– Quarterly Earnings Exceed Prior
Guidance –
– Quarterly Basic and Diluted EPS up
30.4% and 29.7% Year-over-Year, Respectively –
CNinsure Inc., (Nasdaq:CISG), (the "Company" or "CNinsure"), a
leading independent insurance intermediary company operating in
China, today announced its unaudited financial results for the
third quarter 2010 ended September 30, 2010.1
Financial
Highlights:
Highlights for Third Quarter 2010
- Total net revenues: RMB388.2 million (US$58.0 million),
representing an increase of 30.4% from the corresponding period of
2009.
- Income from operations: RMB119.1 million (US$17.8 million),
representing an increase of 35.7% from the corresponding period of
2009.
- Net income attributable to the Company's shareholders: RMB109.8
million (US$16.4 million), representing an increase of 42.7% from
the corresponding period of 2009, which exceeded the previous
guidance of approximately 38% year-over-year growth.
- Basic and diluted net income per American Depositary Share
("ADS"): RMB2.198 (US$0.329) and RMB2.128 (US$0.318), respectively,
representing an increase of 30.4% and 29.7%, respectively, from the
corresponding period of 2009.
Commenting on the financial results, Mr. Yinan Hu, chairman and
chief executive officer of the Company, stated, "The Company
maintained strong growth momentum in the third quarter with total
net revenues and net income attributable to CNinsure's shareholders
growing 30.4% and 42.7% year-over-year, respectively, exceeding our
previous guidance. Although the follow-on public offering in July
led to a dilution in our EPS, we still recorded a 29.7%
year-over-year diluted EPS growth in the third quarter,
demonstrating the strong execution capability of the management.
Robust growth of our three existing business lines continued into
the third quarter with the life insurance business and claims
adjusting business growing 109.1% and 34.3% year-over-year,
respectively. The overall commission rate from the property and
casualty insurance business increased over the previous quarter,
which led to a year-over-year growth of 6.7% in our property and
casualty insurance business in the third quarter as compared to
year-over-year decline of that in the second quarter. We believe
there is still room for further improvement in our property and
casualty insurance commission rate." Mr. Hu continued, "During the
past decade, CNinsure has built a nation-wide sales and service
network in 23 provinces, enabling the Company to change its role
from an insurance product retailer with no bargaining power to a
general agency with more influence in its cooperation with upstream
product suppliers. To better meet customers' needs, we have placed
more focus on customized products instead of merely distributing
general products already prevalent in the market. Furthermore, we
have been building new profits centers to sell multiple products to
each of our customers in an effort to strengthen our profitability.
We believe the ongoing insurance marketing system reform, coupled
with the increasing demand for asset preservation and appreciation
and financing service as a result of the growth in people's
disposable income will provide CNinsure with greater opportunities
for future development.
"Since our initial public offering in 2007, organic growth and
growth through acquisitions have become the dual engines for our
business development and we have maintained positive balance
between the two strategies. Of the 30.4% year-over-year growth in
terms of total net revenues in the third quarter, organic growth
accounted for approximately 72% while growth through acquisitions
accounted for approximately 28%. Due to the immature and fragmented
nature of China's insurance intermediary industry, we have adopted
a unique acquisition model to identify suitable acquisition targets
while reducing risks, which has proved to be viable. Looking ahead,
acquisition will continue to be one of our most important growth
strategies. We will constantly review and refine our acquisition
model to make it more simplified and straightforward, in terms of
valuation matrix, payment method, and earn-out provisions. For the
future potential acquisitions, we will, as always, place strong
emphasis on restricting risk, enhancing cash flow and insisting on
high growth and high return.
"We are now building the groundwork for our e-commerce
insurance, insurance brokerage, consumer finance and wealth
management businesses in an effort to turn our blueprint for the
next five years into reality. Examining all the opportunities and
challenges, we firmly believe that the Company will be able to
continue its strong growth momentum for the next few years. We are
confident in the growth prospects of the Company and China's
financial services industry and committed to maximizing shareholder
value by pursuing the long-term sustainable growth of the
Company."
Financial Results for the
Third Quarter Ended
September
30,
2010
Total net revenues for the third quarter ended September 30,
2010 were RMB388.2 million (US$58.0 million), representing an
increase of 30.4% from RMB297.8million for the corresponding period
of 2009. The increase was primarily driven by the significant
growth of the life insurance business as a result of the growth in
sales volume, the increase in commission rate for new life
insurance policies and the growth in renewal commissions.
Total operating costs and expenses were RMB269.2million
(US$40.2million) for the third quarter of 2010, representing an
increase of 28.1% from RMB210.1millionfor the corresponding period
of 2009.
