UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT
OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of November 2016
Commission File Number: 001-34862
FANG HOLDINGS LIMITED
(Exact name of registrant as specified in its charter)
F9M, Building 5, Zone 4, Hanwei International Plaza
No. 186 South 4th Ring Road
Fengtai District, Beijing 100160
The
People’s Republic of China
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FANG HOLDINGS LIMITED | |||
| By: | /s/ Vincent Tianquan Mo | ||
| Name: | Vincent Tianquan Mo | ||
| Title: | Executive Chairman | ||
Date: November 30, 2016
Exhibit Index
Exhibit 99.1—Press Release dated November 28, 2016
Exhibit 99.1
Fang Announces Third Quarter 2016 Results
BEIJING, Nov. 28, 2016 /PRNewswire/ -- Fang Holdings Limited (NYSE: SFUN) ("we," "our," or "Fang"), the leading real estate Internet portal in China, announced today its unaudited financial results for the three months ended September 30, 2016.
Third Quarter 2016 Highlights
| Ÿ | Total revenues were $250.1 million. |
| Ÿ | Operating income was $0.2 million. Non-GAAP operating income was $2.4 million. A description of the adjustments from GAAP to non-GAAP operating income is detailed in the Reconciliation Statement following this press release. |
| Ÿ | Net loss attributable to Fang's shareholders was $4.9 million. Fully diluted loss per ADS was $0.01. Non-GAAP net loss attributable to Fang's shareholders was $14.2 million. Non-GAAP fully diluted loss per ADS was $0.03. A description of the adjustments from GAAP to non-GAAP net loss attributable to Fang's shareholders and fully diluted loss per ADS is detailed in the Reconciliation Statement following this press release. |
“This quarter was one of the toughest quarters in Fang’s history. Our transformation coupled with the market regulations by the government was very challenging,” said Vincent Mo, Chairman and CEO of Fang. “Transformation is not easy but we are determined and optimizing the operations details. The Company achieved operational profitability and we are confident to turn around the Company.”
Third Quarter 2016 Results
Revenues
Fang reported total revenues of $250.1 million in the third quarter of 2016, a 1% increase from $248.5 million in the corresponding period of 2015, primarily driven by the growth of e-commerce services, partially offset by the decline in marketing services.
Revenue from e-commerce services was $167.4 million in the third quarter of 2016, an increase of 17.4% from $142.6 million in the corresponding period of 2015, primarily driven by the growth of the brokerage services for secondary home, partially offset by the scaling down of rental and home furnishing due to the adjustment of Fang’s strategies in 2016.
Revenue from marketing services was $35.6 million in the third quarter of 2016, a decrease of 45.8% from $65.6 million in the corresponding period of 2015, primarily due to less demand from property developers for online advertising.
Revenue from listing services was $28.5 million in the third quarter of 2016, an increase of 4.0% from $27.4 million in the corresponding period of 2015, primarily due to the increased unit price per paying member.
Revenue from Internet financial services was $7.3 million in the third quarter of 2016, an increase of 14.0% from $6.4 million in the corresponding period of 2015, primarily due to the contribution from existing loans of new home financial services.
Revenue from other value-added services was $11.4 million in the third quarter of 2016, an increase of 75.4% from $6.5 million in the corresponding period of 2015, primarily due to the growth of big data services in research business.
Cost of Revenue
Cost of revenue was $157.0 million in the third quarter of 2016, a decrease of 16.7% from $188.5 million in the corresponding period of 2015 and a decrease of 32.1% from $231.1 million in the second quarter of 2016. The decrease in cost of revenue was mainly due to the downsizing of the agent team related to the secondary brokerage services and the scaling down of rental and home furnishing in ecommerce services.
Operating Expense
Operating expenses were $92.9 million in the third quarter of 2016, generally consistent with the corresponding period of 2015.
Selling expenses were $56.7 million in the third quarter of 2016, an increase of 7.4% from $52.8 million in the corresponding period of 2015, primarily due to the increased advertising and promotional expenses.
General and administrative expenses were $36.2 million in the third quarter of 2016, a decrease of 7.2% from $39.0 million for the corresponding period of 2015, primarily due to the decreased bad-debt expense and bank surcharges.
Operating Loss/Income
Operating income was $0.2 million in the third quarter of 2016, compared to operating loss of $31.7 million in the corresponding period of 2015.
