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

BEIJING, May 18, 2017 /PRNewswire/ -- 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 first quarter ended March 31, 2017.

First Quarter 2017 Highlights

  • Total first quarter revenue increased 19.2% to US$280.7 million from US$235.4 million in the first quarter of 2016.
  • Contract sales increased 9.2% to US$305.4 million from US$279.6 million in the first quarter of 2016.
  • Selling, General and Administrative ("SG&A") expenses as a percent of total revenue decreased to 12.6% from 13.4% in the first quarter of 2016.
  • Net income was US$7.4 million, compared to US$6.9 million in the first quarter of 2016.
  • Diluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$0.11, compared to US$0.09 in the first quarter of 2016.
  • The Company repurchased 1,367,400 ADSs at a total cost of approximately US$7.2 million in the first quarter of 2017.

Mr. Yong Zhang, Xinyuan's Chairman, stated, "Our first quarter results were generally in line with our expectations under the current government's restrictive policies impacting China's overall housing market. We achieved approximately 20% revenue growth which was partially driven by improved average selling prices ("ASP") as well as healthy sales from our Brooklyn, New York-based Oosten project, which contributed over 20% to our total sales this quarter. The majority of our development projects in China performed in line with our budget in the first quarter and we maintained a cautious approach to unit sales volume and operating expenses given the current environment. Among Xinyuan's U.S. projects, our Oosten project has sold 38 units as of the end of the first quarter. Our second New York project, located in Manhattan, began excavation and foundation work, and our third New York project, located in Queens, continues to move through its planning stage for development. 

On the financing front, we closed our offering of US$300 million 7.75% senior notes due 2021 at the end of February to further optimize our financial structure. This transaction in the first quarter is reflective of our focus on improving our debt structure and managing interest payments over the longer term. In addition, our property management service entity, Xinyuan Technology Service Co., Ltd., successfully listed on National Equities Exchange and Quotations (NEEQ) in China in this quarter, which we expect to provide better financing opportunities in the future.

As we look ahead, we continue to develop our planning stage projects more cautiously given the current environment. For the remaining quarters of this year, our goal is to generate positive cash flows from our operations, optimize pricing of our China and U.S.-based unit sales, commence pre-sales for four to five of our new planning stage projects, complete select land acquisitions and move forward with the next stages of development for our New York City-based projects. We are pleased to pay our 21st consecutive quarterly dividend and our recent $40 million share repurchase announcement demonstrates our commitment to delivering value for our shareholders," concluded Mr. Zhang.

First Quarter 2017 Financial Results

Contract Sales

Contract sales in China totaled US$240.8 million in the first quarter compared to US$279.6 million in the first quarter of 2016. The Company's GFA sales in China were 140,300 square meters in the first quarter of 2017 compared to 206,600 square meters in the first quarter of 2016. The ASP per square meter sold in China was RMB11,820 (US$1,717) in the first quarter of 2017 compared to RMB8,839 (US$1,354) in the first quarter of 2016. The ASP increase was due to the product mix of units sold and the Company's strategic adjustment efforts to maintain pricing stability. Contract sales in the United States totaled US$64.6 million in the first quarter of 2017.

Breakdown of GFA Sales and ASPs by Project in China

Project

Q1 2016

Q4 2016

Q1 2017

Unsold

GFA

ASP

GFA

ASP

GFA

ASP

GFA

(m2 000)

(RMB)

(m2 000)

(RMB)

(m2 000)

(RMB)

(m2 000)

