China Housing & Land Development Inc. Announces Third Quarter 2010 Financial Results

XI'AN, China, Nov. 12, 2010 /PRNewswire via COMTEX/ -- China Housing & Land Development, Inc. ("China Housing" or the "Company"; Nasdaq: CHLN) today announced its financial results for the quarter ended September 30, 2010.

Highlights for 3Q10: Total revenue in the third quarter of 2010 decreased 7.1% to $34.0 million from $36.6 million in the second quarter of 2010 but increased 42.3% from $23.9 million in the third quarter of 2009.

Total gross floor area ("GFA") sales were 39,833 sq. meters, compared to 46,459 sq. meters in the 2010 second quarter period and 32,436 sq. meters in the 2009 third quarter period.

Average residential selling price ("ASP") in the third quarter was RMB 5,694, compared with RMB 5,641 in the second quarter of 2010, and represents a 13.9% increase from RMB 5,001 in the third quarter of 2009.

Gross profit increased 5.8% to $10.9 million from $10.3 million in the second quarter of 2010 and 47.3% from $7.4 million in the third quarter of 2009. Third quarter 2010 gross margin was 32.0% compared to 28.2% in the second quarter of 2010 and 31.0% in the third quarter of 2009.

SG&A expenses as a percentage of total revenue decreased to 8.4%, compared to 10.3% in the 2010 second quarter and 10.5% in the 2009 third quarter period.

Operating income increased 22.8% to $7.0 million from $5.7 million in the second quarter of 2010, and increased 118.8% from $3.2 million in the third quarter of 2009.

Net income attributable to the Company in the third quarter of 2010 was $6.5 million, or $0.20 per basic share and $0.15 per diluted share. Excluding the $1.4 million or $0.04 impact on basic EPS associated with the revaluation of derivatives and warrants, net income was $5.1 million, or $0.15 per basic share.

Mr. Pingji Lu, China Housing's Chairman, commented, "We were generally pleased with our performance in the third quarter. JunJing II Phase Two and Puhua Phase One were the primary contributors to our performance. Sales would have been even higher in the third quarter were it not for government approval delays related to JunJing III that required us to delay recognizing revenue related to this project until the fourth quarter. We believe that overall demand for housing, average selling prices and transaction volume trends in the Xi'an market continue to improve. According to data from E-House (China) and the Xi'an Bureau of Statistics, Xian's residential sales in the third quarter of 2010 totaled 3.1 million square meters with an average selling price of RMB 6,560, a 2% increase in sales volume and 12% increase in sales price compared to the second quarter of 2010. In the third quarter of 2009, residential sales totaled 3.3 million square meters with an average sales price of RMB 5,280 per square meter. When compared to the 2009 third quarter, total residential sales volume in Xi'an decreased 7%, while sales prices increased 24%." We are focused on layering on additional ASP and gross margin improvement. These trends can continue to trend higher in the coming quarters as we develop and sell more mid-to-high level apartment units at our current projects under development. We are also evaluating the opportunity to design and create move-in ready apartments for specific high-end projects under development such as Park Plaza." Total revenue in the third quarter of 2010 decreased to $34.0 million from $36.6 million in the second quarter of 2010 and increased from $23.9 million in the third quarter of 2009. In the third quarter of 2010, most of the Company's revenue came from its JunJing II Phase Two and Puhua Phase One projects. Third quarter 2010 contract sales totaled US$33.5 million representing a total GFA of 39,833 square meters. Third quarter 2010 contract sales represented a 40.2% increase compared to US$23.9 million in the third quarter of 2009. The Company secured $13.7 million in contract sales from its JunJing III project in the third quarter. However, this revenue will not be recognized until the fourth quarter due to government approval delays. The Company's average residential selling price per square meter in the third quarter of 2010 was RMB 5,694, a 13.9% increase from RMB 5,001 in the third quarter of 2009 and a 0.9% increase compared with RMB 5,641 in the second quarter of 2010.

Gross profit for the three months ended September 30, 2010 was $10.9 million, representing an increase of 5.8% from $10.3 million in the second quarter of 2010 and a 47.3% increase from $7.4 million in the same period of 2009. The gross profit margin for the three months ended September 30, 2010 was 32.0%, which surpassed the 31.0% in the same period of 2009 and was higher than the 28.2% in the second quarter of 2010. Gross profit increased sequentially due to increased sales and average selling prices of Jun Jing II Phase Two and Puhua projects as well as from the sale of commercial space at some existing projects which typically carry a higher gross margin than residential apartment sales.

