E-House Holdings' CEO Discusses Q1 2013 Results - Earnings Call Transcript

| About: E-House (China) (EJ)

E-House (China) Holdings Limited (NYSE:EJ)

Q1 2013 Earnings Call

May 15, 2013 7:30 AM ET

Executives

Michelle Yuan – Director, IR

Li-Lan Cheng – Chief Operating Officer

Bin Laurence – Chief Financial Officer

Xin Zhou – Chief Executive Officer

Analysts

Jinsong Du – Credit Suisse

Gregory Chow – Citigroup

Tian Hou – T.H. Capital

Ella Ji – Oppenheimer

Sunny Tam – Bank of America/Merrill Lynch

Operator

Hello and thank you for standing by for E-House First Quarter 2013 Earnings Conference Call. At this time, all participants are in listen-only mode. After management’s prepared remarks, there will be a Q&A session. Today’s conference call is being recorded. If you have any objections, you may disconnect at this time.

I would now like to turn the meeting over to your host for today’s conference, Ms. Michelle Yuan, E-House Director of Investor Relations.

Michelle Yuan

Hello, everyone, and welcome to E-House first quarter 2013 earnings conference call. Today, we are going to give you an update on our financial results for the first quarter ended March 31, 2013. If you need a copy of the earnings press release or if you would like to sign up for our investor distribution list, please go to the IR section of our website at www.ehousechina.com.

Leading the call today is Mr. Li-Lan Cheng, our COO, who will review some highlights for the first quarter of 2013. Ms. Bin Laurence, our CFO, will then discuss the financial results in more detail. We will then open the call to questions, at which time, our Co-Chairman and CEO, Mr. Xin Zhou will be available.

Before we continue, please allow me to read you E-House’s Safe Harbor statement. Some of the statements during this conference call are forward-looking statements made under the Safe Harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to those outlined in our public filings with the SEC.

You are encouraged to review the forward-looking statements section of our Annual Report on Form 20-F filed with the SEC for additional information concerning factors that could cause those differences. E-House does not undertake any obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Our earnings press release and this call include discussions of unaudited GAAP financial information as well as some unaudited non-GAAP financial measures. Our press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. Please take note that unless otherwise stated, all figures mentioned during this conference call are in U.S. dollars.

I will now turn the call over to E-House COO, Mr. Li-Lan Cheng. Mr. Cheng, please go ahead.

Li-Lan Cheng

Thank you to everyone for joining us on this call today. During 2012, we adjusted our strategies and cost structure amid real estate market fluctuations. This resulted in a more focused and streamlined business that is better able to adapt to changing market conditions.

During the first quarter of this year, two of our main business components, our primary agency business and our online real estate advertising and e-commerce business saw significant growth of over 170% and nearly 90% respectively.

On top of the strong gains in traditional online advertising, our real estate e-commerce business has become an important growth driver for the online segment. If last year’s first quarter revenues were at low points for our business. We believe that for the first quarter of this year signified a clear turnaround of our business and formed a solid base for our overall growth this year.

Innovation has always been a core component of our mission. Tomorrow, we will launch our CRIC Home Price series which is also referred to as our China Real Estate Price System or CRPS another unique set of products in the industry.

The CRIC Home Price series includes a primary home price index for 288 cities in China, a secondary home price index for 66 cities and home price appraisals and recommended pricing for every newly built home in 12 key cities as well as secondary home price estimates within those 12 cities.

The CRIC Home Price series has gone through industry experts’ scrutiny and obtained a patent in China. In addition, to target the growing number of mobile internet users in China.

We recently launched our mobile application Pocket Leju, which allows users to which allows users to search for new and secondary homes to buy or rent, with price and listing source information as well as transaction tools.

The application has been downloaded by approximately 700,000 users in the first month since its launch. These new and innovative products and services will enable us to better serve our developer clients, along with consumers, and further strengthen our competitive and leadership position in the industry.

I would now turn the call over to our CFO, Ms. Bin Laurence, who will review our financial highlights for the first quarter.

