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News Release
Fang Announces Fourth Quarter and Fiscal Year 2017 Results

BEIJING, March 29, 2018 /PRNewswire/ -- Fang Holdings Limited (NYSE: SFUN) ("Fang" or "we"), the leading real estate Internet portal in China, today announced its unaudited financial results for fourth quarter and fiscal year ended December 31, 2017.

Fourth Quarter 2017 Highlights

  • ŸTotal revenues were $112.2million.
  • ŸOperating income was $30.6 million. Non-GAAP operating income was $32.6 million. A description of the adjustments from GAAP to non-GAAP operating income is detailed in the Reconciliation Statement following this press release.
  • ŸNet income attributable to Fang's shareholders was $15.2 million. Fully diluted earnings per ADS were $0.03.
  • ŸNon-GAAP net income attributable to Fang's shareholders was $15.1 million. Non-GAAP fully diluted earnings per ADS were 0.03. A description of the adjustments from GAAP to non-GAAP net income attributable to Fang's shareholders and fully diluted earnings per ADS is detailed in the Reconciliation Statement following this press release.

"Fang returned to full-year profitable in 2017 after two years of net losses in 2015 and 2016," commented Vincent Mo, Chairman and CEO of Fang. "Although Fang is still in its retransformation back to a platform player, it's clear that we are on the right track going forward."

Fourth Quarter 2017 Results

Revenues

Fang reported total revenues of $112.2 million in the fourth quarter of 2017, a 35.8 % decrease from $174.7 million in the corresponding period of 2016, primarily due to the decline in e-commerce services by $81.4 million

Revenue from listing services was $41.8 million in the fourth quarter of 2017, an increase of 8.2% from $38.6 million in the corresponding period of 2016, driven by the increased number of paying members.

Revenue from marketing services was $49.6 million in the fourth quarter of 2017, an increase of 3.4% from $48.0 million in the corresponding period of 2016, primarily driven by the refocus of Fang's effort in the online business.

Revenue from e-commerce services was $8.5 million in the fourth quarter of 2017, a decrease of 90.6% from $89.9 million in the corresponding period of 2016, primarily due to Fang's transformation back to a technology-driven open platform model.

Revenue from Internet financial services was $3.6million in the fourth quarter of 2017, a significant increase from $0.6 million in the corresponding period of 2016, primarily due to the recovery of loan operations and the introduction of collateral loan products.

Revenue from other value-added services was $8.6 million in the fourth quarter of 2017, an increase of 67.5% compared to $5.2 million in the corresponding period of 2016, primarily driven by the growth of data products in the research business. 

Cost of Revenue

Cost of revenue was $29.7 million in the fourth quarter of 2017, a decrease of 66.8% from $89.4 million in the corresponding period of 2016, primarily driven by the closing of the self-owned brokerage stores, deduction of e-commerce staff and cost optimization under the technology-driven open platform model.

Operating Expense

Operating expenses were $51.9 million in the fourth quarter of 2017, a decrease of 44.9% from $94.2 million in the corresponding period of 2016.

Selling expenses were $27.8 million in the fourth quarter of 2017, a decrease of 53.0% from $59.2 million for the corresponding period of 2016, primarily driven by the decrease of advertising and promotion fee, sales commission fee.

General and administrative expenses were $24.3 million in the fourth quarter of 2017, a decrease of 31.1% from $35.3 million for the corresponding period of 2016, primarily due to the deduction of staff cost.

Operating Income

Operating income was $30.6 million in the fourth quarter of 2017, compared to operating loss of $8.9 million in the corresponding period of 2016, primarily attributable to the closing of the self-owned brokerage stores and effective cost control.

Income Tax Expenses

Income tax expenses were $13.1 million in the fourth quarter of 2017, compared to $3.1 million in the corresponding period of 2016.

Net Income and EPS

Net income attributable to Fang's shareholders was $15.2 million in the fourth quarter of 2017, compared to net loss of $10.4 million in the corresponding period of 2016. Earnings per fully-diluted ordinary share and ADS were $0.16 and $0.03 in the fourth quarter of 2017, compared to loss per fully-diluted ordinary share and ADS of $0.11 and $0.02 in the fourth quarter of 2016, respectively.

Adjusted EBITDA

Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $35.6 million in the fourth quarter of 2017, compared to $2.4 million in the corresponding period of 2016.

