– Full Year Operating Income Guidance
Revised Upwards to 50% Growth YoY – Quarterly
Diluted Net Income Per ADS
US$0.40, Up
20.0% YoY
Fanhua Inc., (Nasdaq: FANH), (the "Company" or "Fanhua"), a leading
independent financial services provider in China, today announced
its unaudited financial results for the second quarter ended June
30, 20181.
Quarterly Dividend
Declaration:
On August 18, 2018, the Company’s Board of
Directors declared a quarterly dividend of US$0.0125 per ordinary
share, or US$0.25 per ADS, amounting to a total of US$16.3 million.
The dividend will be payable on or around September 19, 2018 to
shareholders of record on September 5, 2018.
Financial Highlights for
the Second quarter of
2018:
|
|
|
|
|
(In thousands, except per ADS) |
2017 Q2 (RMB) |
2018 Q2 (RMB) |
2018 Q2 (US$) |
Change % |
Total net revenues |
1,002,482 |
972,116 |
146,910 |
-3.0 |
Operating income |
72,024 |
127,597 |
19,283 |
77.2 |
Net income attributable to the Company’s shareholders |
140,347 |
171,842 |
25,969 |
22.4 |
Diluted net income per ADS |
2.20 |
2.64 |
0.40 |
20.0 |
|
|
|
|
|
Financial Highlights for the First half
of 2018:
|
|
|
|
|
(In thousands, except per ADS) |
First Half 2017 (RMB) |
First Half 2018 (RMB) |
First Half 2018 (US$) |
Change % |
Total net revenues |
2,336,069 |
1,815,379 |
274,347 |
-22.3 |
Operating income |
127,238 |
217,778 |
32,912 |
71.2 |
Net income attributable to the Company’s shareholders |
210,087 |
302,060 |
45,648 |
43.8 |
Diluted net income per ADS |
3.37 |
4.64 |
0.70 |
37.7 |
|
|
|
|
|
Commenting on the financial results of the
second quarter of 2018, Mr. Chunlin Wang, Chief Executive Officer
of Fanhua, stated, “We are glad to report strong results in the
second quarter of 2018, with operating income growing 77.2%
year-over-year to RMB127.6 million, once again beating
expectations, and net income attributable to shareholders growing
22.4% year-over-year to RMB171.8 million.
“Total life insurance premiums reached RMB1.5
billion, up 69.8% year-over-year, outpacing the overall industry
growth rate. This was driven by the strong growth across all of the
key operational metrics in our life insurance segment, as
highlighted below:
- Annualized insurance premiums from the health insurance
business were up 177.1% year-over-year, accounting for 79.4% of our
total life insurance business as compared to 42.7% a year
ago;
- First year premiums on regular insurance products grew by 41.4%
year-over-year to approximately RMB715.0 million, which is
attributable to the strong year-over-year growth of 143.9% in the
number of insurance policies sold during the second quarter of
2018, even though the average per policy premium for health
insurance products, which have become the main products for the
Company, is typically much lower than that of annuity and endowment
insurance products;
- Rapid expansion of sales force continued into the second
quarter of 2018, with the number of registered sales agents growing
92.2% year-over-year to 630,995 and the number of performing sales
agents for life insurance2 growing 97.0% year-over-year to
66,654;
- Life insurance premiums from renewals increased by 109.1%
year-over-year to RMB763.9 million. In the meantime, our 13th month
persistency ratio outperformed the industry average and remained
above 94.0%. We firmly believe in the value of our long-term
regular life insurance business as it provides the Company with
stable and recurring revenues and profits for years to come, which
are crucial to the sustainable and sound development of the Company
over the long run. We are pleased that our commitment to the
long-term regular life insurance business has started to produce
results, as evidenced by the stellar performance during the
quarter.
“Looking ahead to the second half of 2018, in
light of the extremely high base in the third quarter of 2017
primarily owing to the swell of fast-return annuity and
participating endowment products following the implementation of
Circular No. 134, we expect to see a slight year-over-year decrease
in new life insurance premiums in the third quarter of 2018.
