EX-99.1 2 v472780_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

Xinyuan Real Estate Co., Ltd. Announces Second Quarter 2017 Financial Results

 

 BEIJING, China, August 11, 2017 - Xinyuan Real Estate Co., Ltd. (“Xinyuan” or the “Company”) (NYSE: XIN), an NYSE-listed real estate developer and property manager primarily in China and recently in other countries, today announced its unaudited financial results for the second quarter ended June 30, 2017.

 

Second Quarter 2017 Highlights

 

·Contract sales increased 54.4% to US$732.4 million from US$474.4 million in the second quarter of 2016 and increased 139.8% from US$305.4 million in the first quarter of 2017.

 

·Total revenue increased 29.6% to US$488.2 million from US$376.6 million in the second quarter of 2016 and increased 73.9% from US$280.7 million in the first quarter of 2017.

 

·Gross profit increased 39.6% to US$107.9 million (or 22.1% of total revenue) from US$77.3 million (or 20.5% of total revenue) in the second quarter of 2016, and increased 72.4% from US$62.6 million (or 22.3% of total revenue) in the first quarter of 2017.

 

·Selling, General and Administrative (“SG&A”) expenses as a percentage of total revenue decreased to 9.9% from 10.9% in the second quarter of 2016 and decreased from 12.6% in the first quarter of 2017.

 

·Net income was US$20.6 million, compared to US$27.8 million in the second quarter of 2016 and US$7.4 million in the first quarter of 2017.

 

·Diluted net earnings per American Depositary Share (“ADS”) attributable to shareholders were US$0.14, compared to US$0.39 in the second quarter of 2016 and US$0.11 in the first quarter of 2017.

 

·The Company repurchased through its share repurchase program 952,231 ADSs at a total cost of approximately US$4.7 million in the second quarter of 2017.

 

Mr. Yong Zhang, Xinyuan’s Chairman, stated, “Our second quarter results were generally in line with our expectations under the current government’s restrictive policies impacting China’s overall housing market. We achieved 54.4% contract sales growth and 29.6% revenue growth compared to the same quarter last year, which was attributable to strong and solid performance of our active projects.

 

We were also pleased to increase our number of strategic land acquisitions. During the second quarter, we increased our presence in several existing markets where we have a sound track record, including Zhengzhou, Xi’an and Kunshan, and established our presence in a new market with national geographical significance — Zhuhai, an important location in the “Guangdong-Hong Kong-Macao Greater Bay Area”. A total of five new projects with an aggregate GFA of 795,000 square meters were acquired in the second quarter, which we expect to support our growth in the years to come.

 

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Furthermore, we are pleased to pay our 22nd consecutive quarterly dividend. The ongoing US$40 million share repurchase as well as the full redemption of our outstanding US$200 million senior notes in early July also demonstrate our commitment to delivering value to our shareholders,” concluded Mr. Zhang.

 

Second Quarter 2017 Financial Results

 

Contract Sales

 

Contract sales in China totaled US$711.8 million in the second quarter compared to US$474.4 million in the second quarter of 2016 and US$240.8 million in the first quarter of 2017.

 

The Company’s GFA sales in China were 409,700 square meters in the second quarter of 2017 compared to 344,600 square meters in the second quarter of 2016 and 140,300 square meters in the first quarter of 2017.

 

The ASP per square meter sold in China was RMB11,946 (US$1,739) in the second quarter of 2017 compared to RMB8,992 (US$1,377) in the second quarter of 2016 and RMB11,820 (US$1,717) in the first quarter of 2017.

 

Contract sales in the United States totaled US$20.6 million in the second quarter of 2017.

 

The Company commenced pre-sales of one new project in the second quarter of 2017, Xingyang Splendid III, which contributed 3.8% of total GFA sales.

 

Breakdown of GFA Sales and ASPs by Project in China

 