Cash

As of December 31, 2017, Fang had cash, cash equivalents, and short-term investments of $507.1 million, compared to $590.5 million as of December 31, 2016. Net cash generated from operating activities was $57.1 million in the fourth quarter of 2017, compared to cash flow generated from operating activities of $85.1 million in the same period of 2016, primarily due to the decrease of cash inflow of loan receivable related to operating activities compared to the fourth quarter of 2016.

Fiscal Year 2017 Results

Revenues

Fang reported total revenues of $444.3 million for 2017, representing a decrease of 51.5% from $916.4 million for 2016, primarily due to the decline in e-commerce services revenue by 489.9 million.

Revenue from marketing services was $149.3 million for 2017, a decrease of 9.8% from $165.4 million for 2016, primarily due to less demand from property developers.

Revenue from e-commerce services was $87.8 million for 2017, a decrease of 84.8% from $577.7 million for 2016, primarily due to Fang's transformation back to a technology-driven open platform model.

Revenue from listing services was $165.4 million for 2017, an increase of 40.0% from $118.1 million for 2016, driven by the increased number of paying members in lower-tier cities.

Revenue from financial services was $12.1 million for 2017, a decrease of 59.3% from $29.6 million for 2016,, primarily due to the reduced loan demand from decreased secondary transaction volumes of Fang's own franchised brokerage services and a strategic shift to a more diversified loan business, which is still at its early stage.

Revenue from other value-added services was $29.8 million for 2017, an increase of 16.6% from $25.6 million for 2016, primarily driven by the growth of data products in the research business.

Cost of Revenue

Cost of revenue was $174.6 million for 2017, a decrease of 74.6% from $687.2 million for 2016, primarily driven by the closing of the self-owned brokerage stores, deduction of e-commerce staff and cost optimization under the technology-driven open platform model.

Operating Expenses

Operating expenses were $232.9 million for 2017, a decrease of 38.8% from $380.7 million for 2016.

Selling expenses were $91.3 million for 2017, a decrease of 60.3% from $229.8 million for 2016, primarily driven by the decrease of advertising and promotion fee, sales commission fee.

General and administrative expenses were $141.1 million for 2017, a decrease of 6.7% from $151.3 million for 2016, primarily due to the deduction of staff cost.

Operating Income

Operating income was $36.8 million for 2017, compared with operating loss of $151.4 million for 2016.

Income Tax Expenses

Income tax expenses were $21.4 million for 2017, compared to $25.0 million for the corresponding period in 2016. The expenses decrease was primarily due to the reversal of previously recorded ASC 740 (FIN 48) tax and interest liability.

Net Loss/Income and EPS

Net income attributable to Fang's shareholders was $16.3 million for 2017, compared to net loss $169.6 million for 2016. Earnings per fully-diluted ordinary share and ADS were $0.18 and $0.04 in 2017, compared to loss per fully-diluted ordinary share and ADS of $1.81 and $0.36 in 2016, respectively.

Adjusted EBITDA

Adjusted EBITDA was $63.6 million for 2017, compared to negative $121.2 million for 2016.

Cash

Cash generated from operating activities was $126.9 million for 2017, compared to net cash generated from operating activities $131.2 million for 2016, primarily due to the decrease of cash inflow of loan receivable related to operating activities compared to 2016.

Business Outlook

Fang estimates its net income for 2018 will range from approximately $100 million to approximately $120 million, representing a year-on-year increase of approximately 388.3% to approximately 485.9%. This forecast reflects Fang's current and preliminary view, which is subject to change.

Conference Call Information

Fang's management team will host a conference call on the same day at 8:00 AM U.S. EST (8:00 PM Beijing/Hong Kong time). The dial-in details for the live conference call are:

International Toll:

+65 67135090

Local Toll:


United States

+1 845-675-0437 / +1 866-519-4004

Hong Kong

+852 3018-6771 / +852 800-906-601

Mainland China

+86 400-620-8038 / +86 800-819-0121

Passcode:

SFUN

A telephone replay of the call will be available after the conclusion of the conference call from 11:00 ET on Mar 29, 2018 through 9:59 ET April 6, 2018. The dial-in details for the telephone replay are:

International Toll:

+61 2-8199-0299

Toll-Free:


United States

+1 855-452-5696 / +1 646-254-3697

Hong Kong

+852 800-963-117 / +852 3051-2780

Mainland China

+86 400-602-2065 / +86 800-870-0205

Conference ID:

8879727

A live and archived webcast of the conference call will be available on Fang's website at http://ir.fang.com.

