GUANGZHOU, China, Aug. 26 /Xinhua-PRNewswire-FirstCall/ -- CNinsure
Inc., (NASDAQ:CISG), a leading independent insurance agency and
brokerage company operating in China, today announced its unaudited
financial results for the second quarter ended June 30, 2008. (1)
(1) This announcement contains translations of certain Renminbi
(RMB) amounts into U.S. dollars (US$) at specified rates solely for
the convenience of the reader. Unless otherwise noted, all
translations from RMB to U.S. dollars are made at a rate of
RMB6.8591 to US$1.00, the effective noon buying rate as of June 30,
2008 in The City of New York for cable transfers of RMB as
certified for customs purposes by the Federal Reserve Bank of New
York. Financial Highlights for Second Quarter 2008 -- Total net
revenues: RMB214.8 million (US$31.3 million), representing an
increase of 57.3% from the first quarter of 2008 and an increase of
111.0% from the second quarter of 2007, exceeding the previous
guidance of RMB175.0 million to RMB180.0 million. -- Net income:
RMB60.6 million (US$8.8 million), representing an increase of 73.1%
from the first quarter of 2008 and an increase of 84.2% from the
second quarter of 2007. -- Basic and diluted net income per ADS:
RMB1.329 (US$0.194), and RMB1.329 (US$0.194), respectively.
Commenting on the second quarter results, Yinan Hu, Chairman and
CEO of CNinsure Inc. stated, "We are excited to report record high
revenues which exceeded our previous estimate. The strong financial
results reflected that CNinsure, as a leading insurance
intermediary in China, continued to benefit from the dynamism of
China's insurance market, particularly the 51.1% industry-wide
premium growth (2), despite the negative impacts of natural
disasters and volatile financial market. " "We are particularly
pleased that our business generated strong organic growth as we
successfully executed our acquisition strategy in the second
quarter. Of the 57.3% top-line growth, 67.1% was contributed by our
existing operations and 32.9% by acquisitions, indicating a sound
momentum for sustainable growth. In addition, our dedication to
improving our business structure is also paying off, with our
property and casualty insurance, life insurance and the newly added
claims adjusting business lines respectively contributing 77.6%,
15.8% and 6.6% of our total net revenues in the first half of 2008.
We believe we are on the right track towards a well-balanced
business structure, which will lay a solid foundation for our
continued growth in the future. " He added, "Looking forward, while
continuing to focus on organic growth, we remain committed to
expanding our distribution network through acquisitions, as well as
building a scalable unified operating platform to achieve economies
of scale and stronger profitability. I have full confidence that
these investments will further solidify our leading position in the
Chinese insurance intermediary market and fuel our growth in the
second half of 2008 and beyond. " (2) Source: CIRC Financial
Results for the Second Quarter 2008 Total net revenues for the
second quarter ended June 30, 2008 were RMB214.8 million (US$31.3
million), representing an increase of 57.3% from RMB136.6 million
for the previous quarter, and an increase of 111.0% from RMB101.8
million for the second quarter of 2007. The increase over the
previous quarter was primarily attributable to seasonality of our
business, higher productivity of sales agents, increasing number of
sales agents, increase in commission rates of life insurance
business and contributions by our newly acquired entities. The
increase over the second quarter of 2007 was mainly attributable to
higher commission rates, higher productivity of sales agents, a
significant increase in the number of sales agents and
contributions from newly acquired entities. Total operating costs
and expenses were RMB144.1 million (US$21.0 million) for the second
quarter of 2008, representing an increase of 38.6% from RMB104.0
million for the previous quarter and an increase of 103.3% from
RMB70.9 million for the second quarter of 2007. Commissions and
fees expenses were RMB109.3 million (US$15.9 million) for the
second quarter of 2008, representing an increase of 53.8% from
RMB71.1 million for the previous quarter and an increase of 101.4%
from RMB54.3 million for the second quarter of 2007. The increases
corresponded to the increase in net revenues from commissions and
fees. Selling expenses were RMB2.8 million (US$0.4 million) for the
second quarter of 2008, representing a decrease of 31.6% from
RMB4.1 million for the previous quarter and an increase of 41.6%
from RMB2.0 million for the second quarter of 2007. The decrease
from the previous quarter was primarily due to further
centralization of management functions. The increase over the
second quarter of 2007 was primarily due to the selling expenses
incurred by newly acquired entities in 2008. General and
administrative expenses were RMB31.9 million (US$4.7 million) for
the second quarter of 2008, representing an increase of 11.1% from
RMB28.8 million for the previous quarter and an increase of 119.2%
from RMB14.6 million for the second quarter of 2007. The increase
as compared to the first quarter of 2008 was primarily due to
general and administrative expenses incurred by newly acquired
entities in the second quarter of 2008. The increase as compared to
the second quarter of 2007 was primarily due to increases in
share-based compensation expenses, salaries for administrative
staff as a result of increased headcount, ongoing professional
expenses and Sarbanes-Oxley Act compliance-related expenses and
exchange loss. As a result of the foregoing factors, income from
operations was RMB70.7 million (US$10.3 million) for the second
quarter of 2008, representing an increase of 116.6% from RMB32.7
million for the previous quarter and an increase of 128.4% from
RMB31.0 million for the second quarter of 2007. Operating margin
was 32.9% for the second quarter of 2008 as compared with 23.9% for
the previous quarter and 30.4% for the second quarter of 2007.
