Fang Announces Third Quarter 2019 Results, Board Changes of Directors and Date of 2019 Annual General Meeting

BEIJING, Nov. 18, 2019 /PRNewswire/ -- Fang Holdings Limited (NYSE: SFUN) ("Fang" or the "Company"), a leading real estate Internet portal in China, today announced (i) its unaudited financial results for the third quarter ended September 30, 2019, (ii) a change in its board of directors (the "Board") and (iii) its 2019 annual general meeting of shareholders to be held on December 20, 2019 at 10:00 a.m. (local time) at Fang's Beijing headquarters.

Third Quarter 2019 Highlights

    --  Total revenues were $67.6 million, an increase of 11.8% from $60.4
        million in the corresponding period of 2018.
    --  Operating income from continuing operations was $26.7 million, an
        increase of 164.8% from $10.1 million in the corresponding period of
        2018.
    --  Net income was $0.7 million, a decrease of 92.8% from $10.2 million in
        the corresponding period of 2018.

"Our marketing and leads generation services continued to generate growth for our business," commented Mr. Jian Liu, CEO of Fang. "The main drivers behind this growth are our emphasis on new technology and data-driven applications. We are optimistic for the remainder of the year as well as next year, as we continue our focus on the core internet marketing, listing, and leads generation business lines."

Third Quarter 2019 Results

Revenues

Fang reported total revenues of $67.6 million in the third quarter of 2019, an increase of 11.8% from $60.4 million in the corresponding period of 2018, mainly due to the increase in revenues from marketing and leads generation services.

    --  Revenue from marketing services was $30.0 million in the third quarter
        of 2019, an increase of 16.1% from $25.8 million in the corresponding
        period of 2018, driven by Fang's efforts in customer development.
    --  Revenue from listing services was $19.4 million in the third quarter of
        2019, a decrease of 3.7% from $20.2 million in the corresponding period
        of 2018.
    --  Revenue from leads generation services was $14.1 million in the third
        quarter of 2019, an increase of 181.0% from $5.0 million in the
        corresponding period of 2018, driven by the increased effectiveness of
        the service and customer development.
    --  Revenue from financial services was $1.7 million in the third quarter of
        2019, a decrease of 69.7% from $5.6 million in the corresponding period
        of 2018, due to a decrease in average loan receivable balances.

Cost of Revenue

Cost of revenue was $5.7 million in the third quarter of 2019, a decrease of 59.3% from $14.0 million in the corresponding period of 2018, primarily due to optimization in cost structure.

Operating Expenses

Operating expenses were $35.1 million in the third quarter of 2019, a decrease of 3.2% from $36.3 million in the corresponding period of 2018, mainly due to the decrease in staff costs.

    --  Selling expenses were $14.8 million in the third quarter of 2019, a
        decrease of 10.7% from $16.6 million in the corresponding period of
        2018.
    --  General and administrative expenses were $21.7 million in the third
        quarter of 2019, a decrease of 7.1% from $23.4 million in the
        corresponding period of 2018.

Operating Income from Continuing Operations

Operating income from continuing operations was $26.7 million in the third quarter of 2019, an increase of 164.8% from $10.1 million in the corresponding period of 2018.

Change in Fair Value of Securities

Change in fair value of securities for the third quarter of 2019 was a loss of $26.1 million, compared to a loss of $10.9 million in the corresponding period of 2018, mainly due to the fluctuation in market price of investments in equity securities.

Income Tax Benefits

Income tax benefits were $0.1 million in the third quarter of 2019, a decrease of 97.8% compared to income tax benefits of $5.4 million in the corresponding period of 2018.

Net Income

Net income was $0.7 million in the third quarter of 2019, a decrease of 92.8% compared to net income of $10.2 million in the corresponding period of 2018.

Business Outlook

Based on current operations and market conditions, Fang's management remains confident that net income is expected to be positive for the fiscal year ending December 31, 2019. This estimate represents management's current and preliminary view, which is subject to change.

Recent Developments

Board Changes

Mr. Qian Zhao has resigned from the Board, effective from November 18, 2019. Mr. Zhao's resignation did not result from any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Fang thanks Mr. Zhao for his efforts and contributions to the Company.