Commissions and fees expenses were RMB180.4 million (US$27.0
million) for the third quarter of 2010, representing an increase of
29.1% from RMB139.7 million for the corresponding period of 2009.
The increase was primarily due to sales growth and largely tracked
the increase in net revenues from commissions and fees.
Selling expenses were RMB17.5 million (US$2.6 million) for the
third quarter of 2010, representing an increase of 18.3% from
RMB14.8 million for the corresponding period of 2009, primarily due
to sales growth and an increase in expenses incurred in connection
with the establishment of new outlets.
General and administrative expenses were RMB71.3 million
(US$10.7 million) for the third quarter of 2010, representing an
increase of 28.3% from RMB55.6 million for the corresponding period
of 2009. The increase was primarily due to increases in the
following non-cash items:
(1) an increase of 47.0% in depreciation of fixed
assets from RMB4.3 million for the third quarter of 2009 to RMB6.3
million (US$0.9 million) for the third quarter of 2010, largely as
a result of the operation of the upgraded IT system in more
affiliated entities in the third quarter of 2010;
(2) an increase of 94.5% in amortization of intangible
assets from RMB2.7 million for the third quarter of 2009 to RMB5.3
million (US$0.8 million) for the third quarter of 2010, largely as
a result of the acquisitions we made in 2010; and
(3) an increase of 285.5% in share-based
compensation expenses from RMB1.5 million for the third quarter of
2009 to RMB5.9 million (US$0.9 million) for the third quarter of
2010, associated with the grant of options to various directors,
officers and employees in February 2010.
As a result of the foregoing factors, income from operations was
RMB119.1 million (US$17.8 million) for the third quarter of 2010,
representing an increase of 35.7% from RMB87.7 million for the
corresponding period of 2009. Operating margin was 30.7% for the
third quarter of 2010, compared to 29.5% for the corresponding
period of 2009.
Interest income for the third quarter of 2010 was RMB7.2 million
(US$1.1 million), representing a decrease of 3.7% from RMB7.5
million for the corresponding period of 2009.
Income tax expense for the third quarter of 2010 was
RMB21.5million (US$3.2million), representing an increase of 0.5%
from RMB21.4 million for the corresponding period of 2009. The
effective income tax rate applicable to the Company was 17.0% for
the third quarter of 2010, compared to 22.4% for the corresponding
period of 2009. The decrease was primarily attributable to a tax
holiday enjoyed by an affiliated subsidiary of the Company.
Net income attributable to the Company's shareholders was
RMB109.8 million (US$16.4 million) for the third quarter of 2010,
representing an increase of 42.7% from RMB76.9 million for the
corresponding period of 2009.
Net margin was 28.3% for the third quarter of 2010 compared to
25.8% for the corresponding period of 2009.
Basic net income per ADS was RMB2.198 (US$0.329) for the third
quarter of 2010, representing an increase of 30.4% from RMB1.686
for the corresponding period of 2009. Fully diluted net income per
ADS was RMB2.128 (US$0.318) for the third quarter of 2010,
representing an increase of 29.7% from RMB1.641 for the
corresponding period of 2009.
As of September 30, 2010, the Company had RMB2.0 billion
(US$297.6 million) in cash and cash equivalents.
Recent developments:
- On November 19, 2010, CNinsure's Board of Directors approved
the retirement of Mr. Chengbin Li, vice president of human
resources management and strategic planning, due to health reasons.
The retirement will be effective December 1, 2010.
- On November 1, 2010, CNinsure completed the acquisition of
65.1% equity interest in InsCom Holding Limited ("InsCom"), which
was announced on July 29, 2010. Total consideration was RMB84.0
million in cash. The selling shareholders, Inscom's original
management, will stay as managing minority shareholders. As part of
the corporate restructuring of Inscom, CNinsure's equity interests
in six of its affiliated property and casualty insurance agencies
will be transferred to an affiliated subsidiary of InsCom to
facilitate smooth integration of online and offline services, in
exchange for preference shares newly issued by the restructured
InsCom. With the holding of the preference shares, CNinsure is
entitled to all of the profits of the restructured InsCom for a
certain period and reserves the right to require the restructured
InsCom to redeem the preference shares for cash at RMB400 million.
- On September 28, 2010, CNinsure announced that it had signed an
agreement with Shanghai Puyi Investment Consulting Co., Limited
("Shanghai Puyi") and Chengdu Ronghai Investment Co., Ltd.
