Xinyuan Real Estate Co., Ltd. Announces Second Quarter 2020 Financial Results – Wire Real Estate

Xinyuan Real Estate Co., Ltd. Announces Second Quarter 2020 Financial Results




Sep 3, 2020

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Sep 3, 2020 9:44 AM ET

iCrowd Newswire - Sep 3, 2020

 Xinyuan Real Estate Co., Ltd. , 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, 2020US$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

(m2, 000s)

Total Active
Projects as of
June 30, 2020

Sold as of
June 30, 2020

Unsold as of
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

 (m2, 000s)

Pre-sales

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

Contact Information:

US Toll Free: 1-866-575-6539Toll/International: 1-323-994-2082China National: 4001 209101Hong Kong Toll Free: 800 961 105United Kingdom Toll Free: 0800 358 6377
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