China HGS Reports Third Quarter of Fiscal Year 2015 Results

HANZHONG, China, Aug. 7, 2015

Highlights for the Quarter

• Total revenues for the third quarter of fiscal 2015 were approximately $26 million, a decrease of 10% from approximately $28.9 million in the same quarter of fiscal 2014. Total revenues recognized from percentage of completion method were approximately $25.6 million, which accounted for 98.2% of total revenues in the third quarter of fiscal 2015. The year-over-year decrease of revenue was primarily due to limited inventory on completed projects.
• Net income for the third quarter of fiscal 2015 totaled approximately $13.7 million, an increase of approximately $5.5 million from the net income of approximately $8.2 million in the same period of last year. The increased net income in this quarter compared to the same quarter of last year was primarily due to sales of higher margin commercial and parking units during the current period.  
• For the nine months ended June 30, 2015, the Company achieved a positive operating cash flow of approximately $13.1 million, compared to negative operating cash flow of approximately $30.7 million in the same period of last year.
• Basic and diluted net earnings per share ("EPS") attributable to shareholders for the third quarter of fiscal 2015 were $0.30, an increase of 66.7% from $0.18 for the same quarter of last year.  

"I am very pleased that the Company reported strong earnings this quarter, with net income up 68% compared to the same period of last year. As we are selling out our inventory on completed projects, our sales were negatively impacted due to limited number of units for customer selection," said Mr. Xiaojun Zhu, Chairman and Chief Executive Officer of China HGS. "The overall slower economic environment in China posted challenges for real estate industry. However, our regional real estate market remains stable, with average unit price held steady. Our commercial property and parking units with higher average unit price are particularly in strong demand. Our near term effort is to focus on completion of the projects currently under construction as soon as possible. We expect our contract sales and revenue will improve as we have more GFA available for sale," concluded Mr. Xiaojun Zhu.

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, 2014, as well as the Company's Quarterly Reports on Form 10-Q that have been filed since the date of such annual report, 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.