Apart from the foregoing factors, the increase in operating margin
over the previous quarter was also attributable to accrued
performance bonuses totaling RMB7.4 million (US$1.1 million) as a
result of achieving life insurance premium targets for the first
half of 2008. The bonuses will be received at year-end of 2008,
pursuant to agreements with insurance companies. Interest income
for the second quarter of 2008 was RMB10.7 million (US$1.6
million), representing a decrease of 18.1% from RMB13.0 million for
the previous quarter and an increase of 1,019.4% from RMB1.0
million for the second quarter of 2007. The decrease from the
previous quarter was primarily attributable to the decrease in
interest rate of US dollar because we deposited our proceeds
generated from our initial public offering in US dollar account.
The increase over the second quarter of 2007 was primarily
attributable to the proceeds from our initial public offering in
October 2007. Income tax expense for the second quarter of 2008 was
RMB19.2 million (US$2.8 million), representing an increase of 71.0%
from RMB11.2 million for the previous quarter and an increase of
10,447.4% from RMB0.2 million tax credit for the second quarter of
2007. The increase over the previous quarter was primarily
attributable to the increase of taxable income as a result of
strong operations in the second quarter of 2008. The increase over
the second quarter of 2007 was primarily attributable to the
expiration of income tax exemptions starting from January 1, 2008.
Effective income tax rate was 23.5% for the second quarter of 2008
compared to 24.5% for the previous quarter and -0.6% for the second
quarter of 2007. Net income was RMB60.6 million (US$8.8 million)
for the second quarter of 2008, representing an increase of 73.1%
from RMB35.0 million for the previous quarter, and an increase of
84.2% from RMB32.9 million for the second quarter of 2007. Net
margin was 28.2% for the second quarter of 2008 as compared with
25.6% for the previous quarter and 32.3% for the second quarter of
2007. Fully diluted net income per ADS was RMB1.329 (US$0.194) for
the second quarter of 2008, compared with RMB0.768 for the previous
quarter and RMB0.979 for the second quarter of 2007. As of June 30,
2008, the Company had RMB1,587.8 million (US$231.5 million) in cash
and cash equivalents. Business Highlights CNinsure continued
executing its growth strategy, with the following highlights for
the second quarter ended June 30, 2008: -- Consolidating Leading
Position in the Chinese Insurance Intermediary Sector As of June
30, 2008, CNinsure operated a distribution network of 264 Sales and
services outlets in 13 provinces with 20,243 sales professionals,
compared with 17,137 sales professionals, 232 sales and service
outlets 11 provinces as of the end of the previous quarter. In
addition, CNinsure's insurance claims adjusting business has 693
professional adjusters as June 30, 2008. According to the Insurance
Intermediary Market Development Report for the first half 2008
published by the China Insurance Regulatory Commission eight of
CNinsure's affiliated insurance agencies ranked No.s 1, 2, 6, 8,
14, 18, 19, and 20, respectively, among China's top 20 insurance
agencies by revenue, together accounting for 13.0% market share.