Project Q2 2016 Q1 2017 Q2 2017 Unsold
GFA ASP GFA ASP GFA ASP GFA
(m2 '000s) (RMB) (m2 '000s) (RMB) (m2 '000s) (RMB) (m2 '000s)
Zhengzhou Xin City -0.1 13,136 0.2 52,821 0.1 4,005 5.3
Zhengzhou Thriving Family 0.1 10,446 0.3 5,913 - - 15.7
Xingyang Splendid I 2.1 5,281 6.2 6,626 0.4 7,115 28.9
Xingyang Splendid II 8.6 5,253 8.6 6,710 15.4 5,265 58.8
Kunshan Royal Palace 29.0 15,586 2.3 21,222 5.3 24,173 8.8
Suzhou Lake Royal Palace 10.6 21,575 2.8 19,906 3.8 20,094 10.5
Jinan Xinyuan Splendid 1.3 9,499 0.2 4,417 0.2 4,263 8.8
Jinan Royal Palace 32.0 6,874 22.4 9,280 13.2 10,508 164.9
Xuzhou Colorful City 2.9 9,895 1.7 15,131 2.8 13,385 47.1
Beijing Xindo Park -0.3 31,469 0.1 19,697 0.2 4,235 10.4
Chengdu Thriving Family 30.7 5,639 4.7 11,277 6.0 19,194 54.6
Changsha Xinyuan Splendid 39.2 6,355 9.7 9,050 28.2 9,521 24.6
Sanya Yazhou Bay No.1 4.2 12,438 26.3 15,432 8.1 15,888 65.6
Xi’an Metropolitan 21.7 7,133 3.1 8,889 9.5 9,553 65.3
Shanghai Royal Palace 7.0 30,594 -0.1 28,707 - - 11.4
Zhengzhou Xindo Park 10.2 6,448 13.2 6,342 22.9 6,998 37.1
Jinan Xin Central 11.9 10,793 6.8 11,777 8.3 13,928 65.0
Henan Xin Central I 29.9 8,083 0.5 11,568 3.4 16,229 53.7
Zhengzhou Fancy City I 29.0 8,970 0.8 21,739 2.6 19,015 29.2
Zhengzhou Fancy City II (South) 5.6 8,897 10.1 12,394 7.6 12,649 13.3
Tianjin Spring Royal Palace 68.5 7,429 -0.1 6,844 11.0 11,118 157.7
Kunshan Xindo Park - - 4.4 18,244 10.6 20,523 42.5
Zhengzhou International New City I - - 0.9 10,834 207.4 12,084 102.1
Henan Xin Central II - - 15.0 10,955 27.2 11,293 58.6
Xingyang Splendid III - - - - 15.5 6,981 108.1
Others 0.5 - 0.2 - - - 3.2
Total 344.6 8,992 140.3 11,820 409.7 11,946 1,251.2

 

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Revenue

In the second quarter of 2017, the Company’s total revenue increased 29.6% to US$488.2 million from US$376.6 million in the second quarter of 2016 and increased 73.9% from US$280.7 million in the first quarter of 2017.

 

Gross Profit

Gross profit for the second quarter of 2017 was US$107.9 million, or 22.1% of revenue, compared to a gross profit of US$77.3 million, or 20.5% of revenue, in the second quarter of 2016 and a gross profit of US$62.6 million, or 22.3% of revenue, in the first quarter of 2017.

 

Selling, General and Administrative Expenses

SG&A expenses were US$48.2 million for the second quarter of 2017 compared to US$41.0 million for the second quarter of 2016 and US$35.5 million for the first quarter of 2017. As a percentage of total revenue, SG&A expenses were 9.9% compared to 10.9% in the second quarter of 2016 and 12.6% in the first quarter of 2017.

 

Net Income

Net income for the second quarter of 2017 was US$20.6 million compared to US$27.8 million for the second quarter of 2016 and US$7.4 million for the first quarter of 2017. Net margin was 4.2%, compared to 7.4% in the second quarter of 2016 and 2.6% in the first quarter of 2017. Diluted earnings per ADS were US$0.14, compared to US$0.39 per ADS in the second quarter of 2016 and US$0.11 per ADS in the first quarter of 2017.

 

The lower net income compared with the second quarter of 2016 was mainly due to (i) an increase in selling and distribution expenses related to commercial sales under a more challenging market environment, (ii) an increase in the un-capitalized portion of the Company’s interest expenses due to some debt not yet allocated into real estate projects, and (iii) a one-time Land Value-Added Tax (LVAT) refund of approximately US$9 million in the prior year period related to a final settlement at one of the Company’s projects.

 

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Balance Sheet

As of June 30, 2017, the Company’s cash and cash equivalents (including restricted cash) increased to US$1,276.8 million from US$1,245.9 million as of March 31, 2017. Total debt outstanding was US$2,647.8 million, which reflected an increase of US$320.7 million compared to US$2,327.1 million at the end of the first quarter of 2017. The balance of the Company’s real estate properties under development at the end of the second quarter of 2017 was US$2,135.2 million, compared to US$1,848.5 million at the end of the first quarter of 2017.

 

Real Estate Project Status in China

 

Below is a summary table of projects that were active and available for sale in the second quarter of 2017.

