Xinyuan Real Estate Co., Ltd. Announces Second Quarter 2020 Financial Results
BEIJING, Sept. 2, 2020 /PRNewswire/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan" or the "Company") (NYSE: XIN), an NYSE-listed real estate developer and property manager operating primarily in China and in the U.S., today announced its unaudited financial results for the second quarter ended June 30, 2020.
Second Quarter 2020 Highlights
-- Total revenue in the second quarter of 2020 increased 126.1% to US$284.4
million from US$125.8 million in the first quarter of 2020.
-- Net loss in the second quarter of 2020 decreased 23.0% to US$30.1
million from net loss of US$39.1 million in the first quarter of 2020.
-- Diluted net loss per ADS attributable to shareholders in the second
quarter of 2020 decreased 33.3% to US$0.49 from diluted net loss of
US$0.73 in the first quarter of 2020.
Mr. Yong Zhang, Xinyuan's Chairman, stated, "Though the COVID-19 effect still last in Q2 2020, we further strengthened the marketing efforts, with total contract sales of the first half reaching around US$1.18 billion. With certain major projects launched in Q3, we are now holding a more optimistic view toward the full year sales result."
Mr. Zhang continued: "In this quarter, we also have further optimized debt structure and controlled capital expenditure. Our total debt decreased to US$3.0 billion as of June 30, 2020, US$0.6 billion lower year on year. Short term debt was US$1.2 billion, 41% of total debt. Compared with Q1, we have reduced our short-term debt by US$197 million, and total debt by US$32 million. In June and July 2020, we issued RMB160 million and RMB354.5 million of senior notes, respectively, which are now traded on the Singapore Exchange. In July 2020, our HK-listed property management subsidiary completed a follow-on offering, receiving about HK$127.2 million of net proceeds. These successful capital raises bring the additional resources needed to drive our growth strategy and to build a diverse and dynamic real estate ecosystem."
Second quarter 2020 Financial Results
Revenue
In the second quarter of 2020, the Company's total revenue decreased 53.3% to US$284.4 million from US$609.4 million in the second quarter of 2019 and increased 126.1% from US$125.8 million in the first quarter of 2020.
Gross Profit
Gross profit for the second quarter of 2020 was US$19.2 million, or 6.8% of total revenue, compared to gross profit of US$159.2 million, or 26.1% of total revenue, in the second quarter of 2019 and a gross profit of US$28.1 million, or 22.3% of total revenue, in the first quarter of 2020. Gross margin decreased dramatically from the previous quarters, this is mainly because we made a prudent adjustment. Considering the current market price affected by the epidemic, we reduced the expected selling price of several projects, the adjustment resulted in a significant reduction of gross margin. Without the adjustment, gross margin for this quarter would be 22.5%.
Selling, General and Administrative Expenses
SG&A expenses were US$51.4 million for the second quarter of 2020 compared to US$63.0 million for the second quarter of 2019 and US$44.0 million for the first quarter of 2020. As a percentage of total revenue, SG&A expenses were 18.1% compared to 10.3% in the second quarter of 2019 and 35.0% in the first quarter of 2020.
Net Income
Net loss for the second quarter of 2020 was US$30.1 million compared to net income of US$19.8 million for the second quarter of 2019 and net loss of US$39.1 million for the first quarter of 2020. Net margin was negative 10.6% compared to 3.3% in the second quarter of 2019 and negative 31.1% in the first quarter of 2020. Diluted net loss per ADS was US$0.49 compared to diluted net earnings of US$0.19 per ADS in the second quarter of 2019 and diluted net loss of US$0.73 per ADS in the first quarter of 2020.
Balance Sheet
As of June 30, 2020, the Company's cash and restricted cash increased to US$999.8 million from US$933.1 million as of March 31, 2020.
Total debt outstanding was US$3,008.0 million, which reflects a decrease of US$31.6 million from US$3,039.6 million at the end of the first quarter of 2020.