SG&A expense was $2.9 million in the third quarter of 2010, compared to $3.8 million in the second quarter of 2010 and $2.5 million in the third quarter of 2009. As a percentage of total revenue, SG&A expenses decreased to 8.4% from 10.3% in the second quarter of 2010 and was comparable to the 10.5% in the third quarter of 2009. The decrease in SG&A a percent of total revenue is due to lower marketing expenses and from enhanced cost control procedures.

Operating income in the third quarter of 2010 increased to $7.0 million, or 20.6% of total revenue, from $5.7 million, or 15.6% of total revenue, in the second quarter of 2010 and $3.2 million, or 13.6% of total revenue, in the third quarter of 2009.

Net income attributable to China Housing in the third quarter of 2010 was $6.5 million, or $0.20 per basic share and $0.15 per diluted share. Excluding the $1.4 million or $0.04 impact on basic EPS associated with the revaluation of derivatives and warrants, net income was $5.1 million or $0.15 per basic share.

This performance compares to net income of $6.9 million, or $0.22 per basic share, in the third quarter of 2009, which excludes a $5.7 million non-cash gain associated with the revaluation of derivatives and warrants in the third quarter of 2009.

Sequential Quarterly Revenue Breakout Comparison Q3 2010 ------- Unsold Project Revenue Contract GFA Sold ASP GFA Recognized Sales ------- ($) ($) (m(2)) (RMB) (m(2)) --- --- ----- ----- ----- Projects Under Construction JunJing II Phase Two 15,022,903 8,515,737 9,931 5,803 7,258 Puhua Phase One 10,104,983 12,108,057 14,145 5,793 68,605 Puhua Phase Two 2,977,388 9,538,222 12,768 5,056 179,119 Projects Completed JunJing II Phase One 1,200,153 1,200,153 1,409 5,765 1,175 Tsining-24G 1,565,565 1,565,565 1,190 8,904 731 JunJing I 506,270 506,270 215 15,965 5,261 Additional Project 78,659 78,659 175 3,044 815 Other Income 2,592,853 Total 34,048,774 33,512,663 39,833 5,694 262,964 ----- ---------- ---------- ------ ----- ------- Q-o-Q Change (7.0%) (12.7%) (15.2%) 0.9% ------------ ------ ------- ------- --- Q2 2010 ------- Revenue GFA Project Recognized Contract Sold ASP ----------- Sales ($) ($) (m(2)) (RMB) --- --- ----- ----- Projects Under Construction JunJing II Phase Two 21,855,313 19,347,799 23,199 5,691 Puhua Phase One 8,262,890 11,518,612 13,660 5,754 Puhua Phase Two 624,700 3,063,265 4,353 4,802 Projects Completed JunJing II Phase One 3,135,381 3,135,412 3,504 6,106 Tsining-24G 110,835 112,215 35 21,878 JunJing I 1,077,115 1,077,112 1,500 4,900 Additional Project 154,152 154,145 208 5,057 Other Income 1,373,409 Total 36,593,795 38,406,052 46,459 5,641 ----- ---------- ---------- ------ ----- Q-o-Q Change ------------ As of September 30, 2010, China Housing reported $71.6 million in unrestricted cash, compared to $68.3 million as of June 30, 2010 and $19.1 million as of September 30, 2009. Total debt was $132.1 million on September 30, 2010, compared to $130.9 million as of June 30, 2010, and $52.6 million as of September 30, 2009. Net debt as a percentage of total capital was 38.3% on September 30, 2010, compared to 40.6% on June 30, 2010 and 21.4% on September 30, 2009.

Q4 2010 ------- Projects in Planning Unsold First GFA Pre-sales Scheduled (m(2)) ----- JunJing III 47,153 Q4 2010 Park Plaza 180,000 Q1 2011 Golden Bay 378,887 Q2 2011 Puhua Phase Three 165,340 Q2 2012 Puhua Phase Four 152,824 Q4 2013 Total projects in planning 924,204 ----------------- ------- 2010 Outlook Total contract sales in 2010 are expected to reach US$168 to $205 million, a 62%-97% increase compared to $103.9 million in 2009. Total recognized revenue in 2010 is expected to reach US$135 to $165 million, a 56%-91% increase compared to $86.6 million in 2009. The Company is reporting contract sales estimates compared to revenue as it is not subject to percentage of completion alterations.