("Chengdu Ronghai"), to set up a joint venture, named Fanhua Puyi
Investment Management Co., Limited ("Fanhua Puyi"), to engage in
independent investment research and provision of wealth management
services. CNinsure, Shanghai Puyi and Chengdu Ronghai hold 19.48%,
44.61% and 35.91%, respectively, of the equity interest in Fanhua
Puyi which will be capitalized at RMB51.48 million. It is expected
that Fanhua Puyi will become profitable in 2012. CNinsure is
entitled to increase its shareholdings in Fanhua Puyi to gain a
controlling interest when its business becomes more mature. The
joint venture was subsequently established on November 19, 2010.
- On September 28, 2010, CNinsure announced the acquisition of an
additional 46% equity interest in Shenyang Fangda Insurance Agency
Co., Ltd. ("Shenyang Fangda") for RMB40 million in cash, increasing
its total shareholdings in Shenyang Fangda from 5% to 51%. The
transaction was subsequently closed on October 1, 2010. Shenyang
Fangda was co-founded on April 23, 2008 by Chengdu Jingshi and
CNinsure, each holding 95% and 5%, respectively, of the equity
interest. It was agreed that after the establishment of Shenyang
Fangda, Chengdu Jingshi would take responsibility for providing
capital support and recruiting sales teams, while CNinsure would
set forth management requirements and provide back-office support,
and the management of Shenyang Fangda would manage day-to-day
operations of the business. As of September 30, 2010, Shenyang
Fangda had 432 effective sales agents and it is anticipated that
its effective sales force will increase to 600 in 2011. Shenyang
Fangda's guaranteed profits shall be no less than RMB5.2 million in
2011 and shall grow at a compound annual growth rate of over 30%
from 2011 to 2013. Pursuant to the acquisition agreements with the
selling shareholder, all of Shenyang Fangda's net income from 2010
to 2015 will be distributed to CNinsure. If Shenyang Fangda fails
to achieve the guaranteed profit and sales force targets, the total
consideration for the acquisition is subject to downward
adjustment, and CNinsure's shareholdings in Shenyang Fangda will be
adjusted upwards.
- On September 1, 2010, CNinsure announced that Mr. Bo Zhao,
former general manager of Property Insurance Department and
Commercial Risk Insurance for Large Projects Department at PICC
Property & Casualty Company Limited, had joined CNinsure to
head its insurance brokerage business unit and assist the Company's
effort to expand its product and service offering from retail to
commercial line.
- As of September 30, 2010, CNinsure's distribution and service
network consisted of 49 insurance agencies, three insurance
brokerages2 and three claims adjusting firms3 with 636 sales and
services outlets operating in 23 provinces, compared to 47
insurance agencies, four insurance brokerages and four claims
adjusting firms with 472 sales and service outlets operating in 22
provinces as of September 30, 2009. CNinsure had 48,714 sales
agents and 1,488 professional claims adjustors as of September 30,
2010, compared to 36,227 sales agents and 1,449 professional claims
adjustors as of September 30, 2009.
- Net revenues from commissions and fees derived from the
property and casualty insurance, life insurance and claims
adjusting businesses for the third quarter of 2010 each contributed
55.8%, 31.9% and 12.3% of the Company's total net revenues,
respectively, compared to 68.2%, 19.8%, 12.0%, respectively, for
the same period of 2009.
- CNinsure ranked 39th in Forbes Asia's "Best Under A Billion"
List for 2010, making it the only insurance intermediary company to
be in the List in the Asia-Pacific region. The selection was based
on earnings growth, sales growth, and shareholders' return on
equity over the past 12 months as well as over the past three
years.
Business Outlook
CNinsure expects its net income attributable to the Company's
shareholders excluding non-recurring investment income incurred by
business combination achieved in stages to grow by approximately
32% for the fourth quarter 2010 compared to the corresponding
period of 2009. This 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 third
quarter 2010 results at
Time: |
8:00 pm Eastern Standard
Time on November 22, 2010 |
|
or 9:00 am Beijing/Hong
Kong Time on November 23, 2010 |
The dial-in numbers:
United States: |
+1-866-549-1292 |
United Kingdom: |
0808-234-6305 |
Canada: |
+1-866-869-1825 |
Singapore: |
800-852-3576 |
Taiwan: |
0080-185-6004 |
Hong Kong & Other Areas: |
+852-3005-2050 |
China (Mainland): |
400-681-6949 |
Password: 885507# A replay of the call will be available for 30
days as follows:
+852-3005-2020 (Hong Kong
& other areas)
PIN number: 142589#
Additionally, a live and archived web cast of this call will be
available at:
http://www.corpasia.net/us/CISG/irwebsite/index.php?mod=event
About CNinsure Inc.