Bin Laurence

Thank you, Li-Lan. Good morning or good evening everyone. Since the implementation of our cost-control and new incentive measures last year, which aligned our cost structure with the changing market environments, our operating income has improved consistently over the last few quarters.

That trend continued in the first quarter of this year with roughly doubled year-on-year revenues yet relatively flat SG&A expenses. We expect to see significant improvement in profitability along with top-line growth this year.

Now let me walk you through our first quarter financial results in more detail. Total revenues were $116.6 million, for the first quarter of 2013, an increase of 97% from last year’s same quarter, primarily driven by our real estate brokerage services and real estate online services.

Revenues from real estate brokerage services were $59.4 million, an increase of 151% from the first quarter of last year. Real estate brokerage services include primary real estate agency services and secondary real estate brokerage services.

Revenues from primary real estate agency services were $56.4 million, an increase of 171% from the same quarter of 2012, driven by a 135% increase in the total GFA of new properties sold and a 167% increase in the total transaction value of new properties sold. Revenues from secondary real estate brokerage services were $3 million, a slight increase from $2.8 million for the same quarter of 2012.

Revenues from real estate online services were $39.8 million, an increase of 89% from the same quarter of 2012, contributed by 29% growth in traditional online advertising and more importantly from e-commerce revenues.

Revenues from real estate information and consulting services were $11.7 million, an increase of 17% compared to the same quarter of 2012. The increase was due to a revenue increase from information services which was partially offset by a revenue decrease from consulting services as we continued to shift our focus to the more scalable real estate information business.

Revenues from other services were $5.7 million, compared to $4.5 million for the same quarter of 2012. Our other services include offline real estate advertising services, promotional events services and real estate fund management services.

Cost of revenues was $52 million, an increase of 38% from $37.7 million for the same quarter of 2012, due to increased revenues.

SG&A expenses were $75 million, slightly down compared to $77.5 million in the same quarter of 2012.

Loss from operations was $10.3 million, compared to loss of $54.6 million for the same quarter of 2012. Non-GAAP income from operations was $0.8 million, compared to non-GAAP operating loss of $39.8 million for the same quarter of 2012.

Net loss was $6.2 million, compared to net loss of $34.0 million for the same quarter of 2012. Non-GAAP net income was $3.5 million, compared to non-GAAP net loss of $20 million for the same quarter of 2012.

Net loss attributable to E-House shareholders was $5.4 million, or $0.05 loss per diluted ADS, compared to net loss attributable to E-House shareholders of $25.9 million, or $0.33 loss per diluted ADS, for the same quarter of 2012.

Non-GAAP net income attributable to E-House shareholders was $4.2 million or $0.03 per diluted ADS, compared to non-GAAP net loss attributable to E-House shareholders of $16.8 million, or $0.21 loss per diluted ADS, for the same quarter of 2012.

Moving on to our cash position and cash flow.

As of March 31 2013, our cash and cash equivalents balance was $206.3 million. First quarter 2013 net cash used in operating activities was $43 million, mainly attributable to approximately $46 million increase in our customer deposits and approximately $13 million decreases in payroll and welfare payables, partially offset by a decrease in accounts receivable of roughly $10.1 million and non-GAAP net income of $3.5 million.

Net cash used in investing activities was $9.7 million, mainly comprised of $9.2 million for purchase of property and equipment. Net cash proceeds from financing activities were $47.8 million, mainly comprised of $62.6 million proceeds from new share issuance to management, partially offset by $14.9 million paid for share repurchases.

Now let me give you our updated forecast for 2013. We are pleased to raise our 2013 total revenue guidance from previously guided $550 million to approximately $600 million. The revised total revenue guidance would represent an increase of 30% from last year’s $462.4 million. This forecast is subject to change.

Operator, we are now ready to take questions.

Question-and-Answer-Session

Operator

Thank you. (Operator Instructions) First question comes from the line of Jinsong Du from Credit Suisse. Please ask your question.

Jinsong Du – Credit Suisse

Hi, thank you. Just a question regarding the guidance, what’s the rationale behind the raising of the revenue guidance and if Mr. Zhou can also comment on the market outlook and the reason behind that that’ll be great. And also given the increase in revenue guidance do you have a more positive outlook on the earnings side as well. Thank you.