However, we are still confident that we will be able to achieve no
less than RMB100 million in operating income in the third quarter
of 2018, based on expected positive growth in health insurance
business and continued fast growth in renewal business during the
quarter.
“Despite the regulatory restriction on the sales
of short term and fast-return savings-focused life insurance
products, we remain confident in our ability to achieve positive
growth in annualized life insurance premiums in 2018 and we believe
the fast growth in our renewal business will continue, which will
become an increasingly more important and stable source of profits
for the Company. This allows us to raise our full year guidance for
operating profit from 40% to no less than 50% growth
year-over-year.”
Financial Results for the Second
Quarter of 2018
Total net revenues were
RMB972.1 million (US$146.9 million) for the second quarter of 2018,
representing a decrease of 3.0% from RMB1,002.5 million for the
corresponding period in 2017.
- Net revenues for the life
insurance business were RMB808.3
million (US$122.2 million) for the second quarter of 2018,
representing an increase of 36.9% from RMB590.3 million for the
corresponding period in 2017. The increase was mainly driven by the
growth in both first year and renewal commissions as a result of
the rapid growth in the number of sales agents. Revenues generated
from our life insurance business accounted for 83.2% of our total
net revenues in the second quarter of 2018.
- Net revenues for the P&C insurance
business were RMB91.8 million (US$13.9 million) for the
second quarter of 2018, representing a decrease of 73.0% from
RMB339.5 million for the corresponding period in 2017. The decrease
was primarily due to i) the disposal of the equity interests of
some entities in the P&C insurance division in October 2017;
and ii) the transition of our auto insurance business from a
commission-based business model towards a platform business model
starting from the fourth quarter of 2017. Revenues for the P&C
insurance business are mainly derived from commissions generated
from Baoxian.com and the technology service fees based on the
volume of insurance premiums transacted through CNpad. Revenues
generated from the P&C insurance business accounted for 9.4% of
our total net revenues in the second quarter of 2018.
- Net revenues for the claims adjusting business
were RMB72.0 million (US$10.9 million) for the second quarter of
2018, representing a decrease of 1.0% from RMB72.7 million for the
corresponding period in 2017. Revenues generated from the claims
adjusting business accounted for 7.4% of our total net revenues in
the second quarter of 2018.
Total operating costs and
expenses were RMB844.5 million (US$127.6 million) for the
second quarter of 2018, representing a decrease of 9.2% from
RMB930.5 million for the corresponding period in 2017.
- Commission costs were RMB671.6 million
(US$101.5 million) for the second quarter of 2018, representing a
decrease of 8.5% from RMB733.6 million for the corresponding period
in 2017. The decrease was mainly due to the decrease in commission
costs of P&C insurance business, partially offset by the growth
in commission costs of our life insurance business.
- Costs of the life insurance business were
RMB553.4 million (US$83.6 million) for the second quarter of 2018,
representing an increase of 47.5% from RMB375.3 million for the
corresponding period in 2017. The increase was in line with the
growth in sales. Costs incurred by the life insurance business
accounted for 82.4% of our total commission costs in the second
quarter of 2018.
- Costs of the P&C insurance business were
RMB73.0 million (US$11.0 million) for the second quarter of 2018,
representing a decrease of 76.8% from RMB315.2 million for the
corresponding period in 2017. The decrease was in line with the
decrease in sales, and primarily caused by i) the disposal of the
equity interests of some entities in the P&C insurance division
in October 2017; and ii) the transition of our P&C insurance
business from a commission-based business model towards a platform
business model starting from the fourth quarter of 2017. The costs
of the P&C insurance business mainly represent commission costs
incurred for business on Baoxian.com. Costs incurred by the P&C
insurance business accounted for 10.9% of our total commission
costs in the second quarter of 2018.
- Costs of the claims adjusting business were
RMB45.2 million (US$6.8 million) for the second quarter of 2018,
representing an increase of 5.1% from RMB43.0 million for the
corresponding period in 2017. Costs incurred by the claims
adjusting business accounted for 6.7% of our total commission costs
in the second quarter of 2018.