 

Project GFA Contract Sales  Project Cost % Complete  
(m2 '000s) (US$ millions)  
Total Active Project Sold to date Total Active Project Sales to date % Sold  
 
Zhengzhou Xin City 211.1 205.8 345.1 315.4 91.4% 98.2%  
Zhengzhou Thriving Family 131.5 115.8 148.3 122.4 82.5% 96.7%  
Xingyang Splendid I 117.4 88.5 90.7 68.8 75.9% 75.7%  
Xingyang Splendid II 137.2 78.4 137.3 67.1 48.9% 58.6%  
Kunshan Royal Palace 280.0 271.2 467.9 431.7 92.3% 95.2%  
Suzhou Lake Royal Palace 169.6 159.1 349.3 297.7 85.2% 99.6%  
Jinan Xinyuan Splendid 572.2 563.4 722.2 716.0 99.1% 99.5%  
Jinan Royal Palace 449.7 284.8 638.0 301.8 47.3% 76.2%  
Xuzhou Colorful City 130.2 83.1 193.1 115.7 59.9% 83.4%  
Beijing Xindo Park 133.1 122.7 435.8 364.7 83.7% 99.8%  
Chengdu Thriving Family 211.4 156.8 363.1 151.7 41.8% 96.5%  
Changsha Xinyuan Splendid 251.6 227.0 345.0 223.2 64.7% 90.0%  
Sanya Yazhou Bay No.1 117.2 51.6 288.3 109.3 37.9% 86.2%  
Xi’an Metropolitan 290.7 225.4 459.5 233.9 50.9% 97.4%  
Shanghai Royal Palace 57.8 46.4 273.0 170.5 62.5% 99.3%  
Zhengzhou Xindo Park 144.4 107.3 192.3 113.0 58.8% 84.5%  
Jinan Xin Central 194.7 129.7 347.8 191.7 55.1% 82.2%  
Henan Xin Central I 262.2 208.5 351.2 254.0 72.3% 75.7%  
Zhengzhou Fancy City I 166.8 137.6 229.6 180.2 78.5% 67.0%  
Zhengzhou Fancy City II (South) 84.1 70.8 142.2 109.7 77.1% 63.3%  
Tianjin Spring Royal Palace 278.6 120.9 484.5 141.7 29.2% 47.7%  
Kunshan Xindo Park 89.0 46.5 265.5 128.7 48.5% 68.7%  
Zhengzhou International New City I 360.5 258.4 648.5 444.2 68.5% 39.1%  
Henan Xin Central II 109.8 51.2 178.5 83.0 46.5% 53.6%  
Xingyang Splendid III 123.5 15.4 135.2 15.7 11.6% 33.7%  
Others remaining GFA 3.2             
Total active projects 5,077.5 3,826.3 8,231.9 5,351.8 65.0% 78.5%  

 

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As of June 30, 2017, the Company’s total saleable GFA was approximately 2,947,100 square meters for active projects and under planning stage projects in China. Below is a summary of all of the Company’s planning stage projects:

 

 

Unsold GFA

(m2 '000s)

Pre-sales

Scheduled

 
   
Zhengzhou Fancy City II(North) 119.6 Q3 2017  
Zhengzhou International New City II 175.7 Q3 2017  
Beijing Liyuan project 102.3 To be determined  
Changsha Mulian Royal Palace 93.3 Q3 2017  
Zhengzhou International New City III 337.0 To be determined  
Changsha Renmin East Road project 73.0 To be determined  
Xian Aerospace City Project 226.0 To be determined  
Zhengzhou Heizhuzhuang Project 340.0 To be determined  
Kunshan Zhongyu Project 113.0 To be determined  
Zhengzhou International New City IV 46.0 To be determined  
Zhuhai Prince Project 70.0 To be determined  
Total projects under planning 1,695.9    
Total active projects 1,251.2    
Total of all Xinyuan unsold projects in China 2,947.1    

  

Real Estate Project Update in the United States

 

In the second quarter of 2017, our Oosten project in Brooklyn, New York recognized revenue of approximately US$21 million. As of June 30, 2017, we had sold and closed a total of 161 units out of 216 total units and revenue from this project had reached US$238 million. The construction loan for this project was fully paid off. As a testament to this project’s success in the New York market, the Oosten project was recently awarded the “Best Residential Condominium Building” award by the Brooklyn Chamber of Commerce at the 2017 Building Brooklyn Awards, which represents the first win by a non-US-based developer in the award’s history.