Bin Laurence

(Foreign Language- Chinese)

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

Hi, Jinsong, let me answer your first question.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So, since first part of the reason is since November of last year the Chinese real estate, the market warmed up and Q1 continued that trend, as a result, our total Q1 performance was better than previously expected. The second part of the reason is, since the government issued national five measures in March, it caused land transactions as most people know.

However, a lot of people were expecting a significant drop-off in the subsequent period. So far, however in April we have seen that market activity have more has returned to a normal level. If you look at land transaction as well as versus the transaction value and price, it seems that it did not falls through a cliff. However, they just returned to normal level.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Another aspect of the reasons why we increased our revenue guidance comes from our confidence in the performance of the company as well as our competitive position. We adjusted our cost structure as we mentioned earlier last year and as a result, we are better able to align our internal cost structure with the changing market conditions.

In addition, we are going to launch our CRIC Home Price series of products as we mentioned in our release which will further strengthen our competitive position as well as our leadership position.

For our primary real estate business, the pipeline remains very strong and coupled with our cost control measures and incentive plan changes, we believe that improved performance and for our online segment on top of traditional advertising growth, our e-commerce real estate group is finally matured after two years of hard work and now it’s generating significant revenues and make contribution to our online growth.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Going back to your question regarding the outlook for the market, first of all, as I mentioned, market warmed up since November of last year and the first quarter of this year saw a significant growth.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

And, other than the first week of April which contained a national holiday, the transaction values in April, as well as in May are more or less normal and we see continued normal market activity for new home transactions. As a result, we believe that in absence a further significant government freeing down policy. The market will behave more or less normal and stable.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Even though it’s hard to say precisely where the real estate market will be in the future, we could see two trends, which are relatively clear. One is urbanization, which the government emphasizes and two is the government is increasingly using market tools to address the real estate market.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

If whether increased revenue guidance will bring improved profits as well as we mentioned before in our press release, through our internal cost control measures as well as our new incentive plans, we’ve been able to make improvements in our profitability consistently in the last few quarters and first quarter, we pretty much doubled our revenues with relatively flat SG&A expenses. We hope that in the next few quarters, our profitability will continue to improve with the increased top-line growth.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Thank you.

Operator

Thank you for your question. The next question will come from the line of Gregory Chow from Citigroup. Please ask your question.

Gregory Chow – Citigroup

Thanks for taking my question. But I have two questions both on your online advertising series. First one, well, would you help us understand more about the developers advertising budgets for both online advertising and your e-commerce business.

And as we heard some developers may relate their budget into commission budgets and also marketing budgets, why that commission budget increased corresponding to your e-commerce revenue increase. Do you think the marketing budget would decrease and now we are addressing a new e-commerce business will generate cannibalization to your advertising business?

(Foreign Language- Chinese)

My second question is I want to check the number of properties under your e-commerce program sold in Beijing and the Shanghai in the first quarter?

(Foreign Language- Chinese)

Thank you.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So to clarify the question, and the question is, whether the result-oriented or commission based similar to commission budget will cannibalize the regular advertising budget?

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So first of all, in terms of developers’ budget, they usually budget roughly 2% to 3% of the total to cover both brokerage as well as advertising – including brand advertising or channel result-oriented advertising.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

With that in mind, we have to look at the market share for each line of the business for each company. For us, as you know, first quarter we have a pretty significant increase for our traditional online advertising revenues which is around 29%.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Our main e-commerce revenue model is, we sell together with other secondary brokers, discount, online discount coupons to consumers, so that they can get discounts by using this coupon when purchasing their property.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So, we hope that this is – the e-commerce will represent additional advertising revenues. And so far we haven’t seen any advertising budget decrease from developers so far.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

As to your second question, since our e-commerce business in early 2011, as of the end of 2012, there were approximately RMB32.4 billion worth of transaction values on our e-commerce platform.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Q1, our online e-commerce transaction values also exceeded RMB20 billion.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Due to the traditional seasonality, we do believe that through Q2, Q3, Q4, we will have further increase in terms of transaction volumes on our e-commerce platform.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

To clarify, we – although we have RMB32.4 billion transaction values last year, we do not start to generate significant revenues through the second half of last year.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

And in this year, we started, our e-commerce revenue generation from day one.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Thank you.