- Selling expenses were RMB53.9 million (US$8.1
million) for the second quarter of 2018, representing an increase
of 0.4% from RMB53.7 million for the corresponding period in
2017.
- General and administrative
expenses were RMB119.0
million (US$18.0 million) for the second quarter of 2018,
representing a decrease of 16.9% from RMB143.2 million for the
corresponding period in 2017. The decrease was mainly due to a
significant reduction in expenses incurred by our P&C insurance
agencies as a result of the migration to the platform business
model since the fourth quarter of 2017 as well as the disposal of
certain P&C insurance agencies, though partially offset by an
increase in expenses incurred by new office setup and staff
recruitment in relation to regional expansion.
As a result of the preceding factors, we had an
operating income of RMB127.6 million (US$19.3
million) for the second quarter of 2018, representing an increase
of 77.2% from RMB72.0 million for the corresponding period in
2017.
Operating margin was 13.1% for
the second quarter of 2018, compared to 7.2% for the corresponding
period in 2017. The increase was primarily due to the increase in
the sales of regular term life insurance policies and the increase
in renewal life insurance business, which have higher profit
margins.
Investment income was RMB43.9
million (US$6.6 million) for the second quarter of 2018,
representing a decrease of 55.2% from RMB97.9 million for the
corresponding period in 2017. The investment income represented
yields from short-term investments in financial products which
mainly consist of inter-bank deposits or collective trust products
with terms ranging from half a year to two years and interest
payable on a quarterly, semi-annual or annual basis. Our investment
income fluctuates from quarter to quarter because these investments
are classified as available for sales and investment income is
recognized when received.
Interest income was RMB9.1
million (US$1.4 million) for the second quarter of 2018,
representing an increase of 378.9% from RMB1.9 million for the
corresponding period in 2017. The interest income mainly represent
interest related to amounts due from Shenzhen Chuangjia Investment
Limited Partnership, which beneficially owns 84.6% of Fanhua Puyi
Fund Sales Limited. We own 15.4% of the equity interest of Fanhua
Puyi Fund Sales Limited.
Income tax expense was RMB57.3
million (US$8.7 million) for the second quarter of 2018,
representing an increase of 11.3% from RMB51.5 million for the
corresponding period in 2017. The increase was primarily due to an
increase in operating income. The effective tax rate for the second
quarter of 2018 was 31.7% compared with 28.4% for the corresponding
period in 2017. The increase in effective tax rate was primarily
due to the provision of withholding income tax for dividend
payment.
Share of income of affiliates
was RMB49.7 million (US$7.5 million) for the second quarter of
2018, representing an increase of 314.2% from RMB12.0 million for
the corresponding period in 2017, mainly attributable to an
increase of profits from CNFinance Holdings Limited (“CNFinance”),
the parent company of Sincere Fame International Limited (“Sincere
Fame”). Following the reorganization of Sincere Fame in March 2018,
we directly held 20.58% of the equity interest in CNFinance.
Net income from continuing
operations was RMB172.9 million (US$26.1million) for the
second quarter of 2018, representing an increase of 22.1% from
RMB141.6 million for the corresponding period in 2017.
Net income from discontinued
operations3 was nil for the second quarter of 2018, as
compared to a net loss of RMB0.1 million for the corresponding
period in 2017, representing the net loss from the Company’s
brokerage segment, which was disposed of in November 2017.
Net income attributable to the Company’s
shareholders was RMB171.8 million (US$26.0 million) for
the second quarter of 2018, representing an increase of 22.4% from
RMB140.3 million for the corresponding period in 2017.
Net margin was 17.7% for the
second quarter of 2018 compared with 14.0% for the corresponding
period in 2017.
Basic and
diluted net income per ADS were RMB2.64
(US$0.40) and RMB2.64 (US$0.40) for the second quarter of 2018,
respectively, representing increases of 15.8% and 20.0% from
RMB2.28 and RMB2.20 for the corresponding period in 2017.
As of June 30, 2018, the Company had RMB2.8 billion (US$422.1
million) in cash, cash
equivalents and short term
investments.