Zhengzhou Xin City

0.1

4,393

0.1

-

0.2

52,821

5.4

Zhengzhou Thriving Family

0.2

6,169

0.1

36,188

0.3

5,913

15.7

Xingyang Splendid I

0.5

5,249

3.4

7,221

6.2

6,626

29.2

Xingyang Splendid II

0.9

5,599

21.4

6,213

8.6

6,710

74.1

Kunshan Royal Palace

24.6

11,096

2.0

23,137

2.3

21,222

14.1

Suzhou Lake Royal Palace

15.2

16,718

6.1

21,464

2.8

19,906

14.3

Jinan Xinyuan Splendid

0.7

10,498

0.1

10,878

0.2

4,417

9.0

Jinan Royal Palace

13.3

5,985

29.1

8,798

22.4

9,280

178.1

Xuzhou Colorful City

2.0

11,256

2.5

11,791

1.7

15,131

49.9

Beijing Xindo Park

-

-

1.8

29,098

0.1

19,697

10.6

Chengdu Thriving Family

10.6

5,292

8.5

9,621

4.7

11,277

60.6

Changsha Xinyuan Splendid

24.6

5,486

12.1

9,461

9.7

9,050

52.9

Sanya Yazhou Bay No.1

-

-

2.7

12,723

26.3

15,432

73.7

Xi'an Metropolitan

25.9

6,407

19.4

10,781

3.1

8,889

74.8

Shanghai Royal Palace

5.2

24,649

1.9

37,475

-0.1

28,707

11.5

Zhengzhou Xindo Park

2.0

7,504

22.8

6,419

13.2

6,342

60.0

Jinan Xin Central

12.6

9,089

9.0

12,214

6.8

11,777

73.3

Henan Xin Central I

26.2

7,730

5.5

9,673

0.5

11,568

57.2

Zhengzhou Fancy City I

29.6

8,239

2.8

14,594

0.8

21,739

31.8

Zhengzhou Fancy City II
(South)

-

-

9.6

12,353

10.1

12,394

20.9

Tianjin Spring Royal Palace

12.8

9,032

2.4

6,934

-0.1

6,844

168.7

Kunshan Xindo Park

-

-

0.6

19,060

4.4

18,244

53.1

Zhengzhou International
New City I

-

-

48.6

10,717

0.9

10,834

309.8

Henan Xin Central II

-

-

9.0

10,920

15.0

10,955

85.8

Others

-0.4

-

0.5

-

0.2

-

3.2

Total

206.6

8,839

222.0

10,401

140.3

11,820

1,537.7

Revenue

In the first quarter of 2017, the Company's total revenue increased 19.2% to US$280.7 million from US$235.4 million in the first quarter of 2016.

Gross Profit

Gross profit for the first quarter of 2017 was US$62.6 million, or 22.3% of revenue, compared to a gross profit of US$48.9 million, or 20.8% of revenue, in the first quarter of 2016. Gross profit growth was driven by favorable sales at higher margin Zhengzhou Fancy City II (South), Kunshan Xindo Park, Zhengzhou International New City I and Henan Xin Central II projects which began pre-sale after the first quarter of 2016.

Selling, General and Administrative Expenses

SG&A expenses were US$35.5 million for the first quarter of 2017 compared to US$31.5 million for the first quarter of 2016. As a percentage of total revenue, SG&A expenses were 12.6% compared to 13.4% in the first quarter of 2016. SG&A expenses increased largely due to agency commissions  related to project delivery of New York Oosten.

Net Income

Net income for the first quarter of 2017 was US$7.4 million compared to US$6.9 million for the first quarter of 2016. Net margin was 2.6%, compared to 2.9% in the first quarter of 2016. Diluted earnings per ADS were US$0.11, compared to US$0.09 per ADS in the first quarter of 2016.

Balance Sheet

As of March 31, 2017, the Company's cash and cash equivalents (including restricted cash) increased to US$1,245.9 million from US$906.7 million as of December 31, 2016. Total debt outstanding was US$2,327.1 million, an increase of US$233.2 million, compared to US$2,093.9 million at the end of the fourth quarter of 2016. The balance of the Company's real estate property under development at the end of the first quarter of 2017 was US$1,848.5 million, compared to US$1,719.1 million at the end of the fourth quarter of 2016.

Real Estate Project Status in China

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

Project

GFA

Contract Sales

 Project
Cost %
Complete


(m2 000)

(US$ millions)