Operator

Thank you for your question. The next question comes from the line of Tian Hou from T.H. Capital. Please ask your question.

Tian Hou – T.H. Capital

Yeah, Bin and Xin Zhou. I have a couple of questions. One is regarding your e-business, e-commerce business. So would you please give us some color on the details of the e-business? For example, how you conduct the transaction? Do you need an online, like a real estate sales license?

And how do you talk to your developers? And how many developers you are working together? So I really want to get a sense of the details of such a business. That’s the number one question. So, I’ll ask the second question after this one.

(Foreign Language- Chinese)

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

So, we firstly regarded the e-commerce business is a part of – at least part of it is brokerage related.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We cooperate with a brokerage company.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We offer our – transform our resources and our channels.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Our revenues represented fees we generated from our platforms.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

The way it works is, we sell discount coupons together with the brokerage companies. For example, a consumer can pay 10,000 yen in return for a larger amount of discount when he purchases the property. And when they sign the contract, we got to share this 10,000 consumer pay as our revenues.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So we do share this part of the revenue with brokerage –with other brokers.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So far our share of the revenue represents approximately 80% to 90% due to the fact that we provide our platform, online referrals as well as offline channels.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We believe that this e-commerce model represented a very legitimate business model and comply with the Chinese laws.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Tian Hou – T.H. Capital

Yeah, very detailed, very clear. And so, the follow-on question is that, if I am the developer and can I go not only with you but also with other guys like your peers? And so that’s the follow-up question. And I also give you the second question.

So, the second question would be, there is a lot of noises about China market, how it’s going to be pretty, most of noises saying the rest of the year, some market puts a lot of uncertainties, pretty, how to say, lots of policies, a lots of different voices and – but, under this kind of market noises.

You give a set of guidance, and I just wonder how confident are you in your guidance? And then the third question would be, how shall I treat the share account in the next quarter? Okay.

(Foreign Language- Chinese)

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

The first question of course developers they have a choice of whom they choose to do this part of business with. And in most cases, we get the business this time and then somebody else gets the business next time.

There are a few cases where everybody works together in a project. But those are even rare. And then we basically compete and see, which company has the most resources online, midline and offline.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

As for the competitive advantages of our e-commerce platform, first of all we have, three very strong intake points within – and we also have a very established online e-commerce platform.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

And midline, through starting membership data we accumulated throughout these years, we are able to launch a new product called cloud-based call centers, which can be utilized to accumulate the potential buyers and highly regarded by developers.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Offline, we started a real estate broker alliance platform which so far accumulated 300,000 brokers to our network.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

As to the confidence in our guidance, I could say that, we’ve already taken into consideration of the potential changes in the market while giving this guidance.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We do reserve a right to revise the guidance if the government pushes out an extreme type of measure.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Based on our current outlook for the real estate market, we are confident about our guidance.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Thanks. And I’ll answer your third question. (Foreign Language- Chinese) Because of our completion of the new share issuances to the management in the first quarter, starting from the second quarter, our share count is approximately 132 million shares.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Thank you.

Operator

Thank you for your question. Your next question comes from Ella Ji from Oppenheimer. Please ask your question.

Ella Ji – Oppenheimer

Xin Zhou, Li-Lan and Bin, good evening. First question, how much is your e-commerce revenue in this quarter?

Bin Laurence

(Foreign Language- Chinese)

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

It’s a customer related $10 million US.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So, our e-commerce revenue represented only our share of the e-commerce revenues excluding the ones that’s – excluding the portion that we shared with brokerage companies.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Taken that piece into consideration, together revenue between us and brokerage companies on our e-commerce platform is somewhere between$18 million to 19 million.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So you can back the number out and see that if you exclude these e-commerce revenues, our first quarter year-on-year traditional online advertising yield has a growth of 29%.