Income Tax Expenses
Income tax expenses were $8.0 million in the third quarter of 2016, compared to income tax benefit of $29.2 million in the corresponding period of 2015.
Net Loss/Income and EPS
Net loss attributable to Fang's shareholders was $4.9 million in the third quarter of 2016, compared to net income of $1.4 million in the corresponding period of 2015. Loss per fully-diluted ordinary share and ADS were $0.05 and $0.01, respectively, in the third quarter of 2016, compared to earnings of $0.02 and nil in the corresponding period of 2015.
Adjusted EBITDA
Adjusted EBITDA, defined as non-GAAP net income before income taxes, interest expenses, interest income, depreciation and amortization, was $1.6 million in the third quarter of 2016, compared to the loss of $24.3 million in the corresponding period of 2015.
Cash
As of September 30, 2016, Fang had cash, cash equivalents, and short-term investments of $893.4 million, compared to $983.7 million as of December 31, 2015. Net cash generated from operating activities was $76.8 million in the third quarter of 2016, compared to cash flow used in operating activities of $83.2 million in the same period of 2015, primarily due to the repayment of loan principals in our financial services, which was $86.8 million for the three months ended September 30, 2016.
Share Repurchase Program
As of November 28, 2016, Fang had purchased approximately 17 million ADSs in aggregate with a total consideration of US$81 million. Fang will continue to purchase the ADSs with an aggregate value of no more than US$200 million under the current program.
Business Outlook
Fang adjusted its total revenue guidance for 2016 from $1,148.6 million to approximately $927.7 million, representing a year-on-year increase of 5.0%. 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 (9:00 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 November 28, 2016 through 7:59 ET December 6, 2016. 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: | 23749283 |
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 our websites, we provide e-commerce, marketing, listing, financial and other value-added services for China's fast-growing real estate and home furnishing and improvement sectors. Our 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 629 cities in China. For more information about Fang, please visit http://ir.fang.com.
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 income/(loss), (2) non-GAAP net income/(loss) and (3) non-GAAP basic and diluted earnings/(loss) per ordinary share and per ADS and (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 table has more details on the reconciliation between non-GAAP financial measures and their most directly comparable GAAP financial measures.
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. Such forward-looking statements include, without limitation, statements regarding our future financial performance, revenue guidance for 2016, growth and growth rates, and market position and continued business transformation. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Potential risks and uncertainties include, without limitation, whether the transactions contemplated by the restructuring of our assets and businesses will receive the requisite approvals, whether such restructuring will be carried out as planned, the impact of such restructuring on our assets and businesses, the impact of our transformation from a pure Internet information platform to a transaction-oriented platform, the impact of our implementation of a "zero tolerance policy" that has resulted in dismissal of employees, the impact of the slowdown in China's real estate market on us and the impact on revenues of our existing and new service fees reductions, our ability to retain real estate listing agencies as customers during challenging economic periods, the success of our new business initiatives, our ability to manage its operating expenses, the impact of, measures taken or to be taken by the Chinese government to control real estate growth and prices and other events which could occur in the future, economic challenges in China's real estate market, the impact of competitive market conditions for our services, our ability to maintain and increase our leadership in China's home related internet sector, the uncertain regulatory landscape in China, fluctuations in our quarterly operating results, our continued ability to execute business strategies including our SouFun membership services and SouFun Online Shop, our ability to continue to expand in local markets, our reliance on online advertising sales and listing services and transactions for our revenues, any failure to successfully develop and expand our content, service offerings and features, including the success of new features to meet evolving market needs, and the technologies that support them, the quality of the loans we originate and resell and the performance of those loans in the future, our ability to successfully service and process customer loans for our own benefit and for the purchasers of those loans and, should we in the future make acquisitions, any failure to successfully integrate acquired businesses.