"We believe that we'll enter 2011 positioned for even greater financial success.

Provided that current conditions remain stable, we believe we have an opportunity to increase our revenue and contract sales growth by an average of 30% each year for the next several years. We remain encouraged with the overall progress in our business and believe our portfolio of current and future development projects can position China Housing and Land as a leading developer in the western China region," concluded Mr. Lu.

Conference Call Information China Housing's management will host an earnings conference call on Friday, November 12, 2010 at 8:30 a.m. U.S. Eastern Time. Listeners may access the call by dialing #1-719-325-2145. To listen to the live webcast of the event, please go to http://www.viavid.net. Listeners may access the call replay, which will be available through November 18th, by dialing #1-858-384-5517; passcode: 5434239.

About China Housing & Land Development, Inc.

Based in Xi'an, the capital city of China's Shaanxi province, China Housing & Land Development, Inc., is a leading developer of residential and commercial properties in northwest China. China Housing has been engaged in land acquisition, development, and management, including the sales of residential and commercial real estate properties through its wholly-owned subsidiary in China, since 1992.

China Housing & Land Development is the first Chinese real estate development company traded on NASDAQ. The Company's news releases, project information, photographs, and more are available on the internet at www.chldinc.com.

Safe Harbor This news release may contain forward-looking information about China Housing & Land Development, Inc. which is covered under the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward- looking terminology such as believe, expect, may, will, should, project, plan, seek, intend, or anticipate or the negative thereof or comparable terminology, and include discussions of strategy, and statements about industry trends and China Housing & Land Development's future performance, operations, and products.

Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Actual performance results may vary significantly from expectations and projections. Further information regarding this and other risk factors are contained in China Housing's public filings with the U.S. Securities and Exchange Commission.

All information provided in this news release and in any attachments is as of the date of the release, and the companies do not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