Ella Ji – Oppenheimer

Great, thanks. And then, you mentioned a few new initiatives such as the Pocket Leju, mobile app and CRPS and also the cloud, the database. I wonder if management can talk about your thoughts of potential monetization in future. Do you think the market will be ready for that maybe given like a 12 to 15 months?

Bin Laurence

(Foreign Language- Chinese)

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

First of all, there are three new products that I’d like to share with you today. First is the cloud-based call center.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Cloud-based call center was established utilizing the accumulated membership data that E-House has through all these years and this data can be utilized for individual projects among developers.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

This cloud-based call center system from day one increased our competitive position for our primary brokerage business as well as our e-commerce business.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We are not going to separately try to monetize the cloud-based call center system. However, the benefit is obtained from increased revenue from our primary brokerage businesses as well as our e-commerce business and through increased competitive positions.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

The second new product is the CRIC Home Price system.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Li-Lan mentioned this earlier through his comments. This new product will be officially launched tomorrow.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

First of all, this new series of products will increase our competitive and the leadership position.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Secondly, we believe that this product will bring revenues in terms of pricing consulting in the future.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

And the third benefit of this home price series is that, we believe since the price is the number one important element when it comes to property transactions, we believe that when coupled – when used on the internet, it will bring additional traffic to our internet sites.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

A very good example is, we coupled this home price system with our Pocket Leju, the mobile application that we launched about a month ago, and because that it allows consumers to check on prices for those properties, we are able to get roughly 70,000 downloads within a month.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

The third new product is the Pocket Leju. This is the mobile application that we launched recently.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We believe that the mobile internet is the direction of the internet growth.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Our current target is that we will accumulate more and more consumer end-users for the Pocket Leju product.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

We believe that eventually, when you have a large number of downloaded users for this mobile application, we will see added benefit online advertising, our brokerage business as well as e-commerce business. But, right now, there is no direct revenue from this product.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Thank you.

Operator

Thank you. Your last question comes from Sunny Tam from Bank of America/Merrill Lynch. Please ask your question.

Sunny Tam – Bank of America/Merrill Lynch

Hi, thank you. Just two quick questions. One would be on the cost side, can you give us more detail on how you control your costs. We saw the SG&A was pretty much flat versus a year ago. Can we expect the trend for the full year to be roughly the same as last year?

And on the direct cost of revenues, I saw that actually the gross margins went down a little bit versus third and fourth quarter to around 55% in first quarter 2013 versus around 60% in third and fourth quarters.

Is there any change in the cost structure, it’s more variable right now and when your incomes go up you have to pay a lot more than before. And the second question would be an update on the project pipelines that the company has right now? Thank you.

Bin Laurence

(Foreign Language- Chinese)

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

Okay, so I will answer the first two of your questions. Regarding what we did with our cost structure we changed our incentive plans last year, so that our current sales incentive is related to the company’s revenues versus previously it’s linked to the transaction values. As a result, the sales force compensation is more directly linked to the company’s performance.

And secondly, with the declining commission rate we try to improve the productivity of our sales force by reducing the number of sales people in each project while maintain the same high quality of services. Through those measures, we are able to generate profits with the current and relatively stable commission rates.

Your second question regarding the cost of revenues actually, first quarter usually has slightly higher cost – as a percentage of revenues slightly higher compared to the rest of the three quarters. But if you compare our first quarter’s percentage with the same percentage of first quarter of last year, it’s actually down significantly.

First quarter’s cost as a percentage of revenue was 42% and same quarter last year it was 59%. So actually this – we improved in this aspect as well and you should see the 40% as in previous years in the next few quarters, this cost of revenue as a percentage. This cost as a percentage of revenue would still come down a little bit.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

So regarding your project pipeline, as of the end of last year, we have a total of 150 million square meters. And in the first quarter have roughly 170 million square meters. It increased by 20 million within a quarter.

Xin Zhou

(Foreign Language- Chinese)

Bin Laurence

(Interpreted)

Thank you.

Operator

Thank you. We are now approaching the end of the conference call. I’ll now turn the call over to E-House Director of Investor Relations, Ms. Michelle Yuan for her closing remarks.

Michelle Yuan

This concludes today’s call. If you have any follow-up questions, please do let us know. Thank you.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.

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