Company Achieves Revenue and Net Income Growth of 28%
Year-Over-Year SHANGHAI, China, Nov. 20 /PRNewswire-FirstCall/ --
E-House (China) Holdings Limited ("E-House" or the "Company")
(NYSE:EJ), a leading real estate services company in China, today
announced its unaudited financial results for the fiscal quarter
and nine months ended September 30, 2008. Financial Highlights --
Total revenues were $39.3 million for the third quarter of 2008, an
increase of 28% from $30.6 million for the same quarter in 2007. --
For the first nine months of 2008, total revenues were $115.5
million, an increase of 63% from $70.7 million for the same period
in 2007. -- Net income for the third quarter of 2008 was $10.9
million, an increase of 28% from $8.5 million for the same quarter
in 2007. -- For the first nine months of 2008, net income was $31.3
million, an increase of 62% from $19.3 million for the same period
in 2007. -- Diluted earnings per ADS were $0.13 for the third
quarter of 2008 and $0.39 for the first nine months of 2008,
compared to $0.11 and $0.26, respectively, for the same periods in
2007. "During the third quarter, China's real estate industry
experienced its most severe downturn in recent history," said Mr.
Xin Zhou, E-House's chairman and chief executive officer. "The
continued deterioration in sentiment among potential real estate
buyers, a slowdown in China's economy and the Beijing Olympic Games
all contributed to the sharp decline in both primary and secondary
real estate transaction volumes across most of the cities where we
operate. The total sales volume of properties sold by E-House also
declined compared to the third quarter of 2007, when the market was
at its peak. However, we were still able to achieve revenue and
profit growth, largely due to our rapidly expanding consulting and
information services business." Mr. Zhou added, "Looking ahead to
the fourth quarter of 2008, we expect conditions within China's
real estate sector to remain challenging. China's economic growth
continues to show obvious signs of slowing down and consumer
sentiment continues to deteriorate. Available data on real estate
transactions in October continue to reveal a sharp decline in
volume for most major cities compared to last year. However, the
Chinese government recently announced a series of measures aimed at
stimulating economic growth and encouraging real estate purchases.
These measures include lowering interest rates, reduction of taxes
for certain types of real estate transactions and favorable
mortgage lending terms for certain types of real estate purchases.
While the immediate impact of these measures may be limited, we
believe that these measures will clearly help China's economy and
the real estate sector over the long term. "Since the October
holiday period, many developers with projects in E- House's
pipeline launched sales and carried out aggressive promotions in
order to generate sales volume and cash flow. This has led to a
substantial increase in sales volume for E-House compared to the
third quarter. However, following the central bank's announcement
in October of the new mortgage lending policy, most commercial
banks have still not issued detailed rules to clarify whether and
to what extent the favorable lending terms can be extended to a
wider range of purchases than what the central bank has already
specified. This has caused a temporary halt in the signing of new
mortgage loan agreements in many locations while consumers and bank
branches wait for clear instructions. Since the definition of a
successful sale in many of our agency contracts requires the
signing of the mortgage loan agreement, the timing of our revenue
recognition for many of our sales in the fourth quarter may be
adversely affected. Our total revenues for the fourth quarter will
be highly dependent on this factor. "In this challenging
environment, E-House's position remains highly unique and
favorable. As developers struggle to generate sales volume and
streamline their management and cost structure, we thereby continue
to gain market share by signing more projects while building an
unprecedented project pipeline. Our consulting business also
benefits from developers' increased need for better information and
market intelligence. Once the industry starts to recover, we will
be well positioned to resume robust growth." Mr. Li-Lan Cheng,
E-House's chief financial officer, added, "During the third quarter
of 2008, we were able to achieve revenue growth largely as a result
of strong growth in our consulting business. Income from operations
and operating margin for the third quarter of 2008 both declined as
compared to the same period in 2007 as our cost base increased more
than our revenue. Net income increased and net margin was stable
for the third quarter of 2008 compared to the same period in 2007
due to downward adjustment of our effective tax rate following the
government's confirmation of the 18% applicable corporate tax rate
for our primary agency business in Shanghai, as opposed to the 25%
tax rate applicable for most other businesses in China." Mr. Cheng
added, "In addition to the uncertainty with our revenues for the
fourth quarter as Mr. Zhou stated, we expect our fourth quarter
operating and net margins to be lower than the same period in 2007.
This is because our fourth quarter revenue is unlikely to increase
proportionally as much as our cost base has compared to the same
period in 2007, when we recorded very strong revenue growth. In
addition, we had a much lower effective tax rate in the fourth
quarter of 2007 than what we expect to receive this year."