One of its affiliated insurance brokerages ranked No.17 among
China's top 20 insurance brokerages in terms of revenue, with an
approximately 1.4% market share. In addition, the three insurance
claims adjusting firms it acquired in the first half of 2008,
ranked No.s 2, 3 and 9, respectively, among China's top 20
insurance claims adjusting firms, with a combined 10.7% market
share. -- Geared for Expansion: Selective Acquisitions and
Entrepreneurial Agent Program The highly fragmented nature of the
independent insurance intermediary sector in China offers CNinsure
substantial opportunities for consolidation. CNinsure intends to
expand its distribution network through selective acquisitions and
establishment of joint ventures with entrepreneurial agents:
Acquisitions CNinsure completed acquisitions of majority interests
in two P&C insurance agencies, one life insurance agency and
two claims adjusting companies, expanding its geographic footprint
to Guangxi Province in southern China and Liaoning Province in
northern China. The five acquired entities in aggregate contributed
8.4% of its total net revenues in the second quarter of 2008. Newly
Established Insurance Agencies CNinsure announced establishment of
two life insurance agencies with entrepreneurial agents to expand
into Jiangsu and Jilin provinces. -- Further Expanding the Life
Insurance Business and Accelerating Penetration into the Insurance
Claims Adjusting Sector while Continuing to Grow P&C Insurance
Business. Growing Life Insurance Business Two and half years after
the expansion into life insurance sector, CNinsure has begun to
benefit from the growing life insurance business scale. Commissions
and fees revenues derived from the sales of life insurance products
for the second quarter of 2008 grew 50.8% from the previous quarter
and 283.8% from the second quarter of 2007. It recognized RMB7.4
million (US$1.1 million) in performance bonuses as a result of
achieving life insurance premium targets for the first half of
2008, pursuant to agreements with insurance companies. It is
expected that life insurance business will become a more important
source of revenues for CNinsure in the coming years. Expanding Into
Claims Adjusting Sector Following its acquisition of Guangdong
Fangzhong Insurance Surveyors & Loss Adjusters Co., Ltd. in
December 2007 to start claims adjusting business, CNinsure acquired
Khubon Insurance Surveyors & Loss Adjusters Co., Ltd. and
Teamhead Insurance Surveyors & Loss Adjusters Co., Ltd.,
another two among China's top 20 insurance adjusting firms, with a
plan to merge these three companies to build one nationwide claims
adjusting service network. While providing a new source of
revenues, its newly-added insurance claims adjusting business has
also helped drive the growth of its P&C and life insurance
sales, with more sophisticated and value- added after-sales
services now available to its customers. Commissions and fees
revenues derived from its claims adjusting business grew 249.1%
from the previous quarter. Improving Business Structure CNinsure is
dedicated to improving its business structure with more focus on
life insurance business and further expansion into claims adjusting
business while continuing to grow its P&C insurance business.
Though property and casualty insurance business remained it's the
biggest contributor in terms of revenues, life insurance business
was increasingly gaining share and the newly added claims adjusting
business also showed a good start, each contributing 77.6%, 15.8%
and 6.6% of its total net revenues in the first half of 2008, as
compared with 88.7%, 11.3% and 0% in the same period of last year.
-- Upgrading Unified Operating Platform to Support Future Growth As
it grew in size and entered into new regions, CNinsure continued to
improve its operating platform to facilitate a standardized
business process and expedite expansion. CNinsure has completed the
first stage construction of IT infrastructure including database
and company-wide local area network. It has also launched
preliminary testing of key applications, including business process
control system, financial and accounting ERP(Enterprise Resource
Planning) system as well as e-learning online training system.
CNinsure expects to put the upgraded operating platform into place
in the first quarter of 2009. -- Strengthening Relationships with
Leading Insurance Companies CNinsure has established business
relationships with 59 domestic and foreign insurance companies. It
has successfully forged group level relationships with most of its
life insurance company partners by entering into master contracts
that apply to all of its life insurance agencies nationwide.
