Nam Tai Property : NTP - Reports Q3 2017 Results

THIRD QUARTER NEWS RELEASE

Investor relations contact: Please refer to the Nam Tai website (www.namtai.com)

Mr. Kevin McGrath or the SEC website (www.sec.gov) for Nam Tai press releases

Managing Partner of Cameron Associates and financial statements. Tel.:[phone]

E-mail: [e-mail]

NAM TAI PROPERTY INC.

Reports Q3 2017 Results

SHENZHEN, PRC - October 30, 2017 - Nam Tai Property Inc. ("Nam Tai" or the "Company") (NYSE Symbol: NTP) today announced its unaudited results for the third quarter ended September 30, 2017.

KEY HIGHLIGHTS

(In thousands of US dollars, except per share data, percentages and as otherwise stated)

Quarterly Results Nine Months Results

Q3 2017	Q3 2016	YoY(%)(c) 9M 2017	9M 2016	YoY(%)(c)
Operation income	$ 529	$ 614	(14) $ 1,664	$ 1,905	(13)
Net operation income	$ 529	$ 614	(14) $ 1,664	$ 1,165	43
% of operation income	100.0%	100.0%	100.0%	61.2 %
Operating loss	$ (1,627)	$ (1,651)	- $ (5,354)	$ (5,176 )	-
% of operation income	(307.6)%	(268.9)%	(321.8)%	(271.7 )%
per share (diluted)	$ (0.04)	$ (0.04)	- $ (0.14)	$ (0.14 )	-
Net income (loss)(a)(b)	$ 2,522	$ (1,315)	- $ 6,421	$ (4,299 )	-
% of operation income	476.7%	(214.2)%	385.9%	(225.7 )%
Basic income (loss) per share	$ 0.07	$ (0.04)	- $ 0.18	$ (0.12 )	-
Diluted income (loss) per share	$ 0.07	$ (0.04)	- $ 0.17	$ (0.12 )	-
Weighted average number of shares ('000)
Basic	36,927	36,847	36,656	36,749
Diluted	37,731	36,847	37,332	36,749

Notes:

1. Net income for the three months ended September 30, 2017 mainly included exchange gain of $2.6 million as a result of the appreciation of Renminbi against the US dollar in Q3 2017, interest income of $1.7 million earned from time deposits and net operation income of $0.5 million, but partly offset by general and administrative expenses of $2.2 million.

2. Net income for the nine months ended September 30, 2017 mainly included exchange gain of $6.2 million as a result of the appreciation of Renminbi against the US dollar during the nine months ended September 30, interest income of $6.0 million earned from time deposits, and net operation income of $1.7 million, but partly offset by general and administrative expenses of $7.0 million.

3. Percentage change is not applicable if either of the two periods contains a loss.

4. Capitalization on project investment was $7.4 million for Q3 2017, totaling $12.3 million for the nine months ended September 30, 2017 and our accumulated project investment was $51.7 million up to September 30, 2017, which was recorded under the account of real estate properties under development in the balance sheet as at September 30, 2017.

5. This information has been published on the Company's website http://www.namtai.com/investors#investors/quarterly_earnings under the quarterly earnings report of Q3 2017 on page 8, Condensed Consolidated Statements of Comprehensive Income.

SUPPLEMENTARY INFORMATION (UNAUDITED) IN THE THIRD QUARTER OF 2017

Key Highlights of Financial Position

As at September 30, 2017	As at December 31, 2016	As at September 30, 2016
Cash, cash equivalents and short term investments	$171.4 million(a)(b)	$184.2 million	$192.1million
Ratio of cash(c) to current liabilities	13.81	14.79	77.78
Current ratio	15.72	16.63	87.42
Ratio of total assets to total liabilities	21.29	19.98	104.31
Return on equity	3.5%	(3.8 )%	(2.2)%
Ratio of total liabilities to total equity	0.05	0.05	0.01

Notes:

1. As compared with December 31, 2016, the decrease of $12.8 million in the cash, cash equivalents and short-term investments was mainly due to the payments of $13.4 million for new office premises, $7.7 million for dividend payment, and $4.9 million being made for land development project and accordingly was recorded under the account of real estate properties under development in the balance sheet as at September 30, 2017, partly offset by the exchange gain of $7.6 million as a result of the appreciation of Renminbi against the US dollar during the nine months ended September 30, 2017, and proceeds of $3.9 million from shares issued for the exercise of share options.

2. As compared with September 30, 2016, the decrease of $20.7 million in the cash, cash equivalents and short-term investments was mainly due to the payments of $13.4 million for new office premises, $8.4 million for dividend payment, $5.8 million being made for land development project and accordingly was recorded under the account of real estate properties under development in the balance sheet as at September 30, 2017, partly offset by the proceeds of $3.9 million from shares issued for the exercise of share options, and the exchange gain of $2.6 million as a result of the appreciation of Renminbi against the US dollar from September 30, 2016 to September 30, 2017.

