Research and Trading Portal for US-listed China Stocks · March 29, 2017
China Tracker - Details for China HGS Real Estate (HGSH)
China HGS Real Estate
Looking ahead, we believe demand for properties will continue to rise in Hanzhong and surrounding areas, as the local economy and Gross Domestic Product (GDP) are continuing to improve rapidly under the China central government's guidance for the development of the economies in western regions. In addition to the 62,700 square meters land we acquired in May 2011, we are actively seeking additional land. We believe that continuous land acquisition will help ensure the sustainability of our business development. We also anticipate a strong fiscal fourth quarter, which is normally a peak season for the real estate market. In summary, we are very positive about the dynamics in our market and we feel confident that China HGS will continue its steady and healthy growth over the next several years.
China HGS Real Estate today announced that the Company has experienced brisk sales at its Yangzhou Pearl Garden Phase III Project in Yang County, Shaanxi province, following the project's opening in mid-February 2011. Based on price levels in February, 2011, China HGS could generate total revenues of about $22.9 million from sales of the Pearl Garden III project.
"We are very pleased to achieve such encouraging presale results from the Pearl Garden III project. Due to increasing demand for real-estate properties in the Yang County local market, the presale results significantly exceeded our initial expectations. The Chinese government recently launched a series of regulations intended to cool down the overheated domestic real estate market. Although these measures will affect the entire real-estate industry in China, including China HGS, we believe since China HGS' market focus is on Tier-III and Tier-IV cities, where most demands is generated from first time apartment buyers and the overall real estate market is less overheated, we believe we will experience only a limited impact from the central government's property control initiatives. Therefore, China HGS continues to remain optimistic and confident about its business growth prospects in 2011 and the following several years."
Considering the special circumstances of new regulation implemented by the Local Taxation Bureau, we hope our investors can understand this unusual temporary impact on our recognized revenue. We will be able to recognize the revenue backlog once the new invoice system becomes normalized and operational, which we expect to occur during the second quarter of fiscal year 2011. Therefore, we have reason to believe that our attractive pipeline of planned and currently under-construction projects will enable us to continue our business growth in the fiscal year 2011.
As China is more actively deploying its 'Go to the West' strategy to even out domestic economic development, we believe Hanzhong is located in an ideal location to benefit from the regional development in western China, since it represents one of the most important connecting points between northwest and southwest China. In addition, our solid track record and industry-leading position in Hanzhong has also started to improve China HGS' market recognition in several surrounding Tier-III cities in Shaanxi and surrounding areas. We have an attractive pipeline of planned and currently under-construction projects to drive solid growth in fiscal 2011 and beyond.
China HGS expects to begin trading on The NASDAQ Global Market under the new stock symbol "HGSH" on Monday, September 13, 2010, until which time its shares will continue to trade on the Over-The-Counter Bulletin Board under the symbol "CAHS".
"Despite the Chinese government's tightening policy and regulations to constrain growth in the domestic real estate market, we maintain our positive outlook for the property market in second-tier and third-tier cities in western China. We believe that Hanzhong and the surrounding areas will continue to enjoy the benefits of China's "Go to the West" policy in the coming years." For the fiscal year ending September 30, 2010, China HGS raises its revenue guidance from previously announced $47.5 million - $49.0 million to $52.5 million to $53.0 million. The Company also raised its fiscal year 2010 net income guidance from $15.5-$16 million to $17.0-$17.5 million, or diluted earnings per share of approximately $0.38 to $0.39.
We are pleased to report that our Xin Ju project was nearly sold out at the end of June 2010, reflecting the continued strong demand in the Hanzhong residential property market. Despite the tightening measures undertaken by the Chinese government in 2010 to control the overheated real estate market in certain Tier 1 cities, Hanzhong and the surrounding areas have continued to be vibrant markets during the first half of 2010. We are very confident that the economic growth in Hanzhong will continue to exhibit robust growth for the next several years, resulting in stable and growing demand for real estate. We also expect the new multi-layer buildings we are constructing in Yang County to make meaningful revenue contributions over the next two years. We remain confident in our ability to meet our 2010 fiscal year guidance of revenue of approximately $47.5 million to $49.0 million and net income of $15.5 million to $16.0 million.
For the fiscal year ending September 30, 2010, China HGS reaffirms its guidance of revenue of approximately $47.5 million to $49.0 million and net income of $15.5 million to $16.0 million. "We have enhanced our corporate governance by establishing a strong board with a majority of independent directors and creating audit, compensation and nominating and corporate governance committee. We believe we now meet all the corporate governance requirements to list our common stock on a major U.S. stock market."
Market demand for high quality and well-equipped residential properties continues to grow, resulting in increased market recognition and strong sales for China HGS, which is well-known for its superior quality residential properties. We estimate the Xin Ju Project and the Nan Yuan II Project to generate over RMB 170 million ( $24.9 million) in revenue for fiscal year 2010.
China HGS re-affirms its previously issued guidance for fiscal year ended September 30, 2010. The Company expects revenues to be approximately $47.5 million to $49.0 million and net income to be approximately $15.5 million to $16.0 million. The Company expects to generate stronger sales in the second quarter of fiscal 2010 than in the first quarter, as migrant workers return home to celebrate the Spring Festival, which marks the traditional sales season for apartment units. "Despite the fact that many national real estate developers have been impacted by the government's recent tight monetary policy, China HGS has not been materially affected. We believe our projects in Hanzhong City and Yang County have little speculative buying due to strong fundamentals and GDP growth. With significant land reserves and a balance sheet with no long-term debt, we believe we will continue to capture opportunities for revenue and profit growth in the year ahead."
China HGS expects revenues for the fiscal year ended September 30, 2010 to be approximately 47.5 million to $49.0 million and net income of $15.5 million to $16.0 million, higher than the Company's earlier guidance of $46.4 million and $13.0 million, respectively. The Company expects fully diluted earnings to be in the range of $0.39 to $0.40 per share, based on current weighted average shares outstanding.