Total
Active
Project

Sold to
date

Total
Active
Project

Sales
to date

%
Sold



Zhengzhou Xin City

211.1

205.7

343.3

312.8

91.1%

98.0%


Zhengzhou Thriving Family

131.5

115.8

148.0

122.0

82.4%

92.9%


Xingyang Splendid I

117.3

88.1

90.2

68.2

75.6%

75.6%


Xingyang Splendid II

137.2

63.1

137.0

55.2

40.3%

56.1%


Kunshan Royal Palace

280.0

265.9

466.9

412.4

88.3%

94.3%


Suzhou Lake Royal Palace

169.6

155.3

357.2

286.0

80.1%

99.8%


Jinan Xinyuan Splendid

572.2

563.2

720.7

714.2

99.1%

99.5%


Jinan Royal Palace

449.6

271.5

636.6

276.2

43.4%

73.6%


Xuzhou Colorful City

130.2

80.3

192.7

110.0

57.1%

81.5%


Beijing Xindo Park

133.1

122.5

434.9

363.6

83.6%

100.0%


Chengdu Thriving Family

211.4

150.8

362.3

134.7

37.2%

95.5%


Changsha Xinyuan Splendid

251.7

198.8

344.2

183.7

53.4%

89.6%


Sanya Yazhou Bay No.1

117.2

43.5

287.7

90.5

31.5%

86.4%


Xi'an Metropolitan

290.7

215.9

458.5

222.9

48.6%

97.1%


Shanghai Royal Palace

57.8

46.3

272.4

169.6

62.3%

100.0%


Zhengzhou Xindo Park

144.4

84.4

191.9

89.5

46.6%

82.1%


Jinan Xin Central

194.7

121.4

347.1

174.6

50.3%

74.9%


Henan Xin Central I

262.2

205.0

350.4

241.8

69.0%

68.9%


Zhengzhou Fancy City I

166.8

135.0

229.1

168.8

73.7%

63.2%


Zhengzhou Fancy City II
(South)

84.1

63.2

141.9

95.6

67.4%

58.4%


Tianjin Spring Royal Palace

278.6

109.9

483.5

123.7

25.6%

39.4%


Kunshan Xindo Park

89.0

35.9

265.0

96.9

36.6%

65.2%


Zhengzhou International New
City I

360.7

50.9

647.1

79.3

12.3%

33.5%


Henan Xin Central II

109.8

24.0

178.1

38.2

21.4%

47.5%


Others remaining GFA

3.2

-

-

-

-

-


Total active projects

4,954.1

3,416.4

8,086.7

4,630.4

57.3%

76.4%


As of March 31, 2017, the Company's total sellable GFA was approximately 2,501,600 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 000)

Pre-sales

Scheduled




Zhengzhou Fancy City II (North)

119.6

Q3 2017


Zhengzhou International New City II

175.7

Q3 2017


Xingyang Splendid III

37.4

To be determined


Beijing Liyuan project

102.3

To be determined


Changsha Mulian Royal Palace (Changsha New project)

93.3

Q2 2017


Zhengzhou International New City III

345.6

To be determined


Changsha Renmin East Road project

90.0

To be determined


Total projects under planning

963.9



Total active projects

1,537.7



Total of all Xinyuan projects in China

2,501.6



Real Estate Project Update in the United States

In the first quarter of 2017, our Brooklyn, New York-based Oosten project delivered 38 units with revenue of approximately $65 million. As of the end of March 2017, total units sold and revenue of this project had reached 144 units and $217 million, respectively, and the construction loan had been completely paid off. Most closed buyers had moved in. Also during the first quarter, local market demand and price trends remained healthy in both Manhattan and Brooklyn. Both saw modest year-on-year unit price increases with Brooklyn enjoying slightly higher increases. We also observed a meaningful drop in new condominium inventory year-on-year and quarter-on-quarter in both Manhattan and Brooklyn. In particular, Brooklyn new development condo unit inventory saw a 22% quarter-on-quarter decrease during the first quarter.

Xinyuan's second New York project, located in midtown Manhattan, had completed demolition, and excavation and foundation work had begun. In the first quarter, the Company successfully closed a $108 million construction loan from a major commercial bank.

For our project located in Queens, New York, the company has selected a general contractor and is in the planning stage of the ground-up development. We are also in discussions with several financial institutions regarding construction financing in order to commence construction.

Conference Call Information

The Company will hold a conference call at 8:00 am ET on May 18, 2017 to discuss first quarter 2017 results. Listeners may access the call by dialing:

US:

1-877-723-9517

China:

86-400-120-2694

International:

1-719-325-4771

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 May 25, 2017 by dialing:

US:

1-844-512-2921

International: 

1-412-317-6671

Access code:

3753482

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.