 

During the second quarter of 2017, local market demand and price trends remained stable in both Manhattan and Brooklyn. Both saw modest year-on-year unit price increases, with Brooklyn enjoying slightly higher increases.

 

The Company is continuing its foundation work for its second New York City project which is located in midtown Manhattan.

 

The Company continues to execute its planning, governmental approvals and pre-development of its ground-up development project located in Queens, New York.

 

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Conference Call Information

The Company will hold a conference call at 8:00 am ET on August 11, 2017 to discuss second quarter 2017 results. Listeners may access the call by dialing:

 

US Toll Free: 1-888-857-6931
China: +86-400-120-2694
International: 1-719-457-2601

 

A webcast will also be available through the Company's investor relations website at http://ir.xyre.com.

 

A replay of the call will be available through August 18, 2017 by dialing:

 

US: 1-844-512-2921
International: 1-412-317-6671
Access code: 4856564

 

About Xinyuan Real Estate Co., Ltd.

Xinyuan Real Estate Co., Ltd. (“Xinyuan”) is an NYSE-listed real estate developer and property manager primarily in China and recently in other countries. In China, Xinyuan develops and manages large scale, high quality real estate projects in over ten tier one and tier two cities, including Beijing, Shanghai, Zhengzhou, Jinan, Xi’an, Suzhou, among others. Xinyuan was one of the first Chinese real estate developers to enter the U.S. market and over the past few years has been active in real estate development in New York. Xinyuan aims to provide comfortable and convenient real estate related products and services to middle-class consumers. For more information, please visit http://www.xyre.com.

 

Forward Looking Statements

Certain statements in this press release constitute “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 includes statements about estimated financial performance and sales performance and activity, among others, and can generally be identified by terminology such as “will”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar statements. Statements that are not historical statements 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, our ability to continue to implement our business model successfully; our ability to secure adequate financing for our project development; our ability to successfully sell or complete our property projects under construction and planning; our ability to enter successfully into new geographic markets and new business lines and expand our operations; the marketing and sales ability of our third-party sales agents; the performance of our third-party contractors; the impact of laws, regulations and policies relating to real estate developers and the real estate industry in the countries in which we operate; our ability to obtain permits and licenses to carry on our business in compliance with applicable laws and regulations; competition from other real estate developers; the growth of the real estate industry in the markets in which we operate; fluctuations in general economic and business conditions in the markets in which we operate; 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, 2016. Except as required by law, we undertake no obligation to update or review publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statement is made.

 

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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:

 

Xinyuan Real Estate Co., Ltd.

Mr. Joe Xu
Investor Relations Deputy Director
Tel: +86 (10) 8588-9376

Email: irteam@xyre.com

 

ICR, LLC

In U.S.: +1-646-308-1472

In China: +86 (10) 6583-7511

Email: William.zima@icrinc.com

 

Media:

Edmond Lococo

In China: +86 (10) 6583-7510

Email: Edmond.Lococo@icrinc.com

 

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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 
   June 30,   March 31,   June 30, 
   2017   2017   2016 
   (unaudited)   (unaudited)   (unaudited) 
             
Total revenue   488,165    280,714    376,623 
                
Total costs of revenue   (380,242)   (218,147)   (299,317)
Gross profit   107,923    62,567    77,306 
                
Selling and distribution expenses   (18,219)   (10,488)   (8,801)
General and administrative expenses   (29,965)   (25,017)   (32,197)
                
Operating income   59,739    27,062    36,308 
                
Interest income   4,375    2,599    4,223 
Interest expense   (20,195)   (9,325)   (5,063)
Net realized gain on short-term investments   2,257    588    807 
Unrealized gain/(loss) on short-term investments   524    1,254    (153)
Other income   -    159    4,101 
Exchange (loss)/gains   (46)   (51)   182 
Share of loss of equity investees   (265)   (243)   (641)
                
Income from operations before income taxes   46,389    22,043    39,764 
                
Income taxes   (25,769)   (14,625)   (11,960)
                
Net income   20,620    7,418    27,804 
Net (income)/loss attributable to non-controlling interest   (11,698)   42    (1,278)
Net income attributable to Xinyuan Real Estate Co., Ltd. shareholders   8,922    7,460    26,526 
                
Earnings per ADS:               
Basic   0.14    0.12    0.40 
Diluted   0.14    0.11    0.39 
ADS used in computation:               
Basic   64,324    63,995    66,005 
Diluted   65,622    64,944    68,164 

 

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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)

       

   Six months ended 
   June 30,   June 30, 
   2017   2016 
   (unaudited)   (unaudited) 
         