CNinsure is a leading independent intermediary 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 management's quotations and the Business Outlook section
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 the Chinese insurance industry, its ability to
compete effectively against its competitors, quarterly variations
in its operating results caused by factors beyond its control and
macroeconomic conditions in China and their potential impact on the
sales of insurance products. All information provided in this press
release is as of November 22, 2010, 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 |
(In
thousands) |
|
|
|
|
|
As of December 31,
2009 |
As of September 30,
2010 |
As of September 30,
2010 |
|
RMB |
RMB |
US$ |
ASSETS: |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
1,457,890 |
1,991,214 |
297,618 |
Restricted cash |
1,957 |
9,613 |
1,437 |
Accounts receivable, net |
181,360 |
243,293 |
36,364 |
Insurance premium receivables |
230 |
324 |
48 |
Other receivables |
52,108 |
49,428 |
7,388 |
Deferred tax assets |
2,602 |
9,100 |
1,360 |
Amounts due from related parties |
25,337 |
27,200 |
4,065 |
Other current assets |
6,015 |
8,438 |
1,261 |
Total current assets |
1,727,499 |
2,338,610 |
349,541 |
|
|
|
|
Non-current assets: |
|
|
|
Property, plant, and equipment,
net |
108,318 |
105,160 |
15,718 |
Goodwill |
535,911 |
986,197 |
147,403 |
Intangible assets, net |
81,485 |
127,725 |
19,091 |
Deferred tax assets |
3,801 |
2,214 |
330 |
Investment in affiliates |
86,701 |
136,019 |
20,330 |
Other non-current assets |
2,250 |
2,225 |
333 |
Total assets |
2,545,965 |
3,698,150 |
552,746 |
|
CNINSURE
INC. |
Unaudited Condensed
Consolidated Balance Sheets-(Continued) |
|
|
|
|
(In
thousands) |
|
|
|
|
|
As of December 31,
2009 |
As of September 30,
2010 |
As of September 30,
2010 |
|
RMB |
RMB |
US$ |
LIABILITIES AND EQUITY: |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
72,716 |
101,925 |
15,234 |
Insurance premium payables |
1,957 |
2,052 |
307 |
Other payables and accrued
expenses |
182,139 |
131,115 |
19,597 |
Accrued payroll |
24,152 |
28,091 |
4,199 |
Income tax payable |
37,410 |
23,508 |
3,513 |
Amounts due to related parties |
19,274 |
15,000 |
2,242 |
Total current
liabilities |
337,648 |
301,691 |
45,092 |
|
|
|
|
Non-current
liabilities: |
|
|
|
Other tax liabilities |
2,537 |
5,540 |
828 |
Deferred tax liabilities |
19,075 |
38,121 |
5,698 |
Total liabilities |
359,260 |
345,352 |
51,618 |
|
|
|
|
Ordinary shares |
7,036 |
7,668 |
1,146 |
Additional paid-in capital |
1,604,774 |
2,286,195 |
341,708 |
Statutory reserves |
103,877 |
103,874 |
15,526 |
Retained earnings |
348,663 |
644,437 |
96,321 |
Accumulated other comprehensive
loss |
(72,542) |
(79,963) |
(11,952) |
Total CNinsure Inc. shareholders'
equity |
1,991,808 |
2,962,211 |
442,749 |
Noncontrolling interests |
194,897 |
390,587 |
58,379 |
Total equity |
2,186,705 |
3,352,798 |
501,128 |
Total liabilities and
equity |
2,545,965 |
3,698,150 |
552,746 |
|
CNINSURE
INC. |
|
|
|
|
|
|
|
Unaudited Condensed
Consolidated Statements of Operations |
(In thousands, except
for shares and per share data) |
|
|
|
|
|
|
|
|
For The Three Months
Ended |
For The Nine Months
Ended |
|
|
|
|
|
|
|
|
September
30, |
September
30, |
|
2009 |
2010 |
2010 |
2009 |
2010 |
2010 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Net revenues: |
|
|
|
|
|
|
Commissions and fees |
297,680 |
388,004 |
57,993 |
798,873 |
1,035,694 |
154,800 |
Other service fees |
125 |
227 |
34 |
484 |
313 |
47 |
Total net revenues |
297,805 |
388,231 |
58,027 |
799,357 |
1,036,007 |
154,847 |
Operating costs and
expenses: |
|
|
|
|
|
|
Commissions and fees |
(139,707) |
(180,372) |
(26,960) |