Financial Results for the First
Half of
2018
Total net revenues were
RMB1,815.4 million (US$274.3 million) for the first half of 2018,
representing a decrease of 22.3% from RMB2,336.1 million for the
corresponding period in 2017.
- Net revenues for the life
insurance business were
RMB1,481.3 million (US$223.9 million) for the first half of 2018,
representing an increase of 23.1% from RMB1,203.6 million for the
corresponding period in 2017. The increase was mainly due to the
contribution from renewal commissions. Revenues generated from our
life insurance business accounted for 81.6% of our total net
revenues in the first half of 2018.
- Net revenues for the P&C insurance
business were RMB184.2 million (US$27.8 million) for the
first half of 2018, representing a decrease of 81.5% from RMB995.1
million for the corresponding period in 2017. The decrease was
primarily due to i) the disposal of most of the our P&C
insurance agencies in October 2017; and ii) the transition of our
auto insurance business from a commission-based business model
towards a platform business model starting from the fourth quarter
of 2017. Revenues for the P&C insurance business are mainly
derived from commissions generated from Baoxian.com and the
technology service fees based on the volume of insurance premiums
transacted through CNpad. Revenues generated from the P&C
insurance business accounted for 10.1% of our total net revenues in
the first half of 2018.
- Net revenues for the claims adjusting business
were RMB149.9 million (US$22.6 million) for the first half of 2018,
representing an increase of 9.2% from RMB137.3 million for the
corresponding period in 2017. Revenues generated from the claims
adjusting business accounted for 8.3% of our total net revenues in
the first half of 2018.
Total operating costs and
expenses were RMB1,597.6 million (US$241.4 million) for
the first half of 2018, representing a decrease of 27.7% from
RMB2,208.8 million for the corresponding period in 2017.
- Commission costs were RMB1,269.1 million
(US$191.8 million) for the first half of 2018, representing a
decrease of 30.5% from RMB1,826.4 million for the corresponding
period in 2017. The decrease was mainly due to the decrease in
commission costs of P&C insurance business, partially offset by
the growth in commission costs of our life insurance business.
- Costs of the life insurance business were
RMB1,021.7 million (US$154.4 million) for the first half of 2018,
representing an increase of 26.1% from RMB810.4 million for the
corresponding period in 2017. The increase was in line with the
growth in sales. Costs incurred by the life insurance business
accounted for 80.5% of our total commission costs in the first half
of 2018.
- Costs of the P&C
insurance business were RMB153.2 million
(US$23.2 million) for the first half of 2018, representing a
decrease of 83.4% from RMB922.6 million for the corresponding
period in 2017. The decrease was in line with the decrease in
sales. The costs of the P&C insurance business mainly represent
commission costs incurred for business on Baoxian.com. Costs
incurred by the P&C insurance business accounted for 12.1% of
our total commission costs in the first half of 2018.
- Costs of the claims adjusting business were
RMB94.2 million (US$14.2 million) for the first half of 2018,
representing an increase of 1.0% from RMB93.3 million for the
corresponding period in 2017. Costs incurred by the claims
adjusting business accounted for 7.4% of our total commission costs
in the first half of 2018.
- Selling expenses were RMB102.6 million
(US$15.5 million) for the first half of 2018, representing a
decrease of 3.2% from RMB106.0 million for the corresponding period
in 2017. The decrease was primarily due to the reduction in
expenses as a result of the disposal of most of our P&C
insurance agency subsidiaries in the fourth quarter of 2017, as
part of the implementation of a platform business model for our
auto insurance business.
- General and
administrative expenses
were RMB225.9 million (US$34.1 million) for the first half of 2018,
representing a decrease of 18.3% from RMB276.5 million for the
corresponding period in 2017. The decrease was mainly due to a
significant reduction in expenses incurred by our P&C insurance
agencies as a result of the migration to the platform business
model since the fourth quarter of 2017 and the disposal of certain
P&C insurance agencies, though partially offset by an increase
in expenses incurred by new office setup and staff recruitment in
relation to regional expansion.