The balance of the Company's real estate properties under development at the end of the second quarter of 2020 was US$3,094.9 million compared to US$3,176.4 million at the end of the first quarter of 2020.
Real Estate Project Status in China
The Company commenced pre-sales of one new project in the second quarter of 2020, Suzhou Linhu Lake.
Below is a summary table of projects that were active and available for sale in the second quarter of 2020.
Project
GFA
--- ---
(m(2), 000s)
---
Total Active
Sold as of
Unsold as of
Projects as of June 30, 2020 June 30, 2020
June 30, 2020
---
Xingyang Splendid II 118.5 98.1 20.4
--- ---
Jinan Royal Palace 449.8 440.6 9.2
--- ---
Xuzhou Colorful City 130.8 123.3 7.5
--- ---
Sanya Yazhou Bay No.1 117.6 117.3 0.3
--- ---
Xi'an Metropolitan 286.0 276.3 9.7
--- ---
Jinan Xin Central 194.6 190.2 4.4
--- ---
Henan Xin Central I 261.5 253.1 8.4
--- ---
Zhengzhou Fancy City I 166.7 160.9 5.8
--- ---
Tianjin Spring Royal Palace I 139.7 131.7 8.0
--- ---
Zhengzhou International New City I 356.6 351.6 5.0
--- ---
Xingyang Splendid III 120.9 119.0 1.9
--- ---
Zhengzhou International New City II 176.0 170.4 5.6
--- ---
Zhengzhou Fancy City II (North) 108.7 102.0 6.7
--- ---
Tianjin Spring Royal Palace II 144.6 86.6 58.0
--- ---
Zhengzhou International New City III D 46.1 45.2 0.9
--- ---
Zhengzhou Hangmei International Wisdom City I 64.7 56.3 8.4
--- ---
Zhengzhou International New City III B 118.8 118.5 0.3
--- ---
Changsha Furong Thriving Family 72.3 72.3 0.0
--- ---
Chengdu Xinyuan City 741.6 280.5 461.1
--- ---
Kunshan Xinyu Jiayuan 107.9 59.4 48.5
--- ---
Xingyang Splendid IV 151.8 84.1 67.7
--- ---
Suzhou Suhe Bay * 62.6 62.6
--- ---
Zhengzhou Hangmei International Wisdom City II 78.4 39.1 39.3
--- ---
Qingdao Royal Dragon Bay 162.2 104.3 57.9
--- ---
Jinan Royal Spring Bay 116.9 64.1 52.8
--- ---
Xinyuan Golden Water View City-Zhengzhou 331.4 100.7 230.7
--- ---
Zhengzhou Fancy City III 80.6 77.6 3.0
--- ---
Zhengzhou International New City III C 82.3 73.8 8.5
--- ---
Zhengzhou International New City IV A12 199.7 181.8 17.9
--- ---
Zhengzhou International New City IV B10 92.3 67.9 24.4
--- ---
Suzhou Galaxy Bay 76.5 73.3 3.2
--- ---
Suzhou Gusu Shade I 12.0 8.8 3.2
--- ---
Dalian International Health Technology Town I 103.8 44.7 59.1
--- ---
Xingyang Splendid V 80.5 61.6 18.9
--- ---
Suzhou Gusu Shade II ** 14.3 8.4 5.9
--- ---
Zhengzhou International New City V A04 104.9 39.6 65.3
--- ---
Huzhou Silk Town *** 141.4 22.6 118.8
--- ---
Foshan Xinchuang AI International Science and Technology Innovation Valley 194.4 20.4 174.0
--- ---
Suzhou Linhu Lake**** 156.4 5.4 151.0
--- ---
Others 57.5 57.5
--- ---
Total active projects 6,223.3 4,394.1 1,829.2
--- ---
* The Company owns a 16.66% equity interest in Suzhou Hengwan Real Estate Co., Ltd.. which develops Suzhou Suhe Bay. The Company accounts for its investment under the equity method.
