E-House Reports Second Quarter 2008 Results

2008-08-20 06:50:00

    Company achieves revenue growth of 79% and net income growth of 85%

                              year-over- year



    SHANGHAI, China, Aug. 20 /Xinhua-EMWNews/ -- 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 six months ended June 30,

2008.




Financial Highlights -- Total revenues were $43.0 million for the second quarter of 2008, an increase of 79% from $24.0 million for the same quarter in 2007. -- For the first half of 2008, total revenues were $76.2 million, an increase of 90% from $40.0 million for the same period in 2007. -- Net income for the second quarter of 2008 was $11.7 million, an increase of 85% from $6.4 million for the same quarter in 2007. -- For the first half of 2008, net income was $20.4 million, an increase of 90% from $10.8 million for the same period in 2007. -- Diluted earnings per ADS were $0.14 for the second quarter of 2008 and $0.25 for the first half of 2008, compared to $0.09 and $0.15, respectively, for the same periods in 2007. "Our second quarter results, in the midst of the real estate market downturn, demonstrate E-House's unique value," said Mr. Xin Zhou, E-House's chairman and chief executive officer. "Due to a combination of tight monetary policy and the earthquake in Sichuan province, real estate transaction volumes in most major cities were down substantially compared to the same period last year. Our ability to generate growth in transaction volume and value in this market condition further demonstrates our increasing market share and stronger leadership position. At the same time, our real estate consulting and information service revenue continued its strong growth, which helped to deliver impressive performance in our revenues and profits." Mr. Zhou added, "Looking ahead to the third quarter of 2008, we expect conditions within China's real estate market to remain challenging. Compared to the second quarter, real estate transaction volumes for July and August in most leading cities will likely show bigger year-on-year decline. This is because July and August of 2007 saw unusually strong transaction activities at the peak of the real estate market boom. The 2008 Beijing Olympic Games may have also caused a temporary slowdown in real estate transactions. However, we are seeing that many developers have adjusted their sales strategy in preparation for the peak season that traditionally begins in September, by placing a sharp focus on increasing sales volumes and cash flows. This trend, combined with our continued belief that the long-term fundamental demand for real estate in China remains strong, provides compelling reasons for transaction volumes to rebound starting in September." Mr. Li-Lan Cheng, E-House's chief financial officer, added, "During the second quarter, we achieved strong revenue growth and stable profit margins despite difficult market conditions. For the third quarter, we expect to continue solid growth in revenue as a result of a larger number of projects sold by us and strong growth in our consulting and information service segment. Our asset-light, service-oriented business model insulates us from the cash flow problems that many developers face during periods of slow transaction volume. Moreover, a challenging market presents an ideal opportunity for us to expand our market presence and secure additional projects to support future growth." Financial Results for the Second Quarter and First Half of 2008 Revenues Total revenues were $43.0 million for the second quarter of 2008, an increase of 79% from $24.0 million for the same quarter in 2007. For the first half of 2008, total revenues were $76.2 million, an increase of 90% from $40.0 million for the same period in 2007. Primary Real Estate Agency Services Revenues from primary real estate agency services were $28.3 million for the second quarter of 2008, an increase of 38% from $20.6 million for the same quarter in 2007. For the first half of 2008, revenues from primary real estate agency services were $50.1 million, an increase of 51% from $33.3 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 2.7% for the first half of both 2008 and 2007. Secondary Real Estate Brokerage Services Revenues from secondary real estate brokerage services were $3.3 million for the second quarter of 2008, an increase of 45% from $2.2 million for the same quarter in 2007. For the first half of 2008, revenues from secondary real estate brokerage services were $6.1 million, an increase of 49% from $4.1 million for the same period in 2007. This growth was primarily attributable to the expansion of secondary real estate brokerage store network during 2007. As of June 30, 2008, E-House had a total of 161 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 $11.2 million for the second quarter of 2008, a substantial increase from $1.2 million for the same quarter in 2007. For the first half of 2008, revenues from real estate consulting and information services were $19.5 million, a substantial increase from $2.6 million for the same period in 2007. The increase was primarily due to substantial consulting revenue derived from strategic arrangements the Company entered into with major developers covering multiple cities and projects as well as an increase in the number of consulting projects completed for other developers. Cost of Revenues Cost of revenues was $7.3 million for the second quarter of 2008, an increase of 61% from $4.5 million for the same quarter in 2007. The increase was primarily due to a rise in salaries and commissions paid to the Company's sales staff as a result of higher transaction values for new properties sold. The increase was also due to 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. For the first half of 2008, cost of revenues was $13.3 million, an increase of 93% from $6.9 million for the same period in 2007. Selling, General and Administrative Expenses Selling, general and administrative expenses were $18.4 million for the second quarter of 2008, an increase of 89% from $9.7 million for the same quarter in 2007. This was primarily due to an increase in staff salaries, bonuses, rental and travelling expenses as a result of hiring additional managerial employees, an increase in the number of secondary brokerage stores and the expansion of consulting and information services. 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. For the first half of 2008, selling, general and administrative expenses were $33.6 million, an increase of 92% from $17.5 million for the same period in 2007. Income from Operations Income from operations was $17.2 million for the second quarter of 2008, an increase of 77% from $9.7 million for the same quarter in 2007. For the first half of 2008, income from operations was $29.2 million, an increase of 87% from $15.6 million for the same period in 2007. Net Income Net income was $11.7 million for the second quarter of 2008, an increase of 85% from $6.4 million for the same quarter in 2007. For the first half of 2008, net income was $20.4 million, an increase of 90% from $10.8 million for the same period in 2007. Cash Flow As of June 30, 2008, the Company had a cash balance of $223.3 million. Net cash inflow from operating activities was $34.0 million in the second quarter of 2008. The cash inflow from operating activities was mainly due to net income of $11.7 million and a reduction in customer deposits by approximately $26.4 million, partially offset by an increase in accounts receivable by approximately $14.1 million. Other Developments On June 11, 2008, the Company acquired a 33.33% stake in Shanghai Run Dao Culture Limited Company ("Run Dao") for RMB50 million (US$7.3 million) in cash. Run Dao is a leading advertising agency company in Shanghai that has entered into long-term exclusive real estate advertising agency contracts with several leading newspapers in Shanghai. E-House believes its investment in Run Dao will provide an additional tool to offer integrated services to its developer clients. The investment was accounted for using equity method of accounting. On June 12, 2008, the Company granted options to purchase 10,000 ordinary shares to a management employee at an exercise price of $11.61 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. On August 3, 2008, the Company granted options to purchase 100,000 ordinary shares to certain independent directors at an exercise price of $9.53 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 third quarter of 2008 will be in the range of $43 million to $47 million, representing an increase of 40% to 53% over the same quarter in 2007. Conference Call Information E-House's management will host an earnings conference call at 8 a.m. on August 20, 2008 U.S. Eastern Time (8 p.m. on August 20, 2008 Beijing/Hong Kong time).
Dial-in details for the earnings conference call are as follows: US: +1-617-213-8049 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 August 27, 2008: International: +1-617-801-6888
Passcode: 81477311 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