(402,731) |
(496,168) |
(74,160) |
Selling expenses |
(14,799) |
(17,511) |
(2,617) |
(34,157) |
(50,205) |
(7,504) |
General and administrative
expenses |
(55,576) |
(71,288) |
(10,655) |
(146,437) |
(190,686) |
(28,501) |
Total operating costs and
expenses |
(210,082) |
(269,171) |
(40,232) |
(583,325) |
(737,059) |
(110,165) |
Income from operations |
87,723 |
119,060 |
17,795 |
216,032 |
298,948 |
44,682 |
Other income, net: |
|
|
|
|
|
|
Investment income |
— |
— |
— |
18,905 |
38,050 |
5,687 |
Interest income |
7,528 |
7,247 |
1,083 |
26,103 |
19,683 |
2,942 |
Interest expense |
(1) |
— |
— |
(4) |
— |
— |
Others, net |
78 |
(18) |
(2) |
1,035 |
232 |
35 |
Changes in fair value of contingent
consideration payables |
— |
— |
— |
(5,946) |
— |
— |
Net income before income taxes and
income of affiliates |
95,328 |
126,289 |
18,876 |
256,125 |
356,913 |
53,346 |
Income tax expense |
(21,350) |
(21,456) |
(3,207) |
(67,289) |
(72,260) |
(10,801) |
Share of income (loss) of
affiliates |
(10) |
2,472 |
370 |
(37) |
9,807 |
1,466 |
Net income |
73,968 |
107,305 |
16,039 |
188,799 |
294,460 |
44,011 |
|
CNINSURE
INC. |
Unaudited Condensed
Consolidated Statements of Operations-(Continued) |
(In thousands, except
for shares and per share data) |
|
|
|
|
|
|
|
|
For The Three Months
Ended |
For The Nine Months
Ended |
|
|
|
|
|
|
|
|
September
30, |
September
30, |
|
2009 |
2010 |
2010 |
2009 |
2010 |
2010 |
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
Less:Net loss attributable to |
|
|
|
|
|
|
the noncontrolling interests |
(2,955) |
(2,485) |
(371) |
(18,267) |
(1,314) |
(197) |
Net income attributable
to |
|
|
|
|
|
|
the Company's
shareholders |
76,923 |
109,790 |
16,410 |
207,066 |
295,774 |
44,208 |
Net income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
0.084 |
0.110 |
0.016 |
0.227 |
0.314 |
0.047 |
Diluted |
0.082 |
0.106 |
0.016 |
0.224 |
0.303 |
0.045 |
|
|
|
|
|
|
|
Net income per ADS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
1.686 |
2.198 |
0.329 |
4.538 |
6.282 |
0.939 |
Diluted |
1.641 |
2.128 |
0.318 |
4.476 |
6.064 |
0.906 |
|
|
|
|
|
|
|
Shares used in calculating net income
per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
912,497,726 |
998,795,320 |
998,795,320 |
912,497,726 |
941,600,652 |
941,600,652 |
Diluted |
937,397,373 |
1,031,977,186 |
1,031,977,186 |
925,236,583 |
975,563,550 |
975,563,550 |
1This 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
RMB6.6905 to US$1.00, the effective noon buying rate as of
September 30, 2010 in The City of New York for cable transfers of
RMB as set forth in H.10 weekly statistical release of the Federal
Reserve Board.
2During the first quarter of 2010, CNinsure sold its 51% equity
interest in Guangdong Qicheng Insurance Brokerage Co., Ltd.
("Qicheng") to its managing minority shareholder at net asset value
as Qicheng did not perform up to CNinsure's requirements.
3On June 11, 2010, Fanhua Fangzhong Insurance Surveyors &
Loss Adjustors Co., Ltd, was restructured into a holding company
with three subsidiaries and renamed Guangdong Fanhua Fangzhong
Investment Management Co., Ltd.. The three subsidiaries include
CNinsure Surveyors & Loss Adjustors Co., Ltd., Shanghai Fanhua
Teamhead Insurance Surveyors & Loss Adjustors Co., Ltd., and
Shenzhen Fanhua Property Insurance Surveyors & Loss Adjustors
Co., Ltd. (formerly known as Shenzhen Hongzhengda Insurance
Surveyors & Loss Adjustors Co., Ltd.).
CONTACT: CNinsure Inc.
Oasis Qiu, Investor Relations Manager
+86 (20) 6122-2777 x 850
qiusr@cninsure.net
Fanhua (NASDAQ:FANH)
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Fanhua (NASDAQ:FANH)
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From Jul 2023 to Jul 2024