Financial Results for the Third Quarter and First Nine Months of
2008 Revenues Total revenues were $39.3 million for the third
quarter of 2008, an increase of 28% from $30.6 million for the same
quarter in 2007. For the first nine months of 2008, total revenues
were $115.5 million, an increase of 63% from $70.7 million for the
same period in 2007. Primary Real Estate Agency Services Revenues
from primary real estate agency services were $20.1 million for the
third quarter of 2008, a decrease of 22% from $25.7 million for the
same quarter in 2007. This decrease was mainly due to reduced
overall real estate transaction volume in most of the cities where
the Company operates, as a result of slower growth in China's
economy and further deterioration of the demand for real estate
purchases. These factors contributed to decreases in both the gross
floor area ("GFA") and total transaction value of new properties
sold by the Company. (See "Selected Operating Data" below for
details.) For the first nine months of 2008, revenues from primary
real estate agency services were $70.3 million, an increase of 19%
from $59.0 million for the same period in 2007. The average
commission rate was 2.4% in the first nine months of 2008 compared
to 2.3% in the same period of 2007. Secondary Real Estate Brokerage
Services Revenues from secondary real estate brokerage services
were $1.8 million for the third quarter of 2008, a decrease of 47%
from $3.3 million for the same quarter in 2007. This decrease was
due to factors similar to those that caused a decrease in revenues
from primary real estate agency services. For the first nine months
of 2008, revenues from secondary real estate brokerage services
were $7.8 million, an increase of 7% from $7.4 million for the same
period in 2007. As of September 30, 2008, E-House had a total of
136 secondary real estate brokerage stores in five cities in China,
compared to 161 stores as of June 30, 2008, as a result of the
Company's decision to close those stores whose leases expired and
whose operating performance had been poor. Real Estate Consulting
and Information Services Revenues from real estate consulting and
information services were $17.2 million for the third quarter of
2008, a substantial increase from $1.7 million for the same quarter
in 2007. The increase was primarily due to substantial consulting
revenues derived from strategic arrangements the Company entered
into with major developers covering multiple cities and projects
and an increase in the number and size of consulting projects
completed for other developers. The increase also resulted from the
completion of a consulting project associated with land transfer
for a client. For the first nine months of 2008, revenues from real
estate consulting and information services were $36.6 million, a
substantial increase from $4.3 million for the same period in 2007.
Cost of Revenues Cost of revenues was $8.1 million for the third
quarter of 2008, a decrease of 4% from $8.4 million for the same
quarter in 2007. The decrease was primarily due to lower
commissions paid to the Company's sales staff as a result of lower
transaction values for new properties sold and lower project-
related advertising and promotion expenses that the Company was
contractually obligated to pay for several primary real estate
projects. This was partially offset by base salaries and benefits
paid to the Company's sales staff, higher costs associated with
developing, maintaining and updating the CRIC database system as a
result of the expansion of the Company's real estate consulting and
information services, and higher operating costs incurred at sales
offices. For the first nine months of 2008, cost of revenues was
$21.4 million, an increase of 40% from $15.3 million for the same
period in 2007. Selling, General and Administrative Expenses
Selling, general and administrative expenses were $21.4 million for
the third quarter of 2008, an increase of 83% from $11.7 million
for the same quarter in 2007. This was primarily due to an increase
in staff salaries, bonuses, consulting expenses, rental and travel
expenses as a result of hiring additional managerial employees and
the expansion of consulting and information services. The increase
was also due to higher share-based compensation expenses as a
result of share options granted in 2007 and 2008. For the first
nine months of 2008, selling, general and administrative expenses
were $55.0 million, an increase of 88% from $29.2 million for the
same period in 2007. Income from Operations Income from operations
was $9.9 million for the third quarter of 2008, a decrease of 7%
from $10.5 million for the same quarter in 2007. For the first nine
months of 2008, income from operations was $39.1 million, an
increase of 49% from $26.2 million for the same period in 2007. Net
Income Net income was $10.9 million for the third quarter of 2008,
an increase of 28% from $8.5 million for the same quarter in 2007.
For the first nine months of 2008, net income was $31.3 million, an
increase of 62% from $19.3 million for the same period in 2007.