Meanwhile, it is also in final negotiation with property and
casualty insurance companies for similar group level cooperation to
obtain favorable commission rates. Business Outlook For the third
quarter 2008, CNinsure expects its total net revenues to be in the
range of RMB205.0 million (US$29.9 million) and RMB215.0 million
(US$31.3 million), reflecting the slight slowdown of business
activities during the Olympic Games. The foregoing forecast
reflects CNinsure's current and preliminary view, which is subject
to change. Conference Call The Company will host a conference call
to discuss the second quarter of 2008 results at Time: 9:00 pm
Eastern Daylight Time on August 26, 2008 or 9:00 am Beijing/Hong
Kong Time on August 27, 2008 The Toll Free dial-in number: US:
1866-549-1292 UK: 0808-234-6305 Canada: 1866-8691-825 Singapore:
800-852-3576 Taiwan: 0080-185-6004 Hong Kong: +852-3005-2050 China
(Mainland): 800-701-1223; China (Mainland) local dial-in number:
400-681-6949 Password: 885507# A replay of the call will be
available for three days as follows: +852-3005-2020 (Hong Kong
& International) PIN number: 136443# Additionally, a live and
archived web cast of this call will be available at:
http://www.corpasia.net/cancast/us/index.php?id=usCISG_24&version=e
About CNinsure Inc. CNinsure is a leading independent insurance
agency and brokerage company operating in China. CNinsure's
distribution network reaches many of China's most economically
developed regions and affluent cities. The Company distributes a
wide variety of property and casualty and life insurance products
underwritten by domestic and foreign insurance companies operating
in China, and provides insurance claims adjusting as well as other
insurance- related services. Forward-looking Statements This press
release contains statements of a forward-looking nature. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. You can identify
these forward- looking statements by terminology such as "will,"
"expects," "believes," "anticipates," "intends," "estimates" and
similar statements. Among other things, the outlook for the third
quarter of 2008 and the management's quotations contain
forward-looking statements. These forward-looking statements
involve known and unknown risks and uncertainties and are based on
current expectations, assumptions, estimates and projections about
CNinsure and the industry. Potential risks and uncertainties
include, but are not limited to, those relating to CNinsure's
limited operating history, especially its limited experience in
selling life insurance products, its ability to attract and retain
productive agents, especially entrepreneurial agents, its ability
to maintain existing and develop new business relationships with
insurance companies, its ability to execute its growth strategy,
its ability to adapt to the evolving regulatory environment in
Chinese insurance industry, its ability to compete effectively
against its competitors, and quarterly variations in its operating
results caused by factors beyond its control. All information
provided in this press release is as of August 26, 2008, and
CNinsure undertakes no obligation to update any forward-looking
statements to reflect subsequent occurring events or circumstances,
or to changes in its expectations, except as may be required by
law. Although CNinsure believes that the expectations expressed in
these forward-looking statements are reasonable, it cannot assure
you that its expectations will turn out to be correct, and
investors are cautioned that actual results may differ materially
from the anticipated results. Further information regarding risks
and uncertainties faced by CNinsure is included in CNinsure's
filings with the U.S. Securities and Exchange Commission, including
its annual report on Form 20-F. CNINSURE INC. Unaudited Condensed
Consolidated Balance Sheets As of December As of June As of June
31, 30, 30, 2007 2008 2008 RMB RMB USD (In thousands, except for
shares and per share data) ASSETS: Current assets Cash and cash
equivalents 1,544,817 1,587,779 231,485 Restricted cash 12,748
15,294 2,230 Accounts receivable 18,150 70,871 10,333 Insurance
premium receivable 541 187 27 Other receivables, net 30,703 44,269
6,454 Amounts due from related party -- 7,119 1,038 Other current