As a result of the preceding factors, we had an
operating income of RMB217.8 million (US$32.9
million) for the first half of 2018, representing an increase of
71.2% from RMB127.2 million for the corresponding period in
2017.
Operating margin was 12.0% for
the first half of 2018, compared to 5.4% for the corresponding
period in 2017. The increase was primarily due to the increase in
the sales of regular term life insurance policies and the increase
in renewal life insurance business, which have a higher profit
margin.
Investment income was RMB77.1
million (US$11.6 million) for the first half of 2018, representing
a decrease of 28.7% from RMB108.2 million for the corresponding
period in 2017. Investment income represented yields from
short-term investments in financial products which mainly consist
of inter-bank deposits or collective trust products with terms
ranging from half a year to two years and interest payable on a
quarterly, semi-annual or annual basis. Our investment income
fluctuates from quarter to quarter because these investments are
classified as available for sales and investment income is
recognized when received.
Interest income was RMB19.9
million (US$3.0 million) for the first half of 2018, representing
an increase of 696.0% from RMB2.5 million for the corresponding
period in 2017. Interest income mainly represent interest related
to amounts due from Shenzhen Chuangjia Investment Limited
Partnership, which beneficially owns 84.6% of Fanhua Puyi Fund
Sales Limited (“Fanhua Puyi Fund Sales”). We own 15.4% of the
equity interest of Fanhua Puyi Fund Sales.
Income tax expense was
RMB101.1million (US$15.3 million) for the first half of 2018,
representing an increase of 28.3% from RMB78.8 million for the
corresponding period in 2017. The increase was primarily due to an
increase in operating income. The effective tax rate for the first
half of 2018 was 32.3% compared with 31.7% for the corresponding
period in 2017. The increase in effective tax rate was primarily
due to the provision of withholding income tax for dividend
payment.
Share of income of affiliates
was RMB90.1 million (US$13.6 million) for the first half of 2018,
representing an increase of 203.4% from RMB29.7 million for the
corresponding period in 2017, mainly attributable to an increase of
profits from CNFinance, in which we own 20.58% of the equity
interests.
Net income from continuing
operations was RMB302.5 million (US$45.7million) for the
first half of 2018, representing an increase of 51.6% from RMB199.6
million for the corresponding period in 2017.
Net income from discontinued
operations2 was nil for the first half of 2018, as
compared to RMB6.6 million for the corresponding period in 2017,
representing the net income from the Company’s brokerage segment,
which was disposed of in November 2017.
Net income attributable to the Company’s
shareholders was RMB302.1 million (US$45.6 million) for
the first half of 2018, representing an increase of 43.8% from
RMB210.1 million for the corresponding period in 2017.
Net margin was 16.6% for the
first half of 2018 compared with 9.0% for the corresponding period
in 2017.
Basic and
diluted net income per ADS were RMB4.65
(US$0.70) and RMB4.64 (US$0.70) for the first half of 2018,
respectively, representing increases of 32.9% and 37.7% from
RMB3.50 and RMB3.37 for the corresponding period in 2017.
Key Operational Metrics for Fanhua's Online Initiatives
for the Second quarter of 2018:
- CNpad Auto Insurance Mobile Application ("CNpad Auto
Insurance App") - Our proprietary mobile sales support
system:
- CNpad Auto Insurance App had been downloaded
and activated 464,290 times as of June 30, 2018, representing an
increase of 57.8% from 294,228 times as of June 30, 2017;
- The number of active users4 of CNpad Auto Insurance
App was 57,895 in the second quarter of 2018, representing
a decrease of 3.9% from 60,234 in the second quarter of 2017;
- Insurance premiums generated
through CNpad Auto Insurance
App were RMB581.0 million (US$87.8 million) in the
second quarter of 2018, representing a decrease of 3.5% from RMB
602.1 million for the corresponding period of 2017.
- Lan Zhanggui - Our one-stop insurance service platform
that integrates the key functions of both CNpad Auto Insurance and
CNpad Life Insurance App, which was launched in October 2017. All
CNpad Life Insurance App accounts have been converted to Lan
Zhanggui.
