PR Newswire | May 18, 2021 07:45AM EDT

05/18 06:45 CDT

China HGS Announces First Six Months of Fiscal 2021 Financial ResultsRevenue Up by Approximately 867% and 402% for the three and six months of Fiscal 2021, Respectively HANZHONG, China, May 18, 2021

HANZHONG, China, May 18, 2021 /PRNewswire/ -- China HGS Real Estate Inc. (NASDAQ: HGSH) ("China HGS" or the "Company"), a leading regional real estate developer headquartered in Hanzhong City, Shaanxi Province, China, announced its interim financial results for the first half of fiscal 2021 ended March 31, 2021.

Second Quarter Fiscal 2021 Highlights

* Total revenues for the second quarter of fiscal 2021 were approximately $18.3 million, representing an increase of 867.2% from approximately $1.9 million in the same quarter of fiscal 2020 due to more gross floor area sold during the current quarter. * Net income for the second quarter of fiscal 2021 totaled approximately $2.2 million, significantly increased from net loss of approximately $0.6 million in the same period of last year. * Basic and diluted net income per share attributable to shareholders for the second quarter of fiscal 2021 increased to $0.10, compared to net loss per share of $0.01 for the same quarter of the last year.

First Six Months of Fiscal 2021 Highlights

* Total revenues for the first six months of fiscal 2021 were approximately $21.0 million, representing an increase of 401.5% from approximately $4.2 million in the same period of fiscal 2020. * Net income for the first six months of fiscal 2021 totaled approximately $2.5 million, significantly increased from net loss of approximately $0.9 million in the same period of last year. * Basic and diluted net income per share attributable to shareholders for the second quarter of fiscal 2021 increased to $0.11, compared to net loss per share of $0.02 for the same period of the last year.

Safe Harbor Statement

This press release contains forward-looking statements, which are subject to change. The forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All "forward-looking statements" relating to the business of China HGS Real Estate Inc., which can be identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties which could cause actual results to differ. These factors include but are not limited to: the uncertain market for the Company's business, macroeconomic, technological, regulatory, or other factors affecting the profitability of real estate business; and other risks related to the Company's business and risks related to operating in China. Please refer to the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2020, for specific details on risk factors. Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company undertakes no obligation to revise or update its forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

About China HGS Real Estate, Inc.

China HGS Real Estate, Inc. (NASDAQ: HGSH), founded in 1995 and headquartered in Hanzhong City, Shaanxi Province, is a leading real estate developer in the region and holds the national grade I real estate qualification. The Company focuses on the development of high-rise, sub-high-rise residential buildings and multi-building apartment complexes in China's Tier 3 and Tier 4 cities and counties with rapidly growing populations driven by increased urbanization. The Company provides affordable housing with popular and modern designs to meet the needs of multiple buyer groups. The Company's development activity spans a range of services, including land acquisition, project planning, design management, construction management, sales and marketing, and property management. For further information about China HGS, please go to www.chinahgs.com.

Company contact:

Randy Xiong, President of Capital MarketChina Phone: (86) 091-62622612Email: randy.xiong@chinahgs.com

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, September 30,

2021 2020

ASSETS (Unaudited)

Cash $ 555,576 $ 457,699

Restricted cash 3,297,734 3,409,837

Contract assets 15,195,730 14,255,328

Real estate property development completed 93,359,420 94,671,258

Other assets 9,709,848 8,132,555

Property, plant and equipment, net 567,292 571,330

Security deposits 1,922,853 1,855,506

Real estate property under development 251,151,767 227,741,017

Due from local governments for real estate property development completed 2,973,777 2,869,623

Total Assets $ 378,733,997 $ 353,964,153

LIABILITIES AND STOCKHOLDERS' EQUITY

Construction loans $ 116,060,624 $ 109,937,408

Accounts payable 31,854,281 25,415,352

Other payables 4,569,384 4,028,048

Construction deposits 3,318,974 3,202,730

Contract liabilities 1,885,982 1,847,685

Customer deposits 21,498,027 19,405,528

Accrued expenses 1,861,745 1,920,370

Taxes payable 20,592,607 19,881,211

Total liabilities 201,641,624 185,638,332

Commitments and Contingencies

Stockholders' equity

Common stock, $0.001 par value, 50,000,000 shares authorized, 22,525,000 sharesissued and 22,525 22,525outstanding March 31, 2021 and September 30, 2020

Additional paid-in capital 129,930,330 129,930,330

Statutory surplus 10,458,395 10,458,395

Retained earnings 37,466,885 34,954,061

Accumulated other comprehensive loss (785,762) (7,039,490)

Total stockholders' equity 177,092,373 168,325,821

Total Liabilities and Stockholders' Equity $ 378,733,997 $ 353,964,153

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

Three months ended March 31, Six months ended March 31,

2021 2020 2021 2020

Real estate sales $ 18,278,112 $ 1,889,829 $ 21,033,374 $ 4,194,073

Less: Sales tax (115,166) (27,048) (138,704) (66,281)

Cost of real estate sales (14,474,264) (1,466,381) (16,327,906) (3,171,993)

