BEIJING, Nov. 13, 2018 /PRNewswire/ -- Xinyuan Real Estate Co., Ltd. ("Xinyuan" or the "Company") (NYSE: XIN), an NYSE-listed real estate developer and property manager primarily in China and also in other countries, today announced its unaudited financial results for the third quarter ended September 30, 2018.

Third Quarter 2018 Highlights

• On January 1, 2018, the Company adopted ASC 606 to recognize revenue for contracts executed after the adoption on an "over time" basis using costs incurred, an input measure. As such, third quarter results reflect the adoption of ASC 606 and may not be directly comparable to prior periods.
• Contract sales decreased 5.5% to US$571.3 million from US$604.5 million in the third quarter of 2017 and decreased 9.9% from US$633.9 million in the second quarter of 2018.
• Total revenue increased 23.4% to US$595.5 million from US$482.4 million in the third quarter of 2017 and increased 67.4% from US$355.8 million in the second quarter of 2018.
• Gross profit increased 37.1% to US$149.2 million, or 25.1% of total revenue, from US$108.8 million, or 22.6% of total revenue, in the third quarter of 2017 and increased 36.4% from US$ 109.4 million, or 30.7% of total revenue, in the second quarter of 2018.
• Selling, General and Administrative ("SG&A") expenses as a percentage of total revenue decreased to 8.0% from 10.6% in the third quarter of 2017 and 13.2% in the second quarter of 2018.
• Net income increased 44.8% to US$23.9 million from US$16.5 million in the third quarter of 2017 and increased from a net loss of US$9.3 million in the second quarter of 2018.
• Diluted net earnings per American Depositary Share ("ADS") attributable to shareholders were US$0.31 compared to diluted net earnings per ADS of US$0.22 in the third quarter of 2017 and net loss per ADS of US$0.10 in the second quarter of 2018.

Mr. Yong Zhang, Xinyuan's Chairman, stated, "Contract sales during the third quarter of 2018 once again experienced downward pressure because of a slowing economy and continued tight regulations on China's property market. However, we were able to offset these market uncertainties due to our strategically located projects in tier-two cities and our strong operational execution, resulting in a 67.4% increase in our top line from the prior quarter and a 23.4% increase from the prior year period. This translated into bottom-line growth of 44.8% year-over-year."

Mr. Zhang added, "In the third quarter of 2018, we commenced pre-sales of four projects, mainly in tier-two cities where housing demand continues to be strong, including Changsha Furong Thriving Family, Chengdu Xinyuan City I, Kunshan Xinyu Jiayuan, and Xingyang Splendid IV. We were also able to expand our land bank with the strategic acquisition of Dalian International Health Technology Town. This acquisition helps unlock our growth potential in Northeastern area of China. With an enlarged land bank, and an expanded global footprint, we are well positioned for long-term growth.

"We remain optimistic about our revenue growth and contract sales for the fourth quarter and we remain focused on our strategic priorities of rolling out projects in tier-one and tier-two cities. Our effective execution will help strengthen our ability to meet our goals for the fourth quarter. We're also pleased to announce another quarterly dividend payment to shareholders," concluded Mr. Zhang.

Third Quarter 2018 Financial Results

Contract Sales

Contract sales in China totaled US$571.3 million in the third quarter compared to US$597.5 million in the third quarter of 2017 and US$630.3 million in the second quarter of 2018.

The Company's GFA sales in China were 277,500 square meters in the third quarter of 2018 compared to 369,500 square meters in the third quarter of 2017 and 282,900 square meters in the second quarter of 2018.

The average selling price ("ASP") per square meter sold in China was RMB13,406 (US$2,059) in the third quarter of 2018 compared to RMB10,994 (US$1,616) in the third quarter of 2017 and RMB14,173 (US$2,226) in the second quarter of 2018.

The Company commenced pre-sales of four new projects in the third quarter of 2018, Changsha Furong Thriving Family, Chengdu Xinyuan City I, Kunshan Xinyu Jiayuan, and Xingyang Splendid IV, which contributed 37.2% and 32.0% of total GFA sales and total contract sales, respectively.

 

 

 

Revenue

In the third quarter of 2018, the Company's total revenue increased 23.4% to US$595.5 million from US$482.4 million in the third quarter of 2017 and increased 67.4% from US$355.8 million in the second quarter of 2018.

Gross Profit

Gross profit for the third quarter of 2018 was US$149.2 million, or 25.1% of revenue, compared to a gross profit of US$108.8 million, or 22.6% of revenue, in the third quarter of 2017 and a gross profit of US$109.4 million, or 30.7% of revenue, in the second quarter of 2018.

Selling, General and Administrative Expenses

SG&A expenses were US$47.7 million for the third quarter of 2018 compared to US$51.0 million for the third quarter of 2017 and US$47.0 million for the second quarter of 2018. As a percentage of total revenue, SG&A expenses were 8.0% compared to 10.6% in the third quarter of 2017 and 13.2% in the second quarter of 2018.

Net Income/(loss)

Net income for the third quarter of 2018 was US$23.9 million compared to net income of US$16.5 million for the third quarter of 2017 and net loss of US$9.3 million for the second quarter of 2018. Net margin increased from 3.4% in the third quarter of 2017 and increased from negative 2.6% in the second quarter of 2018 to 4.0% for the third quarter of 2018. Diluted net earnings were US$0.31 per ADS in the third quarter of 2018 compared to diluted net earnings of US$0.22 per ADS in the third quarter of 2017 and diluted net loss of US$0.10 per ADS in the second quarter of 2018.

Balance Sheet

As of September 30, 2018, the Company's cash and cash equivalents (including restricted cash) decreased to US$1,416.9 million from US$1,451.5 million as of June 30, 2018. Total debt outstanding was US$4,084.4 million, which reflected an increase of US$498.9 million compared to US$3,585.5 million at the end of the second quarter of 2018. The balance of the Company's real estate properties under development at the end of the third quarter of 2018 was US$4,469.1 million compared to US$3,694.8 million at the end of the second quarter of 2018.

Adoption of ASC606

On January 1, 2018, the Company adopted ASC 606: Revenue from Contracts with Customers ("ASC 606") issued by the Financial Accounting Standards Board. The Company adopted ASC 606 using the modified retrospective approach and applied the adoption only to contracts not completed as of the date of adoption, with no restatement of comparative periods, and a cumulative-effect adjustment to retained earnings recognized as of the date of adoption.

The following tables show the actual annual 2017 operating results and the annual 2017 operating results if the Company had adopted ASC 606 on January 1, 2017.

 

 

 

Real Estate Project Status in China

Below is a summary table of projects that were active and available for sale in the third quarter of 2018.