Total revenue   768,879    612,007 
           
Total costs of revenue   (598,389)   (485,807)
Gross profit   170,490    126,200 
           
Selling and distribution expenses   (28,707)   (16,922)
General and administrative expenses   (54,982)   (55,605)
           
Operating income   86,801    53,673 
           
Interest income   6,974    12,694 
Interest expense   (29,520)   (10,063)
Net realized gain on short-term investments   2,845    916 
Unrealized gain on short-term investments   1,778    767 
Other income   159    4,108 
Exchange (loss)/gains   (97)   236 
Share of loss of an equity investee   (508)   (599)
           
Income from operations before income taxes   68,432    61,732 
           
Income taxes   (40,394)   (27,033)
           
Net income   28,038    34,699 
Net income attributable to non-controlling interest   (11,656)   (2,054)
Net income attributable to Xinyuan Real Estate Co., Ltd. shareholders   16,382    32,645 
           
Earnings per ADS:          
Basic   0.26    0.49 
Diluted   0.25    0.47 
ADS used in computation:          
Basic   64,159    67,309 
Diluted   65,779    69,492 

 

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XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

   June 30,   March 31,   December 31, 
   2017   2017   2016 
   (unaudited)   (unaudited)   (audited) 
ASSETS               
Current assets               
Cash and cash equivalents   955,209    916,029    578,244 
Restricted cash   321,615    329,909    328,499 
Short-term investments   49,686    41,113    39,311 
Accounts receivable   27,669    26,884    32,704 
Other receivables   38,714    31,804    31,822 
Deposits for land use rights   80,376    100,804    153,252 
Other deposits and prepayments   492,429    276,914    525,263 
Advances to suppliers   38,569    30,433    27,457 
Real estate properties development completed   381,238    429,254    477,179 
Real estate properties under development   2,135,226    1,848,471    1,719,135 
Amounts due from related parties   6,155    20,284    17,732 
Amounts due from employees   1,582    2,277    621 
Other current assets   704    140    226 
                
Total current assets   4,529,172    4,054,316    3,931,445 
                
Real estate properties held for lease, net   191,021    163,541    159,874 
Property and equipment, net   33,455    33,610    34,090 
Other long-term investment   9,099    8,938    242 
Investment in joint ventures   7,502    7,541    7,556 
Deferred tax assets   50,190    49,701    49,690 
Deposits for land use rights   29,523    28,988    28,831 
Other assets   57,060    24,740    24,717 
                
TOTAL ASSETS   4,907,022    4,371,375    4,236,445 

 

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XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

   June 30,   March 31,   December 31, 
   2017   2017   2016 
   (unaudited)   (unaudited)   (audited) 
LIABILITIES AND               
SHAREHOLDERS’ EQUITY               
Current liabilities               
Accounts payable and notes payable   482,009    423,413    524,663 
Short-term bank loans and other debt   109,856    130,448    178,576 
Customer deposits   173,326    168,829    150,545 
Income tax payable   102,736    106,396    120,573 
Other payables and accrued liabilities   242,940    208,466    199,661 
Payroll and welfare payable   12,247    4,626    19,522 
Current portion of long-term bank loans and other debt   1,074,467    574,802    704,695 
Current maturities of capital lease obligations   4,314    3,945    3,923 
Mandatorily redeemable non-controlling interests   12,916    -    12,614 
Amounts due to related parties   69,307    67,949    66,230 
                
Total current liabilities   2,284,118    1,688,874    1,981,002 
                
Non-current liabilities               
Long-term bank loans   363,898    350,887    235,885 
Other long term debt   1,099,563    1,270,978    974,791 
Deferred tax liabilities   172,763    105,086    93,107 
Unrecognized tax benefits   20,494    20,492    20,492 
Capital lease obligations, net of current maturities   13,093    14,876    15,016 
Due to related parties   1,543    -    - 
TOTAL LIABILITIES   3,955,472    3,451,193    3,320,293 
                
Shareholders’ equity               
Common shares   16    16    16 
Treasury shares   (65,590)   (60,915)   (53,734)
Additional paid-in capital   542,040    539,763    538,414 
Statutory reserves   95,965    95,965    95,973 
Retained earnings   356,990    354,905    354,274 
Accumulated other comprehensive income   (11,227)   (30,652)   (34,683)
Total Xinyuan Real Estate Co., Ltd. shareholders’ equity   918,194    899,082    900,260 
Non-controlling interest   33,356    21,100    15,892 
Total equity   951,550    920,182    916,152 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   4,907,022    4,371,375    4,236,445 

 

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