China Housing contacts Mr. Cangsang Huang Chief Financial Officer +86-29-8258-2648 in Xi'an chuang@chldinc.com Ms. Jing Lu Chief Operating Officer, Board Secretary, and Investor Relations Officer +86 29.8258.2639 in Xi'an jinglu@chldinc.com / English and Chinese Mr. Shuai Luo Investor Relations +86 29.8258.2632 in Xi'an Laurentluo@chldinc.com/ English and Chinese Mr. Bill Zima, ICR +1 203.682.8233 in United States William.Zima@icrinc.com Ms. Annie Chen, ICR +86 10.6599.7966 in Beijing Annie.Chen@icrinc.com (Financial Tables on Following Pages) CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES Interim Condensed Consolidated Balance Sheets As of September 30, 2010 and December 31, 2009 (Unaudited) September 30, December 31, 2010 2009 ---- ---- ASSETS Cash and cash equivalents $71,610,809 $36,863,216 Cash - restricted 790,723 701,017 Accounts receivable, net of allowance for doubtful 11,823,982, 6,088,482 accounts of $392,550 and $389,996, respectively Other receivables, prepaid expenses and deposits, net 5,753,875 2,484,221 Real estate held for development or sale 110,716,253 103,003,529 Property and equipment, net 13,080,882 15,307,478 Asset held for sale 13,987,503 14,301,564 Advance to suppliers 4,497,831 10,368,386 Deposits on land use rights 58,771,753 28,084,346 Intangible assets, net 42,192,065 41,355,134 Goodwill 832,993 816,469 Deferred financing costs 439,072 411,457 ------- ------- Total assets $334,497,741 $259,785,299 ============ ============ LIABILITIES Accounts payable $19,658,037 $20,706,263 Advances from customers 45,560,387 21,301,876 Accrued expenses 2,482,097 5,587,837 Loans payable 1,166,490 5,916,354 Income and other taxes payable 13,789,950 8,194,659 Other payables 5,147,919 4,524,288 Loans from employees 5,383,006 2,864,824 Bank loans 52,312,981 36,185,705 Deferred tax liability 13,268,309 11,505,181 Warrants liability 2,090,720 5,074,191 Fair value of embedded derivatives 3,078,576 3,991,047 Convertible debt 15,873,701 14,834,987 Mandatorily redeemable noncontrolling interests in Subsidiaries 57,374,833 - ---------- --- Total liabilities 237,187,006 140,687,212 ----------- ----------- Commitments and contingencies SHAREHOLDERS' EQUITY Common stock: $.001 par value, authorized 100,000,000 shares issued and outstanding 33,083,354 and 31,884,969, respectively 33,083 31,885 Additional paid in capital 38,995,679 35,461,706 Common stock subscribed - 252,118 Statutory reserves 4,922,248 4,922,248 Retained earnings 40,827,482 39,895,179 Accumulated other comprehensive income 12,532,243 10,163,483 ---------- ---------- Total China Housing & Land Development, Inc. shareholders' equity 97,310,735 90,726,619 Noncontrolling interests - 28,371,468 --- ---------- Total shareholders' equity 97,310,735 119,098,087 ---------- ----------- Total liabilities and shareholders' equity $334,497,741 $259,785,299 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES Interim Condensed Consolidated Statements of Income For The Three and Nine Months Ended September 30, 2010 and 2009 (Unaudited) 3 Months 3 Months September September 30, 30, ---------- ---------- 2010 2009 ---- ---- REVENUES Sale of properties $31,455,921 $22,728,282 Other income 2,592,853 1,152,408 --------- --------- Total revenues 34,048,774 23,880,690 COST OF SALES Cost of sales of properties 22,568,245 15,991,559 Cost of other income 571,224 469,656 ------- ------- Total cost of sales 23,139,469 16,461,215 ---------- ---------- Gross margin 10,909,305 7,419,475 ---------- --------- OPERATING EXPENSES Selling, general, and administrative expenses 2,873,590 2,501,688 Security registration expenses - 579,775 Stock based compensation - 87,777 Other expenses 232,493 284,044 Interest expense 433,666 417,809 Accretion expense on convertible debt 363,624 311,319 ------- ------- Total operating expenses 3,903,373 4,182,412 --------- --------- NET INCOME FROM BUSINESS OPERATION 7,005,932 3,237,063 --------- --------- CHANGE IN FAIR VALUE OF DERIVATIVES Loss on extinguishment of debt - - Change in fair value of embedded derivatives (958,688) (2,695,306) Change in fair value of warrants (405,821) (3,042,752) -------- ---------- Total change in fair value of derivatives (1,364,509) (5,738,058) ---------- ---------- Income before provision for income taxes 8,370,441 8,975,121 and noncontrolling interest Provision for income taxes 1,926,345 (3,652,886) Recovery of deferred income taxes (31,370) - ------- --- NET INCOME 6,475,466 12,628,007 Charge to noncontrolling interest - 86,121 NET INCOME ATTRIBUTABLE TO $6,475,466 $12,714,128 CHINA HOUSING & LAND DEVELOPMENT, INC. ---------- ----------- WEIGHTED AVERAGE SHARES OUTSTANDING Basic 33,082,573 31,134,137 ========== ========== Diluted 37,374,784 32,972,253 ========== ========== NET INCOME (LOSS) PER SHARE Basic 0.20 0.41 ==== ==== Diluted 0.15 0.24 9 Months 9 Months September September 30, 30, ---------- ---------- 2010 2009 ---- ---- REVENUES Sale of properties $99,067,368 $56,835,091 Other income 5,148,115 3,689,359 --------- --------- Total revenues 104,215,483 60,524,450 COST OF SALES Cost of sales of properties 74,821,470 40,130,502 Cost of other income 1,684,851 1,420,556 --------- --------- Total cost of sales 76,506,321 41,551,058 ---------- ---------- Gross margin 27,709,162 18,973,392 ---------- ---------- OPERATING EXPENSES Selling, general, and administrative expenses 9,170,039 5,853,458 Security registration expenses - 1,786,517 Stock based compensation - 87,777 Other expenses 420,525 474,167 Interest expense 1,388,166 1,202,786 Accretion expense on convertible debt 1,038,732 889,305 --------- ------- Total operating expenses 12,017,462 10,294,010 ---------- ---------- NET INCOME FROM BUSINESS OPERATION 15,691,700 8,679,382 ---------- --------- CHANGE IN FAIR VALUE OF DERIVATIVES Loss on extinguishment of debt 2,180,492 - Change in fair value of embedded derivatives (2,832,023) 3,017,272 Change in fair value of warrants (3,203,085) 4,012,736 ---------- --------- Total change in fair value of derivatives (3,854,616) 7,030,008 ---------- --------- Income before provision for income taxes 19,546,316 1,649,374 and noncontrolling interest Provision for income taxes 4,467,337 (1,591,331) Recovery of deferred income taxes (82,367) - ------- --- NET INCOME 15,161,346 3,240,705 Charge to noncontrolling interest (14,229,043) 279,155 NET INCOME ATTRIBUTABLE TO $932,303 $3,519,860 CHINA HOUSING & LAND DEVELOPMENT, INC. -------- ---------- WEIGHTED AVERAGE SHARES OUTSTANDING Basic 32,911,414 30,987,760 ========== ========== Diluted 35,636,354 30,996,953 ========== ========== NET INCOME (LOSS) PER SHARE Basic 0.03 0.11 ==== ==== Diluted (0.05) 0.11 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

