E-House Reports First Quarter 2008 Results
Revenues Grew 107% Year-Over-Year; Net Income Grew 97% Year-Over-Year
SHANGHAI, China, May 15 /Xinhua-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 ended March 31, 2008.
Financial Highlights
– Total revenues were $33.2 million for the first quarter of 2008, an
increase of 107% from $16.0 million for the same quarter in 2007.
– Net income for the first quarter of 2008 was $8.7 million, an increase
of 97% from $4.4 million for the same quarter in 2007.
– Diluted earnings per ADS were $0.11 for the first quarter of 2008,
compared to $0.06 for the same period in 2007.
“I am pleased to present a strong first quarter for E-House in the
midst of an industry adjustment,” said Mr. Xin Zhou, E-House’s chairman and
chief executive officer. “With our brand name and expanding market
presence, we were able to continue our growth even though China’s real
estate industry has experienced reduced transaction volumes in recent
months. Our results in the first quarter were also helped by a substantial
increase in consulting and information services revenues as a result of
strategic arrangements with leading developers in China, which cover a wide
range of consulting services including market analysis research and CRIC
information services.”
Mr. Zhou added, “Going forward, we are confident with our prospects for
the second quarter and the rest of 2008. While we believe the industry
adjustment may continue for a period of time, we are already seeing signs
of recovery in real estate transaction activities as developers place more
focus on sales volume and cash flow. E-House stands to benefit from both a
continued increase in sales volume and stronger efforts by developers to
push sales, which will likely result in more agency contracts for E-House.
We will continue to focus on expanding our market presence and building our
project pipeline, including pursuing strategic cooperation arrangements
with leading developers. We will also continue our initiative to promote
paid subscriptions to our CRIC system, which we began in April. We have
already signed strategic agreements with several leading real estate
developers covering real estate consulting and information services. This
will provide a further boost to our real estate consulting and information
services revenues for this year.”
Mr. Li-Lan Cheng, E-House’s chief financial officer added, “In the
first quarter, which is seasonally the slowest quarter of the year, we were
able to achieve strong growth and maintain stable profit margins compared
to the same quarter last year, despite the industry adjustment. Looking
forward, we are confident about a strong performance and achieving our
targets for 2008. While primary real estate services will provide solid
growth and continue to contribute the largest share of revenues, we expect
revenue contribution from real estate consulting and information services
to increase substantially this year as compared to recent years. This will
also help to slightly reduce the seasonal fluctuations of our revenues.”
Financial Results for First Quarter of 2008
Revenues
Total revenues were $33.2 million for the first quarter of 2008, an
increase of 107% from $16.0 million for the same quarter in 2007.
Primary Real Estate Agency Services
Revenues from primary real estate agency services were $21.9 million
for the first quarter of 2008, an increase of 72% from $12.7 million for
the same period in 2007. This increase was mainly due to the further
expansion of primary real estate agency operations, which resulted in
increases in both the gross floor area (”GFA”) and total transaction value
of new properties sold. (See “Selected Operating Data” below for details.)
The average commission rate was 2.8% for the first quarter of both 2007 and
2008.
Secondary Real Estate Brokerage Services
Revenues from secondary real estate brokerage services were $2.8
million for the first quarter in 2008, an increase of 54% from $1.8 million
for the same period in 2007. This growth was primarily attributable to the
expansion of secondary real estate brokerage services since the first
quarter of 2007. As of March 31, 2008, E-House had a total of 164 secondary
real estate brokerage stores in five cities in China.
Real Estate Consulting and Information Services
Revenues from real estate consulting and information services were $8.3
million for the first quarter in 2008, an increase of 467% from $1.5
million for the same period in 2007. The increase was primarily due to
substantial consulting revenue included in strategic arrangements the
Company entered into with major developers covering multiple cities and
projects.
Cost of Revenues
Cost of revenues was $6.0 million for the first quarter in 2008, an
increase of 154% from $2.4 million for the same period in 2007. This was
primarily due to an increase in commissions paid to the Company’s sales
staff as a result of a higher transaction value for new properties sold in
the first quarter of 2008 as compared to the same period in 2007, and an
increase in project-related advertising and promotion expenses that the
Company was contractually obligated to pay for several primary real estate
projects.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $15.2 million for the
first quarter of 2008, an increase of 95% from $7.8 million for the same
period in 2007. This was primarily due to an increase in staff salaries,
bonuses, rental and office expenses as a result of hiring additional
managerial employees and an increase in the number of secondary brokerage
stores. The increase was also due to higher advertising and promotion
expenses incurred to promote the CRIC database system as well as higher
share-based compensation expenses as a result of share options granted in
2007 and 2008.
Income from Operations
Income from operations was $12.0 million for the first quarter of 2008,
an increase of 104% from $5.9 million for the same period in 2007.
Net Income
Net income was $8.7 million for the first quarter in 2008, an increase
of 97% from $4.4 million for the same period in 2007.
Cash Flow
As of March 31, 2008, the Company had a cash balance of $207.5 million.
Net cash inflow from operating activities was $10.9 million in the first
quarter of 2008, compared to a net cash outflow of $1.7 million for the
same period of 2007. The increase in cash inflow from operating activities
was mainly due to net income of $8.7 million and the reduction in customer
deposits by approximately $9.6 million in the first quarter of 2008,
partially offset by an increase in accounts receivable by approximately
$7.1 million. Cash flow from financing activities includes proceeds of
$96.8 million from issuing 6,000,000 new ADS’s, net of issuance costs, and
proceeds of $42.7 million from an RMB bank loan secured by a $44.1 million
US dollar deposit. The US dollar deposit is classified as restricted cash.
Other Recent Developments
On April 15, 2008, the Company granted options to purchase 744,500
ordinary shares to non-executive directors and certain management employees
at an exercise price of US$13.00 per share. The options will expire ten
years from the date of grant, with one third of the options vesting on each
of the following three grant date anniversaries.
Business Outlook
The Company estimates that its revenues for the second quarter of 2008
will range from $41 million to $44 million, representing an increase of 71%
to 83% from the same period in 2007.
Conference Call Information
E-House’s management will host an earnings conference call at 8 AM on
May 15, 2008 U.S. Eastern Time (8 PM on May 15, 2008 Beijing/Hong Kong
time).
Dial-in details for the earnings conference call are as follows:
US: +1-617-614-3672
Hong Kong: +852-3002-1672
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 May 22, 2008:
International: +1-617-801-6888
Passcode: 90494973
Additionally, a live and archived webcast 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
financial condition and results of operations for the first quarter, as
well as 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 financial condition or results
of operations for the first quarter of 2008, as well as 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 for
the first quarter of 2008 and prior annual or quarterly periods to differ
materially from those contained in this press release. Potential risks and
uncertainties include, but are not limited to, risks outlined in E-House’s
filings with the U.S. Securities and Exchange Commission, including its
annual report on Form 20-F. E-House does not undertake any obligation to
update any forward-looking statement, except as required under applicable
law.
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