Gross profit 3,688,682 396,400 4,566,764 955,799

Operating expenses

Selling and distribution expenses 16,821 200,390 96,166 400,558

General and administrative expenses 543,334 819,415 849,259 1,408,254

Total operating expenses 560,155 1,019,805 945,425 1,808,812

Operating income (loss) 3,128,527 (623,405) 3,621,339 (853,013)

Interest income (expense), net 712 (15,586) 3,537 (32,839)

Other expense (166,571) (96,729) (272,428) (96,729)

Income (loss) before income taxes 2,962,668 (735,720) 3,352,448 (982,581)

Provision (benefit) for income taxes 741,431 (111,699) 839,624 (101,179)

Net income (loss) 2,221,237 (624,021) 2,512,824 (881,402)

Other Comprehensive income (loss)

Foreign currency translation adjustment (737,431) (2,823,145) 6,253,728 1,557,717

Comprehensive income (loss) $ 1,483,806 $ (3,447,166) $ 8,766,552 $ 676,315

Basic and diluted income (loss) per common share

Basic and diluted $ 0.10 $ (0.01) $ 0.11 $ (0.02)

Weighted average common shares outstanding

Basic and diluted 22,525,000 22,525,000 22,525,000 22,525,000

The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.

CHINA HGS REAL ESTATE INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

Accumulated Common Stock Additional Statutory Retained Other

Comprehensive

Shares Amount Paid-in Capital Surplus Earnings Income (loss) Total

Balance at September 30, 2019 22,525,000 $ 22,525 $ 129,930,330 $ 10,360,251 $ 34,070,767 $ (15,683,723) $ 158,700150

Net loss for the period - - (257,381) (257,381)

Foreign currency translation adjustments - - 4,380,862 4,380,862

Balance at December 31, 2019 22,525,000 22,525 129,930,330 10,360,251 33,189,365 (11,302,861) 162,823,631

Net loss for the period - - (624,021) (624,021)

Foreign currency translation adjustments - - (2,823,145) (2,823,145)

Balance at March 31, 2020 22,525,000 $ 22,525 $ 129,930,330 $ 10,360,251 $ 33,189,365 $ (14,126,006) $ 159,376,465

Balance at September 30, 2020 22,525,000 $ 22,525 $ 129,930,330 $ 10,458,395 $ 34,954,061 $ (7,039,490) $ 168,325,821

Net income for the period - - - - 291,587 - 291,587

Foreign currency translation - - - - - 6,991,159 6,991,159adjustments

Balance at December 31, 2020 22,525,000 22,525 129,930,330 10,458,395 35,245,648 (48,331) 175,608,567

Net income for the period - - - - 2,221,237 - 2,221,237

Foreign currency translation - - - - - (737,431) (737,431)adjustments

Balance at March 31, 2021 22,525,000 $ 22,525 $ 129,930,330 $ 10,458,395 $ 37,466,885 $ (785,762) $ 177,092,373

The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.

CHINA HGS REAL ESTATE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended March 31,

2021 2020

Cash flows from operating activities

Net income (loss) $ 2,512,824 $ (881,402)

Adjustments to reconcile net income (loss) to net cash provided by (used in)operating activities:

Deferred tax provision (benefit) - (235,179)

Depreciation 24,772 37,710

Changes in operating assets and liabilities:

Contract assets (422,948) 651,289

Real estate property development completed 4,747,385 2,937,724

Real estate property under development (13,010,220) (2,835,288)

Other current assets (1,281,964) (935,053)

Security deposit 3,195,887

Accounts payable 5,515,797 89,325

Other payables 395,088 111,347

Contract liabilities (28,762) (71,507)

Customer deposits 1,387,999 2,349,028

Construction deposits (428)

Accrued expenses (675,478)

Taxes payables 109,454 (1,379,060)

Net cash (used in) provided by operating activities (50,575) 2,358,915

Cash flow from financing activities

Repayments of construction loans - (2,128,585)

Net cash used in financing activities - (2,128,585)

Effect of changes of foreign exchange rate on cash and restricted cash 36,349 103,801

Net (decrease) increase in cash and restricted cash (14,226) 334,131

Cash and restricted cash, beginning of period 3,867,536 4,202,117

Cash and restricted cash, end of period $ 3,853,310 $ 4,536,248

Supplemental disclosures of cash flow information:

Interest paid $ 1,847,904 $ 3,416,592

Income taxes paid $ 135,462 $ 375,601

Reconciliation to amounts on condensed consolidated balance sheets:

Cash $ 555,576 $ 658,313

Restricted $ 3,297,734 $ 3,877,935

Total cash and restricted cash $ 3,853,310 $ 4,536,248

Cash, beginning of period $ 457,699 $ 263,139

Restricted, beginning of period $ 3,409,837 $ 3,938,978

Total cash and restricted cash, beginning of period $ 3,867,536 $ 4,202,117

Non-cash financing activities:

Reclassification of interest payable to construction loan $ 1,626,210 $ -

Real estate sales for settlements in real estate property under development $ (14,432,275) $ -

The accompanying notes are an integral part of these unaudited condensedconsolidated financial statements.

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SOURCE China HGS Real Estate Inc.