About Fang

Fang operates the leading real estate Internet portal in China in terms of the number of page views and visitors to its websites. Through its websites, Fang provides e-commerce, marketing, listing, financial and other value-added services for China's fast-growing real estate and home furnishing and improvement sectors. Its user-friendly websites support active online communities and networks of users seeking information on, and other value-added services for, the real estate and home furnishing and improvement sectors in China. Fang currently maintains about 100 offices to focus on local market needs and its website and database contains real estate related content covering more than 651 cities in China. For more information about Fang, please visit http://ir.fang.com.

Safe Harbor Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995.

These forward-looking statements can be identified by terminology such as "will," "expects," "is expected to," "anticipates," "aim," "future," "intends," "plans," "believes," "are likely to," "estimates," "may," "should" and similar expressions, and include, without limitation, statements regarding Fang's future financial performance, revenue guidance, growth and growth rates, market position and continued business transformation. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Fang's control, which may cause its actual results, performance or achievements to differ materially from those in the forward-looking statements. Potential risks and uncertainties include, without limitation, the impact of Fang's transformation back to a technology-driven Internet platform and the impact of current and future government policies affecting China's real estate market. Further information regarding these and other risks, uncertainties or factors is included in Fang's filings with the U.S. Securities and Exchange Commission. Fang does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

About Non-GAAP Financial Measures

To supplement Fang's consolidated financial results presented in accordance with United States Generally Accepted Accounting Principles ("GAAP"), Fang uses in this press release the following measures defined as non-GAAP financial measures by the United States Securities and Exchange Commission: (1) non-GAAP operating (loss)/income, (2) non-GAAP net (loss)/income and (3) non-GAAP basic and diluted (loss)/earnings per ordinary share and per ADS (4) adjusted EBITDA. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Reconciliation of GAAP and non-GAAP Results" set forth at the end of this press release.

Fang believes that these non-GAAP financial measures provide meaningful supplemental information to investors regarding its operating performance by excluding share-based compensation expenses and the related tax effects, realized gain on available-for-sale security, interest income and expenses, income tax expenses, and depreciation expense for the relevant period, which (1) may not be indicative of Fang's recurring core business operating results or (2) are not expected to result in future cash payments. These non-GAAP financial measures also facilitate management's internal comparisons to Fang's historical performance and assist its financial and operational decision making. A limitation of using these non-GAAP financial measures is that share-based compensation, interest income and expenses, income tax expenses, and depreciation expenses have been and will continue to be a significant recurring expense that will continue to exist in Fang's business for the foreseeable future. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliation between non-GAAP financial measures and their most directly comparable GAAP financial measures.

For investor and media inquiries, please contact:

Dr. Hua Lei
CFO 
Phone: +86-10-5631-8661 
Email: leihua@fang.com

Ms. Dana Cheng  
Senior Manager, Investor Relations
Phone: +86-10-5631 8174
Email: chengyu.bj@fang.com 

 

Fang Holdings Limited

Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars, except share data and per share data)

ASSETS

December 31,

December 31,



2017

2016

Current assets:

(Unaudited)

(Audited)


Cash and cash equivalents

228,276

336,528


Restricted cash, current

223,002

211,084


Short-term investments

55,801

42,929


Accounts receivable, net

66,884

93,672


Funds receivable

6,264

20,483


Prepayment and other current assets

32,704

39,824


Commitment deposits

300

6,527


Loan receivable, current

129,438

41,966


Amount due from related parties

167

197

Total current assets 

742,836

793,210

Non-current assets:




Property and equipment, net

622,145

319,897


Prepaid land lease payments

35,728



Loan receivable, non-current

14,674

16,808


Deferred tax assets, non-current

7,602

4,915


Deposit for non-current assets

58,722

240,712


Restricted cash, non-current portion

39,982

-


Long-term investments

470,964

231,880


Other non-current assets

2,026

7,391

Total non-current assets

1,251,843

821,603

Total assets

1,994,679

1,614,813





LIABILITIES AND SHAREHOLDERS' EQUITY



Current liabilities:




Short-term loans

236,985

212,734


Deferred revenue

168,884

129,765


Accrued expenses and other liabilities

303,714

318,539


Customers' refundable fees

7,070

28,630


Income tax payable

4,374

6,022


Convertible senior notes-current

5,700

-

Total current liabilities

726,727

695,691

Non-current liabilities:




Long-term loans

114,109

65,190


Convertible senior notes-non current

291,365

295,268


Deferred tax liabilities, non-current

126,641

70,424


Other non-current liabilities

1,138

415

Total non-current liabilities

533,253

431,297

Total Liabilities  

1,259,980

1,126,988





Equity:




Class A ordinary shares, par value Hong Kong Dollar ("HK$") 1
per share, 600,000,000 shares authorized for Class A and Class
B in aggregate, issued shares as of December 31, 2017 and
2016: 71,425,120 and 71,077,816; outstanding shares as of
December 31, 2017 and 2016: 64,360,062 and 64,012,758

9,204

 

 

 

9,157


Class B ordinary shares, par value HK$1 per share,
600,000,000 shares authorized for Class A and Class B in
aggregate, and 24,336,650  shares and 24,336,650 shares
issued and outstanding as at December 31, 2017 and December
31, 2016, respectively

3,124

 

 

 

3,124


Treasure stock

(136,615)

(136,615)


Additional paid-in capital

500,666

488,943


Accumulated other comprehensive income

137,463

(81,349)


Retained earnings

220,165

203,870

Total Fang Holdings Limited shareholders' equity

734,007

487,130


Noncontrolling interests

692

695

Total equity

734,699

487,825

TOTAL LIABILITIES AND  EQUITY

1,994,679

1,614,813

 

 

Fang Holdings Limited

Condensed Consolidated Statements of Comprehensive Income

(in thousands of U.S. dollars, except share data and per share data)




Three months ended


Year ended




December 31,


December 31,


December 31,


December 31,




2017


2016


2017


2016




(Unaudited)


(Unaudited)


(Unaudited)


(Audited)


Revenues:










  E-commerce services

8,480


89,853


87,809


577,684



  Marketing services

49,632


48,019


149,267


165,437



  Listing services

41,813


38,628


165,374


118,109



  Financial services

3,645


606


12,055


29,602



  Other value-added services and other services

8,647


 

(2,443)


29,791


 

25,559


Total revenues

112,217


174,663


444,296


916,391












Cost of Revenues:










  Cost of services

(29,702)


(89,403)


(174,599)


(687,184)


Total Cost of Revenues

(29,702)


(89,403)


(174,599)


(687,184)












Gross Profit

82,515


85,260


269,697


229,207












Operating expenses and income:









Selling expenses

(27,819)


(59,227)


(91,250)


(229,817)



General and administrative expenses

(24,332)


(35,339)


(141,097)


(151,251)



Other operating income(loss)

238


415


(567)


415


Operating Income (loss)

30,602


(8,891)


36,783


(151,446)



  Foreign exchange gain (loss)

(198)


6,451


15


(1,882)



  Interest income

2,688


2,884


11,322


11,367



  Interest expense

(3,374)


(7,514)


(16,153)


(20,791)



Change in fair value of trading securities

518


-


518


-



Realized gain on available-for-sale
securities (including accumulated other
comprehensive income reclassifications for
unrealized (loss) gain on available-for-sale
securities of US$10,583, US$2,736 for the
year ended December 31, 2016, 2017
respectively

261


 

 

 

-


2,736


 

 

 

10,583



  Investment income

1,325


1,056


6,692


3,281



  Government grants

975


940


3,154


6,469



Other non-operating income (loss)

(4,562)


-


(4,562)


-



  Other-than-temporary impairment on
available-for-sale securities

-


(2,232)


(2,768)


(2,232)


Income (loss) before income taxes and
noncontrolling interests

28,235


(7,305)


37,737


(144,651)


Income tax expenses










  Income tax expenses

(13,062)


(3,079)


(21,442)


(24,984)


Net income (loss)

15,173


(10,385)


16,295


(169,635)



  Net income attributable to noncontrolling
interests

(2)


(2)


(3)


0


Net income (loss) attributable to Fang Holdings
Limited shareholders

15,175


(10,383)


16,298


(169,635)


Other comprehensive income (loss), net of tax









Foreign currency translation 

19,087


(81,642)


56,404


(60,732)