** The Company owns a 19.99% equity interest in Suzhou Litai Real Estate Co., Ltd., which develops Suzhou Gusu Shade II. The Company accounts for its investment under the equity method.
*** The Company owns a 51% equity interest indirectly in Huzhou Xinhong Renju Construction Development Co., Ltd., which develops Huzhou Silk Town. Based on the articles of association, the company cannot exercise control of Huzhou Silk Town, but has the ability to exercise
significant influence over Huzhou Silk Town's operating and financial decisions and accounted for it as an equity method investment.
**** The Company owns a 24% equity interest in Suzhou Rongjingchen Real Estate Co., Ltd., which develops Suzhou Linhu Lake. The Company accounts for its investment under the equity method.
---
As of June 30, 2020, the Company's total saleable GFA was approximately 4,279,200 square meters for active projects and under planning stage projects in China. Below is a summary of all of the Company's projects in China:
Unsold GFA as of
June 30, 2020
Pre-sales
(m(2)
,
000s)
Scheduled
Tongzhou Xinyuan
Royal Palace-
Beijing 102.3
Q3, 2020
Xinyuan Chang'an
Royal Palace-
Xi'an 226.0
To be determined
Zhengzhou
International
New City Land
Bank(all land is
grouped together
and will be
developed
gradually) 879.3
To be determined
Zhuhai Xin World 70.0
To be determined
Lingshan Bay
Dragon Seal-
Qingdao 383.1
Q3, 2020
Zhengzhou Hangmei
Project Land
Bank(all land is
grouped together
and will be
developed
gradually) 181.5
To be determined
Wuhan Hidden
Dragon Royal
Palace 182.9
To be determined
Dalian
International
Health
Technology Town
II 34.4
To be determined
Foshan Xinchuang
AI International
Science and
Technology
Innovation
Valley II 262.4
To be determined
Taizhou Yihe
Yayuan * 128.1
To be determined
Total projects
under planning 2,450.0
Total active
projects 1,829.2
Total of all
Xinyuan unsold
projects in
China 4,279.2
* The Company owns 40% equity interest in Taizhou Yiju Real Estate Co., Ltd. which
develops Taizhou Yihe Yayuan.
Update on United States Real Estate Projects
At the Oosten project in Brooklyn, New York City, as of June 30, 2020, a total of 179 units out of 216 units were sold. Total revenue from this project has reached US$261.0 million. Of the remaining 37 unsold units, 23 are rented with lease terms ranging from 12 months to 24 months.
At the Hudson Garden project, BLOOM ON FORTY FIFTH, in the Hell's Kitchen area of Manhattan, New York City, as of June 30, 2020, the Company had completed superstructure construction, precast concrete facade, and windows installation. Of the total sellable 34,903 square feet of retail/commercial space, a total of 28,090 square feet have been leased to the U.S. department store retailer Target for a 20 year term and another 1,910 square feet have been leased to a dermatologist's office for a 15 year lease term.
The construction is currently ahead of schedule and under budget. The onsite sales office and model apartments were fully furnished during the second quarter 2020 and ready to show to brokers and potential buyers. The residential unit sales strategy started with a first phase launch in China during Q4 2019 in which we exhibited in five Tier 1 and Tier 2 cities, leveraging Xinyuan's own client database and established third-party channels. The start of the second phase in New York City, will depend on the progress of New York City's re-opening from the pandemic.
At the RKO project in Flushing, New York, the Company continued to execute on the planning, governmental approvals, and pre-development activities. As of June 30, 2020, we have engaged GKV Architects to develop new architectural plans, and completed the schematic design for the condo and hotel mixed-use development. The demolition is expected to be completed by the end of November 2020.