Cash Flow As of September 30, 2008, the Company had a cash balance
of $173.1 million. Net cash outflow from operating activities was
$43.3 million in the third quarter of 2008. The cash outflow from
operating activities was mainly due to an increase in customer
deposits by approximately $26.2 million and an increase in accounts
receivables by approximately $25.4 million, partially offset by net
income of $10.9 million. Business Outlook The Company estimates
that its revenues for the fourth quarter of 2008 will be in the
range of $36 million to $40 million, representing a decrease of 29%
to 21% over the same quarter in 2007. For the full year 2008, the
Company estimates that its revenues will be in the range of $152
million to $156 million, representing an increase of 25% to 29%
over 2007. This updated annual revenue guidance reflects the
Company's expectation that challenging market conditions will
persist through the remainder of 2008 due to highly volatile
financial and credit markets, the effect of decreased consumer
spending within the real estate industry over the near term and
uncertainty related to the timing of the Company's revenue
recognition in the fourth quarter. Conference Call Information
E-House's management will host an earnings conference call at
8:00am on November 20, 2008 U.S. Eastern Standard Time (9:00pm on
November 20, 2008 Beijing/Hong Kong time). Dial-in details for the
earnings conference call are as follows: US: +1-617-614-4907 Hong
Kong: +852-3002-1672 Mainland China: 10-800-130-0399 Please dial in
10 minutes before the call is scheduled to begin and provide the
passcode to join the call. The passcode is "E-House earnings call."
A replay of the conference call may be accessed by phone at the
following number until November 27, 2008: International:
+1-617-801-6888 Passcode: 51037379 Additionally, a live and
archived webcast along with the transcript of the conference call
will be available at http://ir.ehousechina.com/ . About E-House
E-House (China) Holdings Limited ("E-House") (NYSE:EJ) is a leading
real estate services company in China. Since its inception in 2000,
E-House has experienced rapid growth and is China's largest real
estate agency and consulting services company with a presence in
more than 30 cities. E-House provides primary real estate agency
services, secondary real estate brokerage services and real estate
consulting and information services, and has received numerous
awards for its innovative and high-quality services, including
"China's Best Company" from the National Association of Real Estate
Brokerage and Appraisal Companies. E-House believes it has the
largest and most comprehensive real estate database system in
China, providing up-to-date and in-depth information covering
residential and commercial real estate properties in all major
regions in China. For more information about E-House, please visit
http://www.ehousechina.com/ . Safe Harbor: Forward-Looking
Statements This announcement contains forward-looking statements.
These statements are made under the "safe harbor" provisions of
Section 21E of the Securities Exchange Act of 1934, as amended.
These forward-looking statements can be identified by terminology
such as "will," "expects," "anticipates," "future," "intends,"
"plans," "believes," "estimates," "may," "intend," "is currently
reviewing," "it is possible," "subject to" and similar statements.
Among other things, the Business Outlook section and quotations
from management in this press release, as well as E-House's
strategic and operational plans, contain forward-looking
statements. E-House may also make written or oral forward- looking
statements in its reports with the U.S. Securities and Exchange
Commission on Forms 20-F and 6-K, in its annual report to
shareholders, in press releases and other written materials and in
oral statements made by its officers, directors or employees to
third parties. Statements that are not historical facts, including
statements about E-House's beliefs and expectations, are
forward-looking statements and are subject to change, and such
change may be material and may have a material adverse effect on
the Company's financial condition and results of operations for one
or more prior periods. Forward-looking statements involve inherent
risks and uncertainties. A number of important factors could cause
actual results to differ materially from those contained, either
expressly or impliedly, in any of the forward- looking statements
in this press release. Potential risks and uncertainties include,
but are not limited to, continued low real estate transaction
volume in China, a further slowdown in the growth of China's
economy, government measures aimed at cooling off or stimulating
China's real estate industry that may adversely and materially
affect E-House's business, failure of the real estate services
industry in China to develop or mature as quickly as expected,
disruptions in the financial markets and other macro-economic
challenges currently affecting the economy of the United States and
other parts of the world, diminution of the value of E-House's
brand or image due to E-House's failure to satisfy customer needs
and/or other reasons, E-House's inability to successfully execute