For investor and media inquiries, please contact:
Dr. Hua Lei
CFO
Phone: +86-10-5631-8661
Email: leihua@fang.com
Ms. Joyce
Tang
Senior Investor Relations Manager
Phone: +86-10-5631 8659
Email: tangjunning@fang.com
Ms. Dana
Cheng
Investor Relations Manager
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)
| September 30, 2016 | December 31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | (Unaudited) | (Audited) | ||||||
| Cash and cash equivalents | 866,929 | 817,921 | ||||||
| Restricted cash, current | - | 103,179 | ||||||
| Short-term investments | 26,457 | 62,559 | ||||||
| Accounts receivable, net | 122,250 | 147,516 | ||||||
| Funds receivable | 25,649 | 45,400 | ||||||
| Prepayment and other current assets | 56,198 | 60,265 | ||||||
| Commitment deposits | 8,293 | 10,646 | ||||||
| Loan receivable, current | 104,486 | 266,990 | ||||||
| Amount due from related parties | 384 | 262 | ||||||
| Total current assets | 1,210,646 | 1,514,738 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 330,187 | 326,504 | ||||||
| Loan receivable, non-current | 34,718 | 55,349 | ||||||
| Deferred tax assets, non-current | 9,801 | 5,490 | ||||||
| Deposit for non-current assets | 259,694 | 137,715 | ||||||
| Long-term investments | 242,058 | 244,678 | ||||||
| Other non-current assets | 8,710 | 6,795 | ||||||
| Total non-current assets | 885,438 | 777,305 | ||||||
| Total assets | 2,096,083 | 2,292,043 | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Short-term loans | 91,496 | 100,000 | ||||||
| Deferred revenue | 125,865 | 145,321 | ||||||
| Accrued expenses and other liabilities | 333,021 | 361,593 | ||||||
| Customers’ refundable fees | 63,921 | 59,107 | ||||||
| Income tax payable | 10,137 | 9,948 | ||||||
| Convertible senior notes-current1 | 399,456 | 396,716 | ||||||
| Total current liabilities | 1,023,896 | 1,072,685 | ||||||
| Non-current liabilities: | ||||||||
| Long-term loans | 82,204 | - | ||||||
| Convertible senior notes | 289,113 | 287,887 | ||||||
| Deferred tax liabilities, non-current | 71,775 | 76,631 | ||||||
| Other non-current liabilities | 303 | 312 | ||||||
| Total non-current liabilities | 443,395 | 364,830 | ||||||
| Total Liabilities | 1,467,291 | 1,437,515 | ||||||
| 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, and 67,612,571 shares and 70,736,679 shares issued and outstanding as at September 30, 2016 and December 31, 2015, respectively | 8,708 | 9,110 | ||||||
| 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 September 30, 2016 and September 30, 2015, respectively | 3,124 | 3,124 | ||||||
| Treasury stock | (80,945 | ) | - | |||||
| Additional paid-in capital | 484,690 | 478,391 | ||||||
| Accumulated other comprehensive income(loss) | 1,350 | (10,364 | ) | |||||
| Retained earnings | 211,165 | 373,505 | ||||||
| Total Fang Holdings Limited shareholders' equity | 628,092 | 853,766 | ||||||
| Non-controlling interests | 700 | 761 | ||||||
| Total equity | 628,792 | 854,527 | ||||||
| TOTAL LIABILITIES AND EQUITY | 2,096,083 | 2,292,042 | ||||||
1. Certain reclassifications in other non-current assets and convertible senior notes as of December 31, 2015 were retrospectively adjusted as a result of the adoption of a new accounting standard effective in 2016.
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 | ||||||||
| September 30, 2016 | September 30, 2015 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenues: | ||||||||
| E-commerce services | 167,413 | 142,576 | ||||||
| Marketing services | 35,574 | 65,604 | ||||||
| Listing services | 28,493 | 27,406 | ||||||
| Financial services | 7,267 | 6,376 | ||||||
| Other value-added services and other services | 11,380 | 6,546 | ||||||
| Total revenues | 250,127 | 248,508 | ||||||
| Cost of Revenues: | ||||||||
| Cost of services | (157,001 | ) | (188,462 | ) | ||||
| Total Cost of Revenues | (157,001 | ) | (188,462 | ) | ||||
| Gross Profit | 93,126 | 60,046 | ||||||
| Operating expenses and income: | ||||||||
| Selling expenses | (56,729 | ) | (52,819 | ) | ||||