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, government measures aimed at reducing

inflation, limiting bank lending and cooling off 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, 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.




E-HOUSE (CHINA) HOLDINGS LIMITED UNAUDITED CONSOLIDATED BALANCE SHEET (In thousands of U.S. dollars) December 31, June 30, 2007 2008 ASSETS Current assets Cash and cash equivalents 101,148 223,250 Restricted cash 3,091 46,289 Customer deposits 123,339 94,207 Notes receivables -- 146 Unbilled accounts receivable, net 55,846 82,142 Accounts receivable, net 11,167 5,829 Properties held for sale 872 974 Advance payment for properties -- 8,858 Deferred tax assets 2,684 2,844 Prepaid expenses and other current assets 7,066 11,536 Amounts due from related parties 2,774 1,703 Total current assets 307,987 477,778 Property, plant and equipment, net 6,502 8,274 Intangible assets, net 3,099 2,716 Investment in affiliates -- 12,128 Goodwill 2,549 2,715 Customer deposits, non-current portion 7,887 1,051 Deferred tax assets, non-current portion 447 474 Other non-current assets 1,082 562 Total assets 329,553 505,698 Current liabilities Short-term borrowings 6,845 51,027 Accounts payable 1,557 2,105 Accrued payroll and welfare expenses 12,632 12,113 Income tax payable 17,880 18,929 Other tax payable 5,568 5,336 Amounts due to related parties 2,572 950 Advance from property buyers 3,091 2,061 Other current liabilities 4,365 7,452 Total current liabilities 54,510 99,973 Deferred tax liabilities 751 652 Deferred revenue-non-current portion -- 2,104 Other non-current liabilities 200 200 Total liabilities 55,461 102,929 Minority interest 2,919 3,329 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 June 30, 2008, respectively 76 82 Additional paid-in capital 209,907 309,145 Retained earnings 54,505 74,927 Accumulated other comprehensive income 6,685 15,286 Total shareholders' equity 271,173 399,440 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 329,553 505,698 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 Six months ended June 30, June 30, 2007 2008 2007 2008 Revenues: Primary real estate agency services 20,559 28,268 33,300 50,145 Secondary real estate brokerage services 2,246 3,255 4,090 6,097 Real estate consulting and information services 1,183 11,187 2,640 19,459 Others -- 250 -- 500 23,988 42,960 40,030 76,201 Cost of revenues (4,523) (7,304) (6,884) (13,311) Selling, general and administrative expenses (9,729) (18,435) (17,528) (33,643) Income from operations 9,736 17,221 15,618 29,247 Other income (expense): Interest expenses (195) (885) (349) (1,134) Interest income 62 315 126 911 Other income, net -- (575) -- (1,353) Income before taxes and minority interest 9,603 16,076 15,395 27,671 Income tax expense (2,538) (4,201) (4,072) (7,000) Minority interest (707) (130) (563) (248) Net income 6,358 11,745 10,760 20,423 Earnings per share: Basic 0.09 0.14 0.15 0.25 Diluted 0.09 0.14 0.15 0.25 Shares used in computation: Basic 50,000,000 82,473,759 50,000,000 81,418,814 Diluted 72,916,081 82,832,024 72,843,792 81,835,790 Notes Note The conversion of Renminbi ("RMB") amounts into USD amounts is 1: based on the rate of USD1 = RMB6.8591 on June 30, 2008 and USD1 = RMB6.9564 for the three months ended June 30, 2008. E-HOUSE (CHINA) HOLDINGS LIMITED SELECTED OPERATING DATA Three months ended Six months ended June 30, June 30, 2007 2008 2007 2008 Primary real estate agency service Total Gross Floor Area ("GFA") of new properties sold (thousands of square meters) 771 955 1,282 1,567 Total value of new properties sold (millions of $) 773 1,096 1,228 1,871 For investor and media inquiries please contact: In China Kate Kui Director of Corporate Development and Investor Relations E-House (China) Holdings Limited Tel: +86-21-5298-0219 Email: katekui@ehousechina.com Cathy Li Ogilvy Financial, Beijing Tel: +86-10-8520-6104 Email: cathy.li@ogilvy.com In the U.S. Thomas Smith Ogilvy Financial, New York Tel: +1-212-880-5269 Email: thomas.smith@ogilvypr.com

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