CHINA HOUSING & LAND DEVELOPMENT, INC. AND SUBSIDIARIES Interim Condensed Consolidated Statements of Comprehensive Income (Loss) For The Three and Nine Months Ended September 30, 2010 and 2009 (Unaudited) 3 Months 3 Months September September 30, 30, 2010 2009 ---- ---- NET INCOME $6,475,466 $12,628,007 OTHER COMPREHENSIVE INCOME (LOSS) Gain (loss) in foreign exchange 1,561,913 69,244 --------- ------ COMPREHENSIVE INCOME 8,037,379 12,697,251 Charge to noncontrolling interest - 86,121 --- ------ Comprehensive income attributable to China Housing & Land Development, Inc. $8,037,379 $12,783,372 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

CHINA HOUSING & LAND DEVELOPMENT INC. AND SUBSIDIARIES Interim Condensed Consolidated Statements of Cash Flows For The Nine Months Ended September 30, 2010 and 2009 (Unaudited) September 30, September 30, 2010 2009 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $15,161,346 $3,240,705 Adjustments to reconcile net income to cash provided by (used in) operating activities: Bad debt recovery - 80,713 Depreciation 901,085 471,788 (Gain) loss on disposal of fixed assets (287,460) 50,501 Gain on disposal of assets held for sale (1,134,675) - Amortization of deferred financing costs 115,873 155,873 Recovery of future income taxes (82,367) - Loss on extinguishment of debt 2,180,492 - Stock based compensation - 87,777 Security registration expenses settled with common stocks - 1,786,517 Change in fair value of embedded derivatives (2,832,023) 4,012,736 Change in fair value of warrants (3,203,085) 3,017,272 Accretion expense on convertible debt 1,038,732 889,305 Non-cash proceeds from sales - (31,673) (Increase) decrease in assets: Accounts receivable (1,986,986) (4,702,750) Other receivable and prepaid expense (3,218,104) (568,727) Real estate held for development or sale 2,340,492 (35,859,057) Advances to suppliers 5,631,869 (159,660) (Deposit) refund on land use rights (29,559,410) 11,534,025 Deferred selling costs - (344,134) Deferred financing costs (140,684) - Increase (decrease) in liabilities: Accounts payable (1,470,626) 8,103,243 Advance from customers 23,391,607 (135,344) Accrued expense 10,609,030 1,165,695 Other payables 515,184 (1,941,379) Income and other taxes payable 5,388,733 (1,621,435) --------- ---------- Net cash provided by (used in) operating activities 23,359,023 (10,808,209) ---------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Change in restricted cash (74,047) 110,130 Purchase of property and equipment (1,123,185) (587,595) Notes receivable collected - 212,140 Cash acquired from acquisition 2,179 519,309 Proceed from sale of property and equipment 864,518 194,006 Proceeds from sale of assets held for sale 412,252 - ------- --- Net cash provided by investing activities 81,717 447,990 ------ ------- CASH FLOWS FROM FINANCING ACTIVITIES: Loans from banks 34,151,372 12,444,063 Repayments of bank loans (19,077,303) (18,447,426) Loans from or repayment to employees, net 2,414,989 678,545 Repayments of loans payable (7,536,715) (3,841,072) Proceeds from exercise of warrants - 1,184,662 --- --------- Net cash provided by (used in) financing activities 9,952,343 (7,981,228) --------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 33,393,083 (18,341,447) Effects of foreign currency exchange 1,354,510 5,237 CASH AND CASH EQUIVALENTS, beginning of period 36,863,216 37,425,340 CASH AND CASH EQUIVALENTS, end of period $71,610,809 $19,089,130 The accompanying notes are an integral part of these interim condensed consolidated financial statements.

SOURCE China Housing & Land Development, Inc.

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