- Lan Zhanggui had been downloaded and activated
630,995 times as of June 30, 2018, representing an increase of
139.3% from 263,696 times of downloads of CNpad Life Insurance App
as of June 30, 2017;
- The number of active users of Lan Zhanggui5
was 71,843 in the second quarter of 2018, representing an increase
of 112.3% from 33,838 active users of CNpad Life Insurance App in
the second quarter of 2017;
- Insurance premiums generated
through Lan Zhanggui were RMB 747.0
million (US$112.9 million) in the second quarter of 2018, among
which life insurance premiums accounted for RMB 707.4 million
(US$106.9 million) and property insurance premium was RMB39.6
million (US$6.0 million), representing an increase of 132.6% from
RMB321.2 million generated through CNpad Life Insurance App for the
second quarter of 2017.
- eHuzhu - Our online non-profit mutual aid
platform:
- The number of registered members was 3.5
million as of June 30, 2018, representing an increase of 94.4% from
1.8 million as of June 30, 2017.
- Baoxian.com - Our online insurance
platform:
- The number of registered customer accounts was
1.8 million as of June 30, 2018, representing an increase of more
than 75% from approximately 1.0 million as of June 30, 2017.
- The number of active customer accounts6 was
89,600 in the second quarter of 2018, representing an increase of
96.8% from 45,520 in the corresponding period of 2017;
- Insurance premiums generated on or through
Baoxian.com was RMB560.0 million (US$ 84.6 million) in the
second quarter of 2018, representing an increase of 11.5 times from
RMB44.7 million in the corresponding period of 2017.
Recent Development
- Fanhua had 630,995 sales agents and 1,191 professional claims
adjustors as of June 30, 2018, compared with 328,267 sales agents,
and 1,228 professional claims adjustors as of June 30, 2017. As of
June 30, 2018, Fanhua’s distribution network consisted of 580 sales
outlets operating in 22 provinces, compared with 856 sales outlets
operating in 21 provinces as of June 30, 2017. Its claims adjusting
service network covered 31 provinces with 132 service outlets as of
June 30, 2018, compared with 156 service outlets in 29 provinces as
of June 30, 2017.
- Fanhua was listed as one of the top 20 global insurance
brokers, in the July 2018 edition of Best’s Review, a monthly
magazine published by A. M. Best, one of the most prestigious
insurance rating agencies in the world. Fanhua, which was ranked
No. 20th in 2017, is the only Asian company on the list and has
been on it for four consecutive years. The ranking was based on
total revenues of 2017.
- In July 2018, Baoxian.com won the Best Internet Insurance
Platform 2017 in the Third China Internet Insurance Conference
organized by China Insurance Quote, the most authoritative and
influential insurance newspaper in China.
Business Outlook
Fanhua expects its operating income to be no
less than RMB100.0 million for the third quarter of 2018. This
forecast reflects Fanhua’s current view, which is subject to
change.
Conference Call
The Company will host a conference call to
discuss its second quarter and first half 2018 financial results as
per the following details.
Time: 9:00 PM Eastern Daylight Time on August 20, 2018
or 9:00 AM Beijing/Hong Kong Time on
August 21, 2018
The toll free dial-in numbers:
United
States |
1-855-500-8701 |
United
Kingdom |
0800-015-9724 |
France |
0800-918-648 |
Germany |
0800-184-4876 |
Australia |
1-300-713-759 |
Canada |
1-855-757-1565 |
Taiwan |
0080-665-1951 |
Hong
Kong |
800-906-606 |
India |
1-800-3010-6020 |
The toll dial-in numbers:
China
(Mainland) |
400-120-0654 |
Singapore
& Other Areas |
+65-6713-5440 |
Conference ID #: 1267067
Additionally, a live and archived web cast of this call will be
available at:
http://ir.fanhuaholdings.com/events-and-presentations
About Fanhua Inc.
Fanhua Inc. is a leading independent
online-to-offline financial services provider. Through our online
platforms and offline sales and service network, we offer a wide
variety of financial products and services to individuals and
businesses, including property and casualty and life insurance
products. We also provide insurance claims adjusting services, such
as damage assessments, surveys, authentications and loss
estimations.
