$2.3 million from its
45% stake in Zhengzhou Jiantou Xinyuan Real Estate Co. Ltd
("Jiantou Xinyuan") compared to book income of US$2.5 million in
the second quarter of 2009 and book income of US$3.2 million in the
third quarter of 2008. Change in Fair Value of Warrant Liabilities
A decrease in the Company's ADS price from US$6.48 at June 30, 2009
to US$4.64 at September 30, 2009 led to a decrease in the fair
value of outstanding warrants resulting in a non-cash credit to
income of US$1.6 million for the third quarter of 2009. Net Income
Net income for the third quarter 2009 was US$15.4 million compared
to US$3.9 million in the second quarter of 2009 and US$7.9 million
for the same period in 2008. Diluted earnings per share for the
third quarter of 2009 was US$0.10, compared to US$0.02 in the
second quarter of 2009 and US$0.05 for the same period in 2008.
Balance Sheet As of September 30, 2009, the Company reported
US$304.5 million in cash and cash equivalents (including restricted
cash) compared to US$236.9 million as of June 30, 2009. Total debt
outstanding was US$333.0 million, a decrease of US$28.8 million
compared to US$361.8 million at the end of the second quarter of
2009. Real estate property under development was US$495.8 million
as of September 30, 2009 compared to US$584.4 million as of June
30, 2009 and US$725.5 million as of September 30, 2008. Update on
Share Transfer of Jiantou Xinyuan Joint Venture On September 30,
the Company announced its wholly owned subsidiary, Henan Xinyuan
Real Estate Co., Ltd. ("Xinyuan China"), signed an agreement to
acquire the remaining 55% equity interest in Jiantou Xinyuan it
does not already own. Following the completion of the transaction,
Jiantou Xinyuan ("JianXin") will become an indirect, wholly-owned
subsidiary of the Company. Since the other two parties of the joint
venture are state-owned enterprises, the transaction is subject to
the governmental approval process for state- owned assets. Xinyuan
China has submitted the required documents to the local State-owned
Assets Supervision and Administration Commission (SASAC) for
approval. The Company expects to receive SASAC approval by the end
of the 2009, allowing completion of the transaction. As of
September 30, 2009 JianXin had three active projects with
approximately 78,000 square meters unsold GFA and one project under
planning with a GFA of approximately 198,000 square meters. Land
Acquisition and Land Bank Reserve The Company contracted to acquire
one land parcel during the third quarter and an additional three
land parcels in October 2009. The total site area of the new land
acquisitions is approximately 325,000 square meters and total
expected buildable GFA is approximately 888,000 square meters. As
of November 9, 2009, the Company's total land bank is approximately
1,379,000 square meters of buildable GFA, including new
acquisitions and projects under planning in Chengdu (219,000 m2)
and Zhengzhou (265,000 m2) but excluding active projects and
Jiantou Xinyuan's land bank. Location Acquisition Site Area Total
GFA Land Price Date (m2) (m2) Rmb M US$ M Rmb per GFA m2 Zhengzhou
2009-9-23 22,417 77,825 138.1 20.2 1,775 Zhengzhou 2009-10-23
56,100 190,152 395.0 57.9 2,077 Xuzhou 2009-10-27 46,777 93,100
212.5 31.1 2,282 Jinan 2009-10-29 200,180 526,990 1,136.0 166.4
2,156 Total 325,474 888,067 1,881.6 275.7 The table below sets out
similar information about JianXin's projects under planning,
assuming Xinyuan China completes the acquisition of JianXin by the
end of 2009. Location Acquisition Site Area Total GFA Land Price
Date (m2) (m2) Rmb M US$ M Rmb per GFA m2 Zhengzhou Est 12/31/09
81,415 198,400 253.9 37.2 1,280 2009 Outlook Fourth quarter 2009
GFA sales are expected to range from 150,000 to 160,000 square
meters, down slightly from the third quarter 2009 due to an
expected seasonal softening in December. Fourth quarter contract
sales are expected to reach US$135 million to US$145 million.