3. Cash in the financial ratio included cash, cash equivalents and short-term investments in the amount of $171.4 million, $184.2 million and $192.1 million as at September 30, 2017, December 31, 2016 and September 30, 2016, respectively.

   OPERATING RESULTS

   Operation income for the third quarter of 2017 and the same quarter of last year were mainly derived from the rental of properties and lands located in Shenzhen. Operating loss for the third quarter of 2017 was $1.6 million, a decrease of $0.1 million, compared to operating loss of $1.7 million in the third quarter of 2016.

   Net income for the third quarter of 2017 was $2.5 million mainly represented by an exchange gain of $2.6 million as a result of the appreciation of Renminbi against the US dollar in the third quarter of 2017, interest income of $1.7 million earned from time deposits and net operation income of $0.5 million, but partly offset by general and administrative expenses of $2.2 million, for an earning of $0.07 per diluted share. Compared to the financial results for the same period in 2016, the net loss then of $1.3 million mainly represented an exchange loss of $0.8 million as a result of the depreciation of Renminbi against the US dollar in the third quarter of 2016 and general and administrative expenses of $2.3 million, but partly offset by the interest income of $1.3 million earned from time deposits and net operation income of $0.6 million, for a loss of $0.04 per diluted share.

   Net income for the nine months ended September 30, 2017 was $6.4 million mainly represented by an exchange gain of $6.2 million as a result of the appreciation of Renminbi against the US dollar during the nine months ended September 30, 2017, interest income of $6.0 million earned from time deposits and net operation income of $1.7 million, but partly offset by general and administrative expenses of

   $7.0 million, for an earning of $0.17 per diluted share. Compared to the financial results for the same period in 2016, the net loss then of

   $4.3 million mainly represented general and administrative expenses of $6.3 million and exchange loss of $3.1 million as a result of the depreciation of Renminbi against the US dollar during the nine months ended September 30, 2016, but partly offset by the interest income of $4.2 million earned from time deposits and net operation income of $1.2 million, for a loss of $0.12 per diluted share.

   As the majority of our assets are denominated in Renminbi, the translation of Renminbi denominated assets to US dollars for reporting purposes has resulted in foreign exchange gain for the nine months ended September 30, 2017. Due to the fluctuation of exchange rate for Renminbi against the US dollar, foreign exchange gain for the nine months ended September 30, 2017 was $6.2 million, or approximately 96% of the amount of our net income for this period. However, since the majority of our payment obligations are also denominated in Renminbi, we do not expect the movement of Renminbi against the US dollar to materially and adversely impact our business. Nevertheless, investors should consider that the purchasing power of US dollar figures for cash and cash equivalents and other short-term investments is not identical from period to period.

   Capitalization on project investment was $7.4 million for Q3 2017, totaling $12.3 million for the nine months ended September 30, 2017 and our accumulated project investment was $51.7 million up to September 30, 2017, which was recorded under the account of real estate properties under development in the balance sheet as at September 30, 2017.

   Our business of land development is currently in the preparatory stage where it takes time to apply for the relevant licenses and permits from the PRC government. During this preparatory stage of the land development, our only sources of income are from limited deposit interest and rental income; therefore, we expect to continue to incur losses during this stage.

   Please see page 8 of the Company's Condensed Consolidated Statements of Comprehensive Income for further details. This information has also been published on the Company's website at http://www.namtai.com/investors#investors/quarterly_earnings in the quarterly earnings report of Q3 2017 on page 8, Condensed Consolidated Statements of Comprehensive Income.

   COMPANY OUTLOOK

   The development of Nam Tai Inno Park in Guangming, Shenzhen, and Nam Tai Inno City in Gushu, Shenzhen, continues to proceed smoothly, without any material set-back and within the Company's expected schedule.

   Based on the most recent filing by Kaisa Group Holdings Ltd. ("Kaisa"), following its purchase of shares from our chairman, Mr. Koo, and from the public market, Kaisa currently holds approximately 20.7% of our outstanding share capital. The Company has begun certain strategic cooperation with Kaisa, including hiring a number of engineers and real estate professionals from Kaisa to join the Company as officers and employees. With the injection of this new team, the Company has significantly increased its execution ability and has become less reliant on external consultants. It is expected that the Company will continue from time to time to consult with Kaisa based on its knowledge and experience in the areas of construction and real estate development. In addition, the Company's board of directors has also appointed Mr. Ying Chi Kwok, a co-founder of Kaisa, and Mr. Julian Lin, its current CEO, to the board as executive directors. Summaries of their professional experience are available on the Company's website.

   The construction of Nam Tai Inno Park continues with the excavation of its foundation and pile driving during the third quarter of 2017. The Company has also been fine tuning certain schematic designs with its architectural design firm, Ronald Lu and Partners, and external project management company, WSP, to increase its construction efficiency and achieve higher aesthetic value. The Company expects to select the main construction contractor for Nam Tai Inno Park before the end of 2017, who will commence work in the beginning of 2018.