Update on the United Kingdom Real Estate Project
During the second quarter of 2020, work on site continued to progress, primarily focused on internal fit out, but completion will be delayed from the contract completion date of October 2020 due to the impact of Covid-19 on construction sites. Our current forecast is that construction will be completed in first quarter 2021, assuming no further restrictions on working conditions.
Of the 423 residential units in The Madison, all of the 104 Affordable Housing apartments have been pre-sold to a regulated affordable housing provider. Of the remaining 319 apartments, 144 apartments have been sold.
Business Outlook
The company expects 2020 contract sales of 20 to 22 billion RMB, with consolidated net income similar to 2019.
However, the above outlook is based on information available as of the date of this press release and reflects the Company's current expectations, which may be subject to change in light of uncertainties relating to future COVID-19 developments.
Conference Call Information
The Company will hold a conference call at 8:00am ET on September 2, 2020, to discuss its second quarter 2020 results. Listeners may access the call by dialing:
US Toll Free: 1-866-575-6539
Toll/International: 1-323-994-2082
China National: 4001 209101
Hong Kong Toll Free: 800 961 105
United Kingdom Toll Free: 0800 358 6377
A webcast will also be available through the Company's investor relations website at http://ir.xyre.com.
A replay of the conference call may be accessed by phone at the following numbers until September 9, 2020:
US: 1-844-512-2921
International: 1-412-317-6671
Access code: 7000011
A live and archived webcast of the conference call will be available at http://ir.xyre.com.
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 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, and 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 City. 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 impact of the COVID-19 pandemic on the real estate markets and economies of the cities and countries in which we operate; 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, 2018. 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:
Xinyuan Real Estate Co., Ltd.
Mr. Charles Wang
Investor Relations Director
Tel: +86 (10) 8588-9376
Email: irteam@xyre.com
The Blueshirt Group
In U.S.: Ms. Julia Qian
Email: Julia@blueshirtgroup.com
In China: Ms. Susie Wang
Mobile: +86 (138) 1081-7475
Email: susie@blueshirtgroup.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
June 30, March 31, June 30,
2020 2020 2019
(unaudited) (unaudited) (unaudited)
Total revenue 284,361 125,769 609,439
Total costs of revenue (265,143) (97,663) (450,224)
Gross profit 19,218 28,106 159,215
Selling and distribution
expenses (15,943) (6,340) (20,633)
General and administrative
expenses (35,434) (37,678) (42,343)
Operating (loss)/income (32,159) (15,912) 96,239
Interest income 4,322 4,169 4,964
Interest expense (30,434) (30,263) (28,384)
Gain on short-term investments 3,460 901 505
Other loss (1,114) (208) (867)
Net gain/(loss) on debt
extinguishment 332 (1,110) (1,955)
Exchange loss (1,960) (850) (4,354)
Share of gain/(loss) of equity
investees 473 (1,024) (1,702)
(Loss)/income from operations
before income taxes (57,080) (44,297) 64,446
Income tax benefits/(expenses) 27,021 5,157 (44,621)
Net (loss)/income (30,059) (39,140) 19,825
Net loss/(income) attributable
to non-controlling interest 3,819 (383) (9,171)
Net (loss)/income attributable
to Xinyuan Real Estate Co.,
Ltd. shareholders (26,240) (39,523) 10,654
(Loss)/earnings per ADS:
Basic (0.49) (0.73) 0.19
Diluted (0.49) (0.73) 0.19
ADS used in computation:
Basic 53,639 53,904 57,003
Diluted 53,639 53,904 57,371
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,
2020 2019
(unaudited) (unaudited)
Total revenue 410,130 1,078,292
Total costs of revenue (362,806) (788,028)