Our online platforms include (1) CNpad, a mobile
sales support application, (2) Baoxian.com, an online entry portal
for comparing and purchasing health, accident, travel and homeowner
insurance products; and (3) eHuzhu (www.ehuzhu.com), a non-profit
online mutual aid platform in China.
As of June 30, 2018, our distribution and
service network consisted of 712 sales and service outlets covering
31 provinces.
For more information about Fanhua Inc., please
visit http://ir.fanhuaholdings.com/.
Forward-looking Statements
This press release contains statements of a
forward-looking nature. These statements, including the statements
relating to the Company’s future financial and operating results,
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, 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 Fanhua and the
industry. Potential risks and uncertainties include, but are not
limited to, those relating to 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 the date hereof, and Fanhua undertakes no obligation to
update any forward-looking statements to reflect subsequent
occurring events or circumstances, or changes in its expectations,
except as may be required by law. Although Fanhua 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 Fanhua is
included in Fanhua's filings with the U.S. Securities and Exchange
Commission, including its annual report on Form 20-F.
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FANHUA INC. |
Unaudited Condensed Consolidated Balance
Sheets |
(In thousands) |
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As of December 31, |
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As of June 30, |
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As of June 30, |
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2017 |
|
2018 |
|
2018 |
|
RMB |
|
RMB |
|
US$ |
ASSETS: |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
363,746 |
|
|
303,256 |
|
|
45,829 |
|
Restricted cash |
75,287 |
|
|
76,050 |
|
|
11,493 |
|
Short
term investments |
2,498,730 |
|
|
2,489,621 |
|
|
376,240 |
|
Accounts
receivable, net |
515,194 |
|
|
872,721 |
|
|
131,889 |
|
Insurance premium receivables |
4,325 |
|
|
5,813 |
|
|
878 |
|
Other
receivables |
631,381 |
|
|
653,305 |
|
|
98,730 |
|
Other
current assets |
43,864 |
|
|
56,005 |
|
|
8,464 |
|
Total current assets |
4,132,527 |
|
|
4,456,771 |
|
|
673,523 |
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant, and equipment, net |
26,075 |
|
|
31,141 |
|
|
4,706 |
|
Goodwill
and intangible assets, net |
127,079 |
|
|
111,604 |
|
|
16,866 |
|
Deferred
tax assets |
2,091 |
|
|
11,672 |
|
|
1,764 |
|
Investment in affiliates |
404,783 |
|
|
493,204 |
|
|
74,535 |
|
Other
non-current assets |
45,187 |
|
|
58,733 |
|
|
8,876 |
|
Total non-current assets |
605,215 |
|
|
706,354 |
|
|
106,747 |
|
Total assets |
4,737,742 |
|
|
5,163,125 |
|
|
780,270 |
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
203,024 |
|
|
435,601 |
|
|
65,830 |
|
Insurance premium payables |
9,553 |
|
|
17,366 |
|
|
2,624 |
|
Other
payables and accrued expenses |
241,894 |
|
|
237,032 |
|
|
35,821 |
|
Accrued
payroll |
77,424 |
|
|
81,245 |
|
|
12,278 |
|
Income
tax payable |
129,965 |
|
|
161,032 |
|
|
24,336 |
|
Total current liabilities |
661,860 |
|
|
932,276 |
|
|
140,889 |