   For Nam Tai Inno City, the Company has afforded its new engineers and executives the opportunity to continue to conduct a thorough review of its construction and marketing plans. The Company also plans to select the architectural design firm for the Inno City project during the fourth quarter of 2017. In line with the previously announced schedule, the demolishing of the Company's old factory buildings will commence in the fourth quarter of 2017.

   As for the Company's Wuxi facilities, its factory building continues to be listed for sale and the Company has also been in discussions with several potential buyers. To maximize the sales value, the Company is also reviewing additional venues for auction.

   The Company purchased new office premises for a total amount of $13.4 million in April 2017. The Company will move its headquarters to this new location after completing the demolishing of the existing headquarters in the first half of 2018.

   Following below are summaries of our Nam Tai Inno Park and Nam Tai Inno City projects:

   Part I: Gross Floor Areas for the Two Projects:

   Inno Park Inno City

   (In square meters, except plot ratios)

   Land area 103,739 52,625

   Plot ratios 2.59 6.00

   Office	175,406	Office + Soho	187,880
   Apartment	61,000	Apartment	48,300
   Gross floor area (GFA)	Commercial	28,594	Commercial	25,000
   Other	4,159	Other	7,200
   269,159	268,380

   Underground floor area	62,673	80,000
   Total construction floor area (CFA)	331,832	348,380

   Remark The above figures are subject to adjustment upon the final approval of the relevant authorities in China.

   Part II: Timetable for the Two Projects:

   Main Certificates Estimated Completion Time

   Inno Park Inno City 2017 2018 2019 2020 2021

4. Land Use Permit Obtained Jun. 4, 2015

5. Land Certificate Obtained Sep. 21, 2015

   Apr. 2018

   Jun. 2018

6. Planning Permit for Construction Engineering

7. D1 Early Construction Permit for Pile Foundation

   Obtained

   Aug. 29, 2017 Dec.2018

   Obtained

   May 5, 2017 N/A

   D2 Construction Permit for Main Project Dec. 2017 Jan. 2019

   D3 Main Construction Acceptance Jun. 2019 Sep. 2020

   D4 Construction Completion Oct. 2019 Jan. 2021

   E Real Estate Certificate Apr. 2020 Dec. 2020

   Remark 1. Triangles represent "Inno Park", while stars are for "Inno City".

8. The construction of "Inno Park" has commenced from April 2017.

9. The construction of "Inno City" is expected to commence before December 2018.

Part III: Budgetary Estimate for the Two Projects:

Total Cost Inno Park Inno City

(US$ in million)

1	Construction Cost	312	415
2	Operation Cost	69	43
Total	$ 381	$ 458

Remark

The $839 million Schematic Design Estimation was prepared by our quantity surveyor, Currie & Brown, based on a schematic design originally prepared by our architectural design firm. This estimate will be used by us for cost control purposes to monitor the costs of design, construction, and other operations.

This estimation does not include the costs of marketing and interior furnishing and makes no adjustment for inflation or financing costs. If the developed properties are offered for sale, the costs would also have to include payment for land appreciation tax.

Potential Risks in Our Business

We currently derive a majority of our income from rental and interest income but please note that our rental income will cease after October 2017. Since 2016, we have seen a stabilizing trend on the benchmark interest rates in China. However, due to the current economic conditions in China, we expect the People's Bank of China ("PBOC") to keep Renminbi-denominated official time deposit interest rates in China at a low level throughout 2017. We expect to continue to incur operating losses in the fourth quarter of 2017 and beyond. With this lower interest rate and cessation of rental income, we expect our income offset against these operating losses to materially decrease in future periods, which will accelerate the current decline of our cash and cash equivalents and other short-term investments.

We have only become a real estate developer after our electronic manufacturing businesses ceased in 2014. To ensure our successful transformation, we have engaged external advisors and sought potential strategic partners and investors, including Kaisa, to support our projects. We cannot assure you our efforts are sufficient in carrying out a transformation of this magnitude. Our Chairman, Mr. Koo, is 74 years old. Mr. Koo has begun his transition towards retirement in anticipation of age and health issues. We cannot assure you that our transition planning can be carried out smoothly, or that any successor will be able to manage our Company as effectively.

As the majority of our assets are denominated in Renminbi, the translation of Renminbi-denominated assets to US dollars for our reporting purposes has resulted in a foreign exchange gain in this quarter. As such, we do expect to see fluctuations in the reporting of foreign exchange loss/gain in the financial statements due to the movement of Renminbi against the US dollar. However, as a majority of our payments are in Renminbi, we also do not expect the movement of Renminbi against the US dollar to adversely impact our business. Nevertheless, investors should consider that the purchasing power of US dollar figures for cash and cash equivalents and other short-term investments is not identical from period to period.

In order for the projects to proceed smoothly and start ahead of schedule, we will need to access additional funding. To do so, the Company will negotiate loans and credit lines with financial banks for the implementation of funds needed to assist in future development of the projects. These debt instruments often contain covenants limiting our flexibility in operating our business and can contain requirements that