assets 1,297 1,297 189 Total current assets 1,608,256 1,726,816
251,756 Non-current assets Property, plant, and equipment, net
11,148 51,017 7,438 Goodwill 9,165 34,860 5,082 Intangibles 4,325
36,120 5,266 Deferred tax assets 1,936 2,104 307 Other 5,334 6,691
975 Total assets 1,640,164 1,857,608 270,824 LIABILITIES AND
SHAREHOLDERS' EQUITY: Current liabilities: Accounts payables 10,138
41,252 6,014 Insurance premium payable 12,748 15,294 2,230 Other
payables and accrued expenses 20,945 79,610 11,607 Accrued payroll
6,949 8,190 1,194 Income tax payable 2,085 20,976 3,058 Amounts due
to related parties 369 369 54 Current portion of long-term
borrowings 103 31 5 Total current liabilities 53,337 165,722 24,162
Non-current liabilities: Long-term borrowings 57 1,448 211 Other
tax liabilities 1,160 1,454 212 Deferred tax liabilities 374 5,641
822 Total liabilities 54,928 174,265 25,407 Commitments and
contingencies Minority interests 18,324 60,307 8,792 Common stock
7,036 7,036 1,026 Additional paid-in capital 1,621,064 1,631,750
237,895 Statutory reserves 47,903 48,136 7,018 Accumulated deficit
(87,941) 7,497 1,093 Accumulated other comprehensive Loss (21,150)
(71,383) (10,407) Total shareholders' equity 1,566,912 1,623,036
236,625 Total liabilities and owners' equity 1,640,164 1,857,608
270,824 CNINSURE INC. Unaudited Condensed Consolidated Statements
of Operations For The Three Months Ended June 30, 2007 2008 2008
RMB RMB USD (In thousands, except for shares and per share data)
Net revenues: Commissions and fees 101,729 214,698 31,301 Other
service fees 117 150 22 Total net revenues 101,846 214,848 31,323
Operating costs and expenses: Commissions and fees (54,296)
(109,337) (15,940) Selling expenses (1,998) (2,829) (412) General
and administrative expenses (14,577) (31,946) (4,657) Total
operating costs and expenses (70,871) (144,112) (21,009) Income
from operations 30,975 70,736 10,314 Other income (expense), net:
Investment income -- 85 12 Interest income 953 10,670 1,556
Interest expense (44) (30) (4) Others, net 4 (10) (1) Income before
income taxes 31,888 81,451 11,877 Income tax benefit (expense) 186
(19,165) (2,794) Net income before minority interest 32,074 62,286
9,083 Minority interest 848 (1,647) (240) Net income 32,922 60,309
8,843 Net Income per share: Basic 0.051 0.066 0.010 Diluted 0.049
0.066 0.010 Net Income per ADS: Basic 1.013 1.329 0.194 Diluted
0.979 1.329[3] 0.194 Shares used in calculating Net income per
share Basic 650,000,000 912,497,726 912,497,726 Diluted 672,841,565
912,497,726 912,497,726 [3] There is no dilutive effect for the
three months end June 30, 2008 as the stock options were
anti-dilutive. CNINSURE INC. Unaudited Condensed Consolidated
Statements of Operations For The Six Months Ended June 30, 2007
2008 2008 RMB RMB USD Net revenues: Commissions and fees 172,323
351,180 51,199 Other service fees 238 286 42 Total net revenues
172,561 351,466 51,241 Operating costs and expenses: Commissions
and fees (87,275) (180,405) (26,302) Selling expenses (4,196)
(6,964) (1,015) General and administrative expenses (25,915)
(60,710) (8,851) Total operating costs and expenses (117,386)
(248,079) (36,168) Income from operations 55,175 103,387 15,073
Other income (expense), net: Investment income -- 85 12 Interest
income 1,980 23,702 3,456 Interest expense (66) (37) (5) Others,
net 15 (8) (1) Income before income taxes 57,104 127,129 18,535
Income tax benefit (expense) (176) (30,370) (4,428) Net income
before minority interest 56,928 96,759 14,107 Minority interest
1,762 (1,087) (158) Net income 58,690 95,672 13,949 Net Income per
share: Basic 0.090 0.105 0.015 Diluted 0.089 0.105 0.015 Net Income
per ADS: Basic 1.806 2.097 0.306 Diluted 1.782 2.097[4] 0.306
Shares used in calculating Net income per share Basic 650,000,000
912,497,726 912,497,726 Diluted 658,927,355 912,497,726 912,497,726
[4] There is no dilutive effect for the six months end June 30,
2008 as the stock options were anti-dilutive. For more information,
please contact: Phoebe Meng Investor Relations Officer Email: Oasis
Qiu Investor Relations Tel: +86-20-6122-2777 x850 Email:
DATASOURCE: CNinsure Inc. CONTACT: Phoebe Meng, Investor Relations
Officer, , or Oasis Qiu, Investor Relations, +86-20-6122-2777 x850,
or , both for CNinsure Inc.
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