its strategy of expanding into new geographical markets in China or
its business plans for strategic alliances and other new business
initiatives, E-House's failure to manage its growth, E-House's loss
of its competitive advantage due to its failure to maintain and
improve its proprietary CRIC system and/or other reasons, E-House's
reliance on a concentrated number of real estate developers, and
other risks outlined in E- House's filings with the U.S. Securities
and Exchange Commission. All information provided in this press
release and in the attachments is as of the date of this press
release, and E-House does not undertake any obligation to update
any such information, except as required under applicable law. --
Financial Tables to Follow -- E-HOUSE (CHINA) HOLDINGS LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEET (In thousands of U.S. dollars)
December 31, September 30, 2007 2008 ASSETS Current assets Cash and
cash equivalents 101,148 173,120 Restricted cash 3,091 31,631
Customer deposits 123,339 120,403 Notes receivables -- 147 Unbilled
accounts receivable, net 55,846 95,626 Accounts receivable, net
11,167 17,116 Properties held for sale 872 1,119 Advance payment
for properties -- 8,912 Deferred tax assets 2,684 2,853 Prepaid
expenses and other current assets 7,066 13,346 Amounts due from
related parties 2,774 1,956 Total current assets 307,987 466,229
Property, plant and equipment, net 6,502 8,430 Intangible assets,
net 3,099 2,807 Investment in affiliates -- 12,254 Goodwill 2,549
3,557 Customer deposits, non-current portion 7,887 1,087 Deferred
tax assets, non-current portion 447 475 Other non-current assets
1,082 275 Total assets 329,553 495,114 Current liabilities
Short-term borrowings 6,845 29,333 Accounts payable 1,557 1,386
Accrued payroll and welfare expenses 12,632 11,215 Income tax
payable 17,880 19,192 Other tax payable 5,568 4,458 Amounts due to
related parties 2,572 950 Advance from property buyers 3,091 1,217
Other current liabilities 4,365 8,187 Total current liabilities
54,510 75,938 Deferred tax liabilities 751 607 Deferred
revenue-non-current portion -- 2,106 Other non-current liabilities
200 200 Total liabilities 55,461 78,851 Minority interest 2,919
3,656 Commitments and contingencies SHAREHOLDERS' EQUITY: Ordinary
share ($0.001 par value): 1,000,000,000 and 1,000,000,000 shares
authorized, 76,473,759 and 82,473,759 shares issued and
outstanding, as of December 31, 2007 and September 30, 2008,
respectively 76 82 Additional paid-in capital 209,907 310,170
Retained earnings 54,505 85,822 Accumulated other comprehensive
income 6,685 16,533 Total shareholders' equity 271,173 412,607
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 329,553 495,114 E-HOUSE
(CHINA) HOLDINGS LIMITED UNAUDITED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands of U.S. dollars, except share data and per
share data) Three months ended Nine Months ended September 30,
September 30, 2007 2008 2007 2008 Revenues: Primary real estate
agency services 25,697 20,145 58,998 70,290 Secondary real estate
brokerage services 3,278 1,752 7,368 7,848 Real estate consulting
and information services 1,661 17,187 4,301 36,646 Others -- 250 --
750 30,636 39,334 70,667 115,534 Cost of revenues (8,429) (8,115)
(15,313) (21,425) Selling, general and administrative expenses
(11,659) (21,362) (29,186) (55,005) Income from operations 10,548
9,857 26,168 39,104 Other income (expense): Interest expenses (151)
(775) (500) (1,909) Interest income 1,028 1,704 1,155 2,615 Other
income, net 523 935 523 (419) Investment income 14 14 Income before
taxes and minority interest 11,948 11,735 27,346 39,405 Income tax
expense (3,160) (1,555) (7,233) (8,555) Minority interest (252) 715
(814) 467 Net income 8,536 10,895 19,299 31,317 Earnings per share:
Basic 0.11 0.13 0.26 0.39 Diluted 0.11 0.13 0.26 0.39 Shares used
in computation: Basic 65,165,717 82,473,759 55,055,239 81,770,462
Diluted 75,274,247 82,715,712 73,653,943 82,129,097 Notes Note 1:
The conversion of Renminbi ("RMB") amounts into USD amounts is
based on the rate of USD1 = RMB6.8183 on September 30, 2008 and
USD1 = RMB6.8377 for the three months ended September 30, 2008.
E-HOUSE (CHINA) HOLDINGS LIMITED SELECTED OPERATING DATA Three
months ended Nine Months ended September 30, September 30, 2007
2008 2007 2008 Primary real estate agency service Total Gross Floor
Area 1,449 998 2,731 2,565 ("GFA") of new properties sold
(thousands of square meters) Total value of new properties sold
(millions of $) 1,363 1,041 2,591 2,912 For investor and media
inquiries please contact: In China Michelle Yuan Manager, Investor
Relations E-House (China) Holdings Limited Phone: +86-21-5228-3793
Email: Cathy Li Ogilvy Financial, Beijing Phone: +86-10-8520-6104
Email: In the U.S. Thomas Smith Ogilvy Financial, New York Phone:
+1-212-880-5269 Email: DATASOURCE: E-House (China) Holdings Limited
CONTACT: In China - Michelle Yuan, Manager, Investor Relations of
E-House (China) Holdings Limited, +86-21-5228-3793, or ; Or Cathy
Li of Ogilvy Financial, Beijing, +86-10-8520-6104, or ; Or In the
U.S. - Thomas Smith of Ogilvy Financial, New York, +1-212-880-5269,
or Web site: http://www.ehousechina.com/
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