Amounts reclassified from accumulated other
comprehensive income

(261)


-


(2,736)


(10,583)



Unrealized gain on available-for-sale security

(23,884)


(1,057)


163,272


7,326



Loss on intra-entity foreign transactions of
long-term-investment nature

499




1,872


(6,996)


Total other comprehensive income (loss),
net of tax

(4,559)


(82,699)


218,812


(70,985)


Comprehensive income (loss)

10,614


(93,084)


235,107


(240,620)


Earnings per share for Class A and Class B ordinary shares







Basic

0.17


(0.11)


0.18


(1.81)



Diluted

0.16


(0.11)


0.18


(1.81)


Earnings per ADS










Basic

0.03


(0.02)


0.04


(0.36)



Diluted

0.03


(0.02)


0.04


(0.36)


Weighted average number of Class A and Class B ordinary shares outstanding:





Basic

89,060,615


91,214,789


88,475,665


93,659,152



Diluted

95,347,781


91,214,789


92,863,987


93,659,152


Weighted average number of ADSs outstanding:








Basic

445,303,077


456,073,946


442,378,324


468,295,759



Diluted

476,738,907


456,073,946


464,319,935


468,295,759











 

 

Fang Holdings Limited

Reconciliation of GAAP and Non-GAAP Results

(in thousands of U.S. dollars, except share data and per share data)


Three months ended


Year ended


December 31,


December 31,


December 31,


December 31,


2017


2016


2017


2016

GAAP income from

30,602


(8,891)


36,783


(151,447)

operations








Share-based compensation

2,056


2,545


7,218


9,477

expense








Non-GAAP income from

32,658


(6,346)


44,001


(141,970)

operations
















GAAP net income

15,173


(10,385)


16,295


(169,635)

One-off tax benefit

-


-


-


-

Investment income

(1,586)


(1,056)


(9,428)


(13,864)

Change in fair value of trading

(518)


-


(518)


-

securities








Share-based compensation

2,056


2,545


7,218


9,477

expense








Non-GAAP net income

15,125


(8,896)


13,567


(174,022)









Net Income attributable to

15,175


(10,383)


16,298


(169,635)

Fang shareholders








One-off tax benefit

-


-


-


-

Investment income

(1,586)


(1,056)


(9,428)


(13,864)

Change in fair value of trading








securities

(518)


-


(518)


-

Share-based compensation

2,056


2,545


7,218


9,477

expense








Non-GAAP net Income

15,127


(8,894)


13,570


(174,022)

attributable to Fang








Holdings Limited








shareholders
















GAAP earnings per share for








Class A and Class B ordinary shares:








Basic

0.17


(0.11)


0.18


(1.81)

Diluted

0.16


(0.11)


0.18


(1.81)

GAAP earnings per ADS:








Basic

0.03


(0.02)


0.04


(0.36)

Diluted

0.03


(0.02)


0.04


(0.36)

Non-GAAP earnings per share








for Class A and Class B








ordinary shares:








Basic

0.17


(0.10)


0.15


(1.86)

Diluted

0.16


(0.10)


0.15


(1.86)

Non-GAAP earnings per ADS:






Basic

0.03


(0.02)


0.03


(0.37)

Diluted

0.03


(0.02)


0.03


(0.37)

Weighted average number of








Class A and Class B ordinary








shares outstanding:








Basic

89,060,616.00


91,214,789.00


88,475,665.00


93,659,152.00

Diluted

95,347,781.00


91,214,789.00


92,863,987.00


93,659,152.00

Weighted average number of ADSs outstanding:





Basic

445,303,078.00


456,073,946.00


442,378,324.00


468,295,759.00

Diluted

476,738,907.00


456,073,946.00


464,319,935.00


468,295,759.00









Non-GAAP Net income

15,125.00


(8,896.00)


13,567.00


(174,022.00)

Add back:








Interest expense

3,374.00


7,514.00


16,153.00


20,791.00

Income tax expenses

13,062.00


3,079.00


21,442.00


24,983.00

Depreciation expenses

6,763.00


3,562.00


23,737.00


18,442.00

Subtract:








Interest income

(2,688.00)


(2,884.00)


(11,322.00)


(11,367.00)

Adjusted EBITDA

35,636.00


2,375.00


63,577.00


(121,173.00)

 

 

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SOURCE Fang Holdings Limited

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