Fourth quarter revenue using the percentage of completion method is
expected to total US$120 million to US$130 million and net income
is expected to be in the range of US$9 million to US$11 million.
Full year 2009 GFA sales are expected to range from 510,000 to
520,000 square meters. Fiscal 2009 contract sales are expected to
total approximately US$430 million to US$440 million. Fiscal 2009
revenue using the percentage of completion method is expected to
range from US$380 million to US$390 million. Fiscal 2009 net income
is expected to be in the range of US$29 million to US$31 million.
Mr. Zhang commented, "We have made considerable progress over the
past two months in building our growth pipeline for 2010 and
beyond. We acquired two parcels of land in Zhengzhou, bolstering
our presence in this high-growth market where we have realized
solid returns. Combined with our recent acquisition of two parcels
of land in Xuzhou and Jinan, the four new parcels we have acquired
since September will increase our future land bank by approximately
325,000 square meters and are expected to generate GFA sales of
approximately 880,000 square meters. We also entered into an
agreement to acquire the remaining interest in our Jiantou Xinyuan,
which would increase the size of our buildable GFA by an additional
198,000 square meters. We are encouraged by the prospects for all
of these projects as we continue to expand our presence in Tier II
markets and position our Company for sustainable, long-term
growth." Percentage of Completion Accounting Most of Xinyuan's
projects recognize revenue under the percentage of completion
method. This requires the Company to re-evaluate its estimates of
future revenues and costs on a quarterly basis project by project.
Cumulative revenue = Cumulative contract sales proceeds x
Cumulative incurred cost ---------------------------- Total
estimated project cost Cumulative cost of sales = Cumulative
contract sales x Cumulative incurred cost
------------------------------- Total estimated project revenue
Whenever Xinyuan makes changes to expected total project life
profit margins, a "catch-up" adjustment must be made in the quarter
of change to account for the difference between profit previously
recognized using the previous profit margin estimate and the
comparable profit using the new profit margin estimates. Further,
if the updated profit margin indicates that the Company will have
to sell units at a price less than its costs to develop them, it
must recognize the full expected gross loss over the life of the
project at that time regardless of whether the units have been
sold. Additionally for such unprofitable projects the Company must
also determine whether an impairment exists, and, if so, write down
the cost to the fair value of the project which, in turn, may be
less than the basis after recognizing the effect of future losses.
Except as discussed above with respect to the Zhengzhou Colorful
Garden project, there were no significant changes in estimates in
the third quarter of 2009. Conference Call Information Xinyuan's
management will host an earnings conference call on November 9,
2009 at 8:00 a.m. U.S. Eastern Time. Listeners may access the call
by dialing 1-719-457-2643. 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 1-719-457-0820, access
code: 4240623. About Xinyuan Real Estate Co., Ltd. Xinyuan Real
Estate Co., Ltd. (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 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 34.5 million people in six strategically
selected Tier II cities, comprising of Hefei, Jinan, Kunshan,
Suzhou, Zhengzhou, Chengdu and Xuzhou. 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; 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; our results of operations may fluctuate from period to
period; the market price of our ADSs may be volatile; we may not be
able to successfully acquire the remaining 55% equity interest in
Jiantou Xinyuan, and other risks outlined in our public filings
with the Securities and Exchange Commission, including our annual
report on Form 20-F for the year ended December 31, 2008. All
information provided in this press release is as of November 9,
2009. 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: Ms.