Fang has appointed Ms. Hong Qin as an independent director of the Board, a member of the audit committee, a member of the compensation committee, and a member and the chair of the nominating and corporate governance committee of the Board, effective from November 18, 2019.

Ms. Hong Qin has extensive real estate policy research experience. Ms. Qin is a senior research fellow at the National Institute of Development and Strategy of Renmin University of China since May 2019. Ms. Qin worked at the Policy Research Center of the Ministry of Housing and Urban-Rural Development of the PRC from May 1992 to April 2019, where she served in various positions and was the director from October 2011 to April 2019. Ms. Qin received a bachelor's degree from Shandong University of Finance and Economics in business economics in 1985 and a master's degree from the Chinese Academy of Social Sciences in urban economics in 1988.

Fang to Hold 2019 Annual General Meeting on December 20, 2019

Fang will hold its 2019 annual general meeting of shareholders at Fang's Beijing headquarters at Tower A, No. 20 Guogongzhuang Middle Street, Fengtai District, Beijing 100070, People's Republic of China on December 20, 2019 at 10:00 a.m. (local time).

The proposals to be submitted for shareholders' approval at the annual general meeting are (i) the re-election of Mr. Howard Huyue Zhang as an independent director of the Board and a member and the chair of the audit committee of the Board, and (ii) the re-election of Ms. Hong Qin as an independent director of the Board, a member of the audit committee, a member of the compensation committee, and a member and the chair of the nominating and corporate governance committee of the Board.

November 21, 2019 is the record date (the "Record Date") for determining the shareholders entitled to receive notice of the annual general meeting or any adjournment or postponement thereof. Holders of record of the Company's ordinary shares at the close of business on the Record Date are entitled to attend the annual general meeting and any adjournment or postponement thereof in person.

Conference Call Information

Fang's management team will host a conference call on the same day at 7:00 AM U.S. EST (8:00 PM Beijing/Hong Kong time). The dial-in details for the live conference call are:


                     International Toll:                 +65 67135090


                     Toll-Free/Local Toll:



     
     United States                          +1 866-519-4004 /+1
                                                845-675-0437



     
     Hong Kong                              +852 800-906-601 /+852
                                                3018-6771



     
     Mainland China                         +86 800-819-0121 /+86
                                                400-620-8038



     
     Passcode:                          
     
     SFUN

A telephone replay of the call will be available after the conclusion of the conference call from 10:00 AM ET on November 18, 2019 through 7:59 AM ET November 26, 2019. The dial-in details for the telephone replay are:


                       International Toll:   +61 2-8199-0299


                       Toll-Free/Local Toll:



     
     United States                        +1 855-452-5696 /+1
                                              646-254-3697



     
     Hong Kong                            +852 800-963-117 /+852
                                              3051-2780


        Mainland China                       +86 400-602-2065 /+86
                                              800-870-0205


        Conference ID:                                      4498166

A live and archived webcast of the conference call will be available on Fang's website at http://ir.fang.com.

About Fang

Fang operates a leading real estate Internet portal in China in terms of the number of page views and visitors to its websites. Through its websites, Fang provides primarily marketing, listing, leads generation and financial services for China's fast-growing real estate and home furnishing and improvement sectors. Its user-friendly websites support active online communities and networks of users seeking information on, and value-added services for, the real estate and home furnishing and improvement sectors in China. Fang currently maintains approximately 65 offices to focus on local market needs and its website and database contains real estate related content covering 658 cities in China. For more information about Fang, please visit http://ir.fang.com.

Safe Harbor Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking 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," "is expected to," "anticipates," "aim," "future," "intends," "plans," "believes," "are likely to," "estimates," "may," "should" and similar expressions, and include, without limitation, statements regarding Fang's future financial performance, revenue guidance, growth and growth rates, market position and continued business transformation. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Fang's control, which may cause its actual results, performance or achievements to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, without limitation, the impact of Fang's transformation back to a technology-driven Internet platform and the impact of current and future government policies affecting China's real estate market. Further information regarding these and other risks, uncertainties or factors is included in Fang's filings with the U.S. Securities and Exchange Commission. Fang does 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.