| General and administrative expenses | (36,177 | ) | (38,966 | ) | ||||
| Other income | - | 5 | ||||||
| Operating Income (loss) | 220 | (31,734 | ) | |||||
| Foreign exchange gain (loss) | (8,390 | ) | 86 | |||||
| Interest income | 2,010 | 4,680 | ||||||
| Interest expense | (4,071 | ) | (3,927 | ) | ||||
| Investment income | 11,453 | 660 | ||||||
| Government grants | 1,862 | 2,405 | ||||||
| Income (loss) before income taxes and non-controlling interests | 3,084 | (27,830 | ) | |||||
| Income tax benefit (expenses) | ||||||||
| Income tax benefit (expenses) | (8,032 | ) | 29,230 | |||||
| Net income (loss) | (4,948 | ) | 1,400 | |||||
| Net income (loss) attributable to non-controlling interests | 1 | (5 | ) | |||||
| Net income (loss) attributable to Fang Holdings Limited shareholders | (4,949 | ) | 1,405 | |||||
| Other comprehensive income (loss), net of tax | ||||||||
| Foreign currency Translation | 41,804 | (34,180 | ) | |||||
| Unrealized gain(loss) on available-for-sale security | 1,197 | (23,085 | ) | |||||
| Total other comprehensive income (loss), net of tax | 43,001 | (57,265 | ) | |||||
| Comprehensive income (loss) | 38,052 | (55,865 | ) | |||||
| Earnings (loss) per share for Class A and Class B ordinary shares | ||||||||
| Basic | (0.05 | ) | 0.02 | |||||
| Diluted | (0.05 | ) | 0.02 | |||||
| Earnings (loss) per ADS | ||||||||
| Basic | (0.01 | ) | - | |||||
| Diluted | (0.01 | ) | - | |||||
| Weighted average number of Class A and Class B ordinary shares outstanding: | ||||||||
| Basic | 93,798,520 | 83,215,146 | ||||||
| Diluted | 93,798,520 | 90,617,966 | ||||||
| Weighted average number of ADSs outstanding: | ||||||||
| Basic | 468,992,600 | 416,075,730 | ||||||
| Diluted | 468,992,600 | 453,089,830 | ||||||
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 | ||||||||
| September 30, 2016 | September 30, 2015 | |||||||
| GAAP income from operations | 220 | (31,734 | ) | |||||
| Share-based compensation expense | 2,223 | 1,125 | ||||||
| Non-GAAP income from operations | 2,443 | (30,609 | ) | |||||
| GAAP net income | (4,948 | ) | 1,400 | |||||
| One-off tax benefit | - | (30,578 | ) | |||||
| Withholding tax related to dividends | - | (3,146 | ) | |||||
| Investment income | (11,453 | ) | (660 | ) | ||||
| Share-based compensation expense | 2,223 | 1,125 | ||||||
| Non-GAAP net income | (14,178 | ) | (31,859 | ) | ||||
| Net Income attributable to Fang shareholders | (4,949 | ) | 1,405 | |||||
| One-off tax benefit | - | (30,578 | ) | |||||
| Withholding tax related to dividends | - | (3,146 | ) | |||||
| Investment income | (11,453 | ) | (660 | ) | ||||
| Share-based compensation expense | 2,223 | 1,125 | ||||||
| Non-GAAP net Income attributable to Fang Holdings Limited shareholders | (14,179 | ) | (31,854 | ) | ||||
| GAAP earnings per share for Class A and Class B ordinary shares: | ||||||||
| Basic | (0.05 | ) | 0.02 | |||||
| Diluted | (0.05 | ) | 0.02 | |||||
| GAAP earnings per ADS: | ||||||||
| Basic | (0.01 | ) | 0.00 | |||||
| Diluted | (0.01 | ) | 0.00 | |||||
| Non-GAAP earnings per share for Class A and Class B ordinary shares: | ||||||||
| Basic | (0.15 | ) | (0.38 | ) | ||||
| Diluted | (0.15 | ) | (0.38 | ) | ||||
| Non-GAAP earnings per ADS: | ||||||||
| Basic | (0.03 | ) | (0.08 | ) | ||||
| Diluted | (0.03 | ) | (0.08 | ) | ||||
| Weighted average number of Class A and Class B ordinary shares outstanding: | ||||||||
| Basic | 93,798,520 | 83,215,146 | ||||||
| Diluted | 93,798,520 | 90,617,966 | ||||||
| Weighted average number of ADSs outstanding: | ||||||||
| Basic | 468,992,600 | 416,075,730 | ||||||
| Diluted | 468,992,600 | 453,089,830 | ||||||
| Non-GAAP Net income | (14,178 | ) | (31,859 | ) | ||||
| Add back: | ||||||||
| Interest expense | 4,071 | 3,927 | ||||||
| Income tax expenses | 8,032 | 4,494 | ||||||
| Depreciation expenses | 5,672 | 3,813 | ||||||
| Subtract: | ||||||||
| Interest income | (2,010 | ) | (4,680 | ) | ||||
| Adjusted EBITDA | 1,587 | (24,305 | ) | |||||