Helen Zhang Director of Investor Relations Tel: +86-10-8588-9255
Email: In the United States: Mr. Bill Zima ICR, LLC Tel:
+1-203-682-8200 Email: Ms. Kate Messmer ICR, LLC Tel:
+1-203-682-8338 Email: (Financial Tables to Follow) 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, 2009 2009 2008 Revenue
128,180 91,767 82,951 Cost of revenue (102,095) (76,316) (64,569)
Gross profit 26,085 15,451 18,382 Selling and distribution expenses
(3,044) (2,377) (5,251) General and administrative expenses (5,923)
(5,079) (8,249) Operating income 17,118 7,995 4,882 Interest income
623 499 559 Share of income in an equity investee 2,298 2,491 3,186
Exchange gains/ (losses) 30 42 668 Other expenses (383) -- --
Change in fair value of warrant liabilities 1,585 (1,613) 2,026
Income from operations before income taxes 21,271 9,414 11,321
Income taxes (5,862) (5,538) (3,536) Net income 15,409 3,876 7,785
Earnings per share: Basic 0.10 0.03 0.05 Diluted 0.10 0.02 0.05
Shares used in computation: Basic 151,363 151,146 149,007 Diluted
160,982 160,754 160,200 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) Nine months ended September 30, September
30, 2009 2008 Revenue 259,886 295,811 Cost of revenue (211,873)
(220,148) Gross profit 48,013 75,663 Selling and distribution
expenses (6,152) (11,257) General and administrative expenses
(14,928) (25,551) Operating income 26,933 38,855 Interest income
1,421 2,806 Share of income in an equity investee 5,820 10,487
Exchange gains 58 4,422 Other expense (383) -- Change in fair value
of warrant liabilities (273) 16,098 Income from operations before
income taxes 33,576 72,668 Income taxes (13,165) (18,759) Net
income 20,411 53,909 Earnings per share: Basic 0.14 0.36 Diluted
0.13 0.34 Shares used in computation: Basic 151,188 148,601 Diluted
160,801 160,680 XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (All US$ amounts and number
of shares data in thousands) September 30, December 31, 2009 2008
(unaudited) ASSETS Current assets Cash and cash equivalents 218,008
135,659 Restricted cash 86,481 57,951 Accounts receivable 4,121
5,320 Other receivables 6,749 20,229 Other deposits and prepayments
38,077 28,989 Advances to suppliers 2,827 733 Real estate property
development completed 326 328 Real estate property under
development 390,199 520,496 Other current assets 2,573 8,308 Total
current assets 749,361 778,013 Real estate property under
development 105,601 102,707 Real estate properties held for lease,
net 14,564 14,851 Property and equipment, net 4,892 5,255 Other
long-term investment 242 242 Interests in an equity investee 25,967
20,157 Deferred tax asset 3,450 6,829 Other assets 5,548 8,112
TOTAL ASSETS 909,625 936,166 XINYUAN REAL ESTATE CO., LTD. AND ITS
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (All US$ amounts
and number of shares data in thousands) September 30, December 31,
2009 2008 (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities Accounts payable 82,339 89,032 Short-term bank loans
165,231 168,967 Customer deposits 8,011 14,252 Income tax payable
6,856 6,263 Deferred tax liabilities 16,833 21,513 Other payables
and accrued liabilities 23,217 20,114 Payroll and welfare payable
1,985 2,210 Warrant liabilities 443 -- Current portion of long-term
debt 76,129 95,638 Total current liabilities 381,044 417,989
Non-Current Liabilities Long-term bank loans 67,653 105,007 Warrant
liabilities -- 170 Unrecognized tax benefits 12,979 12,745 Other
long-term debt 23,953 -- TOTAL LIABILITIES 485,629 535,911
Shareholders' equity Common Shares 15 15 Additional paid-in capital
502,170 499,155 Retained earnings (accumulated deficit) (91,356)
(112,082) Statutory reserves 13,167 13,167 TOTAL SHAREHOLDERS'
EQUITY 423,996 400,255 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
909,625 936,166 DATASOURCE: Xinyuan Real Estate Co., Ltd. CONTACT:
In China, Tom Gurnee, Chief Financial Officer, +86-10-8588-9390, ;
or Helen Zhang, Director of Investor Relations, +86-10-8588-9255, ;
or in the United States, Bill Zima of ICR, LLC, +1-203-682-8200, ;
or Kate Messmer of ICR, LLC, +1-203-682-8338, Web site:
http://www.xyre.com/
Copyright