                                                                                                    
              
                Fang Holdings Limited


                                                                                     
              
                Unaudited Condensed Consolidated Balance Sheets[i]


                                                                            
              
                (in thousands of U.S. dollars, except share data and per share data)





     
     ASSETS                                                                                                                                                           
     
     September 30, December 31,


                                                                                                                                                                                                 2019        2018



     
     Current assets:


                                                
              Cash and cash equivalents                                                                                                            214,417     171,183


                                                
              Restricted cash, current                                                                                                             214,943     245,474


                                                
              Short-term investments                                                                                                                48,739      16,043


                                                
              Accounts receivable, net                                                                                                              74,176      58,687


                                                
              Funds receivable                                                                                                                       7,298       5,474


                                                
              Prepayment and other current assets                                                                                                   26,251      27,894


                                                
              Commitment deposits                                                                                                                      185         191


                                                
              Loans receivable, current                                                                                                             40,749     117,602


                                                
              Current assets of discontinued operations                                                                                                        26,289



     
     Total current assets                                                                                                                                                                  626,758     668,837



     
     Non-current assets:


                                                
              Property and equipment, net                                                                                                          693,588     727,739


                                                
              Land use rights                                                                                                                       31,551      33,153


                                                
              Loans receivable, non-current                                                                                                                     6,249


                                                
              Deferred tax assets                                                                                                                    1,780       2,202


                                                
              Deposits for non-current assets                                                                                                          395         902


                                                
              Restricted cash, non-current portion                                                                                                  38,965       6,990


                                                
              Long-term investments                                                                                                                334,318     373,233


                                                
              Other non-current assets                                                                                                              12,198       4,558


                                                
              Non-current assets of discontinued operations                                                                                                       573



     
     Total non-current assets                                                                                                                                                            1,112,795   1,155,599



     
     Total assets                                                                                                                                                                        1,739,553   1,824,436





     
     LIABILITIES AND SHAREHOLDERS' EQUITY



     
     Current liabilities:


                                                
              Short-term loans                                                                                                                     262,022     297,811


                                                
              Deferred revenue                                                                                                                     130,674     142,473


                                                
              Accrued expenses and other liabilities                                                                                               107,405     118,925


                                                
              Customers' refundable fees                                                                                                             4,233       3,976


                                                
              Income tax payable                                                                                                                    14,367       2,383


                                                
              Amounts due to related parties                                                                                                           271          19


                                                
              Current liabilities of discontinued operations                                                                                                   35,326



     
     Total current liabilities                                                                                                                                                             518,972     600,913



     
     Non-current liabilities:


                                                
              Long-term loans                                                                                                                      146,762     123,215


                                                
              Convertible senior notes                                                                                                             253,021     254,435


                                                
              Deferred tax liabilities                                                                                                              84,404      97,578


                                                
              Other non-current liabilities                                                                                                        125,317     150,837


                                                
              Non-current liabilities of discontinued operations                                                                                                2,258



     
     Total non-current liabilities                                                                                                                                                         609,504     628,323



     
     Total Liabilities                                                                                                                                                                   1,128,476   1,229,236





     
     Equity:


                                                
              Class A ordinary shares, par value Hong Kong Dollar ("HK$") 1 per share,                                                               9,244       9,286
                                                600,000,000 shares authorized for Class A and Class B in aggregate, issued
                                                shares as of December 31, 2018 and September 30, 2019: 72,069,645 and

                                                
              71,775,686; outstanding shares as of December 31, 2018 and September 30,
                                                2019: 65,004,587 and 65,403,005


                                                
              Class B ordinary shares, par value HK$1 per share, 600,000,000 shares                                                                  3,124       3,124
                                                authorized for Class A and Class B in aggregate, and 24,336,650 shares and
                                                24,336,650 shares issued and outstanding as at December 31, 2018 and
                                                September 30, 2019, respectively


                                                
              Treasury stock                                                                                                                     (123,226)  (136,615)


                                                
              Additional paid-in capital                                                                                                           523,984     517,802


                                                
              Accumulated other comprehensive loss                                                                                               (100,668)   (75,837)


                                                
              Retained earnings                                                                                                                    297,925     276,746



     
     Total Fang Holdings Limited shareholders' equity                                                                                                                                      610,383     594,506


                                                
              Non controlling interests                                                                                                                694         694



     
     Total equity                                                                                                                                                                          611,077     595,200



     
     TOTAL LIABILITIES AND EQUITY                                                                                                                                                        1,739,553   1,824,436


                                                                                                                                                          
              
