Xinyuan Real Estate (XIN) Reports Q2 Loss of $0.11 on Revenues of $360.6M; Offers 3Q Revenue Outlook

Xinyuan Real Estate (NYSE: XIN) reported Q2 EPS of ($0.11), versus ($0.14) reported last year. Revenue for the quarter came in at $360.6 million, versus $488.2 million reported last year.

• Under ASC 606, the Company expects to recognize revenue for contracts executed starting from January 1, 2018, on an "over time" basis using costs incurred, an input measure.
• Second quarter results reflect the adoption of ASC 606 and may not be directly comparable to prior periods.
• The adoption of ASC 606 reduced second quarter reported revenues and net income by $212.8 million and $29.2 million, respectively.
• Contract sales decreased 13.4% to US$633.9 million from US$732.4 million in the second quarter of 2017 and increased 66.5% from US$380.7 million in the first quarter of 2018.
• Total revenue decreased 26.1% to US$360.6 million from US$488.2 million in the second quarter of 2017 and increased 107.1% from US$174.1 million in the first quarter of 2018.
• Gross profit increased 3.4% to US$111.6 million, or 30.9% of total revenue, from US$107.9 million, or 22.1% of total revenue, in the second quarter of 2017 and increased 188.4% from US$38.7 million, or 22.2% of total revenue, in the first quarter of 2018.
• Selling, General and Administrative ("SG&A") expenses as a percentage of total revenue increased to 12.6% from 9.8% in the second quarter of 2017 and decreased from 22.9% in the first quarter of 2018.
• Net loss was US$9.1 million compared to net income of US$20.8 million in the second quarter of 2017 and net loss of US$12.7 million in the first quarter of 2018. Exchange gains of $11.6 million in the first quarter of 2018 swung to exchange losses in Q2 2018 as the RMB weakened against the US dollar.
• Diluted net loss per American Depositary Share ("ADS") attributable to shareholders were US$0.11 compared to diluted net earnings per ADS of US$0.14 in the second quarter of 2017 and net loss per ADS of US$0.16 in the first quarter of 2018.

Mr. Yong Zhang, Xinyuan's Chairman, stated, "During the second quarter of 2018, our contract sales experienced downward pressure because of tightened regulations on China's property market. Also, our revenue recognition was delayed due to ASC606 adoption. Despite these factors, we managed to double our revenue and grow our contract sales by two-thirds since the first quarter of 2018."

Mr. Zhang continued, "In the second quarter of 2018, we continued to progress as planned with our domestic pre-sales and overseas projects. We commenced pre-sales of three projects, Zhengzhou International New City III D, Zhengzhou International New City III B, and Zhengzhou Hangmei International Wisdom City I. We were also able to expand our land bank with the strategic acquisition of 6 pieces of land: Zhengzhou International New City, Zhengzhou Hangmei International Wisdom City, Wuhan New Project, Jinan Zhangqiu Project, Suzhou New Project, and Qingdao West Coast Project. With an enlarged land bank, and an expanded global footprint, we are well positioned for long-term growth.

"Despite persistent regulatory headwinds, we remain optimistic about the financial outlook for the rest of the year. We are also proud of our ability to deliver sustainable value to shareholders via a consistent quarterly dividend payout." concluded Mr. Zhang.

GUIDANCE:

Xinyuan Real Estate sees Q3 2018 revenue of $540 million.

For earnings history and earnings-related data on Xinyuan Real Estate (XIN) click here.

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