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

 

 

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


March 31,


December 31,


March 31,


2017


2016


2016


(unaudited)


(unaudited)


(unaudited)










Total revenue


280,714



505,340



235,384










Total costs of revenue


(218,147)



(378,507)



(186,490)

Gross profit


62,567



126,833



48,894










Selling and distribution expenses


(10,488)



(22,058)



(8,121)

General and administrative expenses


(25,017)



(30,226)



(23,408)










Operating income


27,062



74,549



17,365










Interest income


2,599



6,107



8,471

Interest expense


(9,325)



(13,236)



(5,000)

Net realized gain on short-term investments


588



198



109

Unrealized gain/(loss) on short-term investments


1,254



(623)



920

Other income


159



459



7

Loss on extinguishment of debt


-



(12,124)



-

Exchange (loss)/gains


(51)



261



54

Share of (loss)/gain of equity investees


(243)



(138)



42










Income from operations before income taxes


22,043



55,453



21,968










Income taxes


(14,625)



(38,735)



(15,073)










Net income


7,418



16,718



6,895

Net income attributable to non-controlling interest


42



(4,588)



(776)

Net income attributable to Xinyuan Real Estate Co., Ltd. shareholders


7,460



12,130



6,119










Earnings per ADS:









Basic


0.12



0.18



0.09

Diluted


0.11



0.18



0.09

ADS used in computation:









Basic


63,995



65,960



68,613

Diluted


64,944



68,928



71,345

 

 

XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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



March 31,


December 31,


2017


2016


(unaudited)


(audited)

ASSETS






Current assets






Cash and cash equivalents


916,029



578,244

Restricted cash


329,909



328,499

Short-term investments


41,113



39,311

Accounts receivable


26,884



32,704

Other receivables


31,804



31,822

Deposits for land use rights


100,804



153,252

Other deposits and prepayments


276,914



525,263

Advances to suppliers


30,433



27,457

Real estate properties development completed


429,254



477,179

Real estate properties under development


1,848,471



1,719,135

Amounts due from related parties


20,284



17,732

Amounts due from employees


2,277



621

Other current assets


140



226







Total current assets


4,054,316



3,931,445







Real estate properties held for lease, net


163,541



159,874

Property and equipment, net


33,610



34,090

Other long-term investment


8,938



242

Investment in joint ventures


7,541



7,556

Deferred tax assets


49,701



49,690

Deposits for land use rights


28,988



28,831

Other assets


24,740



24,717







TOTAL ASSETS


4,371,375



4,236,445

 

 

XINYUAN REAL ESTATE CO., LTD. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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



March 31,


December 31,


2017


2016


(unaudited)


(audited)

LIABILITIES AND






SHAREHOLDERS' EQUITY






Current liabilities






Accounts payable and notes payable


423,413



524,663

Short-term bank loans and other debt


130,448



178,576

Customer deposits


168,829



150,545

Income tax payable


106,396



120,573

Other payables and accrued liabilities


208,466



199,661

Payroll and welfare payable


4,626



19,522

Current portion of long-term bank loans and other debt


574,802



704,695

Current maturities of capital lease obligations


3,945



3,923

Mandatorily redeemable non-controlling interests


-



12,614

Amounts due to related parties


67,949



66,230







Total current liabilities


1,688,874



1,981,002







Non- current liabilities






Long-term bank loans


350,887



235,885

Other long term debt


1,270,978



974,791

Deferred tax liabilities


105,086



93,107

Unrecognized tax benefits


20,492



20,492

Capital lease obligations, net of current maturities


14,876



15,016

TOTAL LIABILITIES


3,451,193



3,320,293







Shareholders' equity






Common shares


16



16

Treasury shares


(60,915)



(53,734)

Additional paid-in capital


539,763



538,414

Statutory reserves


95,965



95,973

Retained earnings


354,905



354,274

Accumulated other comprehensive income


(30,652)



(34,683)

Total Xinyuan Real Estate Co., Ltd. shareholders' equity


899,082



900,260

Non-controlling interest


21,100



15,892

Total equity


920,182



916,152

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


4,371,375



4,236,445

 

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SOURCE Xinyuan Real Estate Co., Ltd.