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UPDATE 2-E-House Q2 net drops, sees near-term margin pressure
August 11, 2010 / 11:55 AM / in 7 years

UPDATE 2-E-House Q2 net drops, sees near-term margin pressure

* Q2 earnings $0.08/ADS vs $0.24/ADS a year ago

* Rev up 12 pct

* Says sees margin pressure in near-term

* Sees Q3 rev $81-$83 mln vs est $77 mln

* Shares down 5 pct

(Recasts, adds details, share movement)

Aug 11 (Reuters) - E-House China Holding Ltd’s EJ.N quarterly profit fell 65 percent amid the Chinese government’s efforts to cool down the country’s property market, and the company said it sees near-term profit margin pressure.

In April, China raised mortgage rates and down payment requirements to cool down the red hot property market, in a bid to try and nip rising speculation and restrict credit in the country’s real estate markets.

Government measures announced in April caused a sharp decline in volume in both new and secondary home sales, hurting the latest quarter’s results, the company said in a statement.

E-House, a Chinese real estate services company, also said it continued to see margin pressure in the near term due to lower average commission rates.

The impact of lower margins would be mitigated when transaction volumes begin to rebound more strongly and the average commission rate increases, the company said.

The company forecast third-quarter revenue of $81-$83 million, compared with analysts’ average estimate of revenue of $77 million, according to Thomson Reuters I/B/E/S.

However, excluding revenue from the online real estate business operated by China Online Housing Technology Corp, revenue is expected to be $65-$66 million for the period.

For the second quarter, net income attributable to shareholders was $6.7 million, or 8 cents per ADS, compared with $19.3 million, or 24 cents per ADS a year ago.

Excluding items, the company earned 17 cents per ADS.

Revenue rose 12 percent to $71.2 million.

Total gross floor area of new properties sold fell 20 percent to to 2.2 million square meters, while the total value of new properties sold dropped 12 percent to $2.6 billion.

Analysts on average had expected earnings of 13 cents per ADS, before special items, on revenue of $66.4 million.

American Depository Shares of the company were trading down 5 percent at $14.59 late Wednesday morning on the New York Stock Exchange. They touched a low of $14.57 earlier in the session.

Reporting by Divya Sharma in Bangalore; Editing by Prem Udayabhanu; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging:

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