             Unaudited Condensed Consolidated Statements of Comprehensive Income[1]


                                                                                                                                                           
              
             (in thousands of U.S. dollars, except share data and per share data)




                                                                                                                                                                                                                                                                      Three months ended


                                                                                                                                                                                                                                                          
     
     September 30,   
              
     September 30,


                                                                                                                                                                                                                                                                                                  2019         2018





     
                Revenues:


                                                                                                                
           Marketing services                                                                                                                                                        29,993       25,843


                                                                                                                
           Listing services                                                                                                                                                          19,438       20,175


                                                                                                                
           Leads generation services                                                                                                                                                 14,099        5,017


                                                                                                                
           Value-added services                                                                                                                                                       1,514        1,524


                                                                                                                
           Financial services                                                                                                                                                         1,710        5,644


                                                                                                                
           E-commerce services                                                                                                                                                          796        2,217



     
                Total revenues                                                                                                                                                                                                                                                              67,550       60,420





     
                Cost of revenues:


                                                                                                                
           Cost of services                                                                                                                                                         (5,694)    (14,035)



     
                Total cost of revenues                                                                                                                                                                                                                                                     (5,694)    (14,035)





     
                Gross profit                                                                                                                                                                                                                                                                61,856       46,385





     
                Operating expenses and income:


                                                                                                                
           Selling expenses                                                                                                                                                        (14,822)    (16,606)


                                                                                                                
           General and administrative expenses                                                                                                                                     (21,688)    (23,355)


                                                                                                                
           Other income                                                                                                                                                               1,385        3,670





     
                Operating income                                                                                                                                                                                                                                                            26,731       10,094


                                                                                                                
           Foreign exchange loss                                                                                                                                                        832          195


                                                                                                                
           Interest income                                                                                                                                                            1,562        2,353


                                                                                                                
           Interest expense                                                                                                                                                         (5,185)     (5,657)


                                                                                                                
           Investment income, net                                                                                                                                                     2,068          918


                                                                                                                
           Realized gain on sale of available-for-sale securities                                                                                                                       711          252


                                                                                                                
           Change in fair value of securities                                                                                                                                      (26,148)    (10,880)


                                                                                                                
           Government grants                                                                                                                                                             44           26


                                                                                                                
           Other non-operating loss                                                                                                                                                                 442



     
                Income (Loss) before income taxes and noncontrolling interests from continuing operations

                                                                                                                                                                                                                                                      615            (2,257)



     
                Income tax benefits


                                                                                                                
           Income tax benefits                                                                                                                                                          117        5,356



     
                Net income from continuing operations, net of income taxes

                                                                                                                                                                                                                                                      732              3,099



     Income from discontinued operations, net of income taxes                                                                                                                                                                                                        7,125



     Net income                                                                                                                                                                                                                                                                                  732       10,224


                                                                                                                
           Net income attributable to noncontrolling interests



     
                Net income attributable to Fang Holdings Limited shareholders

                                                                                                                                                                                                                                                      732             10,224



     
                Earnings per share for Class A and Class B ordinary shares and per ADS:


                                                                                                                
           Basic                                                                                                                                                                       0.01         0.11


                                                                                                                
           Diluted                                                                                                                                                                     0.01         0.11



     
                Earnings from continuing operations per share for Class A and Class B ordinary shares and per ADS:


                                                                                                                
           Basic                                                                                                                                                                       0.01         0.03


                                                                                                                
           Diluted                                                                                                                                                                     0.01         0.03



     
                Earnings from discontinued operations per share for Class A and Class B ordinary shares and per ADS:


                                                                                                                
           Basic                                                                                                                                                                                   0.08


                                                                                                                
           Diluted                                                                                                                                                                                 0.08

([i]) Impact of the Separation of China Index Holdings Ltd (NASDAQ: CIH) ("CIH") on the Company's Financial Statements: The separation of CIH represents a strategic shift of Fang and has a major effect on Fang's results of operations, the business operated by CIH has been reclassified as discontinued operations. For the periods presented in this press release, the assets and liabilities of the discontinued operations are presented separately on the consolidated balance sheets, and the results of the discontinued operations, less applicable income taxes, are reported as a separate component of income, which is income from discontinued operations, on the consolidated statements of comprehensive income (loss).

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SOURCE Fang Holdings Limited