Gross profit 47,324 290,264
Selling and distribution
expenses (22,283) (40,039)
General and administrative
expenses (73,112) (78,987)
Operating (loss)/income (48,071) 171,238
Interest income 8,491 9,049
Interest expense (60,697) (52,690)
Gain on short-term investments 4,361 1,676
Other expense (1,322) (773)
Loss on extinguishment of debt (778) (6,544)
Exchange loss (2,810) (809)
Share of loss of equity
investees (551) (3,302)
(Loss)/income from operations
before income taxes (101,377) 117,845
Income tax benefits/(expenses) 32,178 (79,830)
Net (loss)/income (69,199) 38,015
Net loss /(income) attributable
to non-controlling interest 3,436 (7,752)
Net (loss)/income attributable
to Xinyuan Real Estate Co.,
Ltd. shareholders (65,763) 30,263
(Loss)/earnings per ADS:
Basic (1.22) 0.52
Diluted (1.22) 0.52
ADS used in computation:
Basic 53,722 57,950
Diluted 53,722 58,309
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,
2020 2020 2019
(unaudited) (unaudited) (audited)
ASSETS
Current assets
Cash and restricted cash 820,769 794,076 989,587
Short-term investments 5,850 7,060 5,596
Accounts receivable 88,103 87,508 97,912
Other receivables 330,833 273,866 287,300
Deposits for land use
rights 28,816 25,970 26,375
Other deposits and
prepayments 300,348 292,506 277,463
Advances to suppliers 66,317 46,081 44,358
Real estate properties
development completed 415,430 434,478 458,205
Real estate properties
under development 3,094,871 3,176,368 3,254,388
Amounts due from related
parties 266,735 201,958 200,758
Amounts due from employees 1,594 2,392 2,351
Other current assets 18,186 13,999 772
Total current assets 5,437,852 5,356,262 5,645,065
Restricted cash, non-
current 179,059 138,975 112,998
Real estate properties
held for lease, net 511,800 516,158 515,869
Property and equipment,
net 40,043 41,086 43,004
Long-term investment 593,547 602,224 613,620
Deferred tax assets 188,034 267,021 260,153
Deposits for land use
rights and properties 32,488 32,463 32,969
Amounts due from related
parties 39,465 80,824 82,687
Contract cost assets 20,703 22,239 23,093
Operating lease right-of-
use assets 8,635 9,563 11,801
Other assets 76,415 77,628 80,405
TOTAL ASSETS 7,128,041 7,144,443 7,421,664
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,
2020 2020 2019
(unaudited) (unaudited) (audited)
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and notes payable 992,679 1,049,106 1,166,660
Short-term bank loans and other debt 56,881 38,719 73,419
Customer deposits 1,224,998 1,152,811 1,106,099
Income tax payable 155,914 279,473 298,228
Other payables and accrued liabilities 530,436 400,140 323,164
Payroll and welfare payable 10,269 10,952 24,224
Current portion of long-term bank loans and other debt 1,177,657 1,393,265 1,418,955
Lease liability, current portion 7,143 12,033 11,284
Mandatorily redeemable non-controlling interests 6,981 6,856 8,857
Amounts due to related parties 53,667 54,869 53,682
Total current liabilities 4,216,625 4,398,224 4,484,572
Non-current liabilities
Long-term bank loans 747,387 795,867 686,065
Other long-term debt 1,026,103 811,717 1,036,691
Deferred tax liabilities 299,468 337,366 338,593
Unrecognized tax benefits 114,085 74,049 73,605
Lease liability 3,373 6,233 10,187
Amounts due to related parties 24,853
TOTAL LIABILITIES 6,431,894 6,423,456 6,629,713
Shareholders' equity
Common shares 16 16 16
Treasury shares (114,454) (114,284) (113,720)
Additional paid-in capital 546,022 544,860 543,291
Statutory reserves 175,002 175,020 175,008
Retained earnings 37,301 85,286 135,873
Accumulated other comprehensive loss (44,843) (70,745) (50,167)
Total Xinyuan Real Estate Co., Ltd. shareholders' equity 599,044 620,153 690,301
Non-controlling interest 97,103 100,834 101,650
Total equity 696,147 720,987 791,951
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 7,128,041 7,144,443 7,421,664
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