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
Other
tax liabilities |
70,350 |
|
|
70,350 |
|
|
10,632 |
|
Deferred
tax liabilities |
17,139 |
|
|
37,030 |
|
|
5,596 |
|
Total non-current liabilities |
87,489 |
|
|
107,380 |
|
|
16,228 |
|
Total liabilities |
749,349 |
|
|
1,039,656 |
|
|
157,117 |
|
|
|
|
|
|
|
|
|
|
Ordinary
shares |
9,571 |
|
|
9,582 |
|
|
1,448 |
|
Additional paid-in capital |
2,429,559 |
|
|
2,247,106 |
|
|
339,591 |
|
Statutory reserves |
311,038 |
|
|
311,515 |
|
|
47,077 |
|
Retained
earnings |
1,468,708 |
|
|
1,770,291 |
|
|
267,533 |
|
Accumulated other comprehensive loss |
(93,108 |
) |
|
(94,170 |
) |
|
(14,231 |
) |
Subscription receivables |
(248,717 |
) |
|
(227,622 |
) |
|
(34,399 |
) |
Total shareholders’ equity |
3,877,051 |
|
|
4,016,702 |
|
|
607,019 |
|
Non-controlling interests |
111,342 |
|
|
106,767 |
|
|
16,134 |
|
Total equity |
3,988,393 |
|
|
4,123,469 |
|
|
623,153 |
|
Total liabilities and equity |
4,737,742 |
|
|
5,163,125 |
|
|
780,270 |
|
|
|
|
|
|
|
|
|
|
|
FANHUA INC. |
|
Unaudited Condensed Consolidated Statements of Income
and Comprehensive Income |
(In thousands, except for shares and per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended |
|
For The Six Months Ended |
|
June 30, |
|
June 30, |
|
2017 |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2018 |
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
Net
revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency |
929,794 |
|
|
900,092 |
|
|
136,025 |
|
|
2,198,796 |
|
|
1,665,518 |
|
|
251,699 |
|
Life
insurance Business |
590,258 |
|
|
808,308 |
|
|
122,154 |
|
|
1,203,649 |
|
|
1,481,275 |
|
|
223,856 |
|
P&C
insurance Business |
339,536 |
|
|
91,784 |
|
|
13,871 |
|
|
995,147 |
|
|
184,243 |
|
|
27,843 |
|
Claims
adjusting |
72,688 |
|
|
72,024 |
|
|
10,885 |
|
|
137,273 |
|
|
149,861 |
|
|
22,648 |
|
Total
net revenues |
1,002,482 |
|
|
972,116 |
|
|
146,910 |
|
|
2,336,069 |
|
|
1,815,379 |
|
|
274,347 |
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agency |
(690,521 |
) |
|
(626,453 |
) |
|
(94,672 |
) |
|
(1,733,025 |
) |
|
(1,174,873 |
) |
|
(177,551 |
) |
Life
insurance Business |
(375,282 |
) |
|
(553,424 |
) |
|
(83,636 |
) |
|
(810,392 |
) |
|
(1,021,677 |
) |
|
(154,400 |
) |
P&C
insurance Business |
(315,239 |
) |
|
(73,029 |
) |
|
(11,036 |
) |
|
(922,633 |
) |
|
(153,196 |
) |
|
(23,151 |
) |
Claims
adjusting |
(43,033 |
) |
|
(45,195 |
) |
|
(6,830 |
) |
|
(93,336 |
) |
|
(94,201 |
) |
|
(14,236 |
) |
Total
operating costs |
(733,554 |
) |
|
(671,648 |
) |
|
(101,502 |
) |
|
(1,826,361 |
) |
|
(1,269,074 |
) |
|
(191,787 |
) |
Selling
expenses |
(53,671 |
) |
|
(53,895 |
) |
|
(8,145 |
) |
|
(106,010 |
) |
|
(102,597 |
) |
|
(15,505 |
) |
General and
administrative expenses |
(143,233 |
) |
|
(118,976 |
) |
|
(17,980 |
) |
|
(276,460 |
) |
|
(225,930 |
) |
|
(34,143 |
) |
Total
operating costs and expenses |
(930,458 |
) |
|
(844,519 |
) |
|
(127,627 |
) |
|
(2,208,831 |
) |
|
(1,597,601 |
) |
|
(241,435 |
) |
Income from operations |
72,024 |
|
|
127,597 |
|
|
19,283 |
|
|
127,238 |
|
|
217,778 |
|
|
32,912 |
|
Other
income, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment income |
97,890 |
|
|
43,941 |
|
|
6,641 |
|
|
108,178 |
|
|
77,052 |
|
|
11,644 |
|
Interest
income |
1,948 |
|
|
9,127 |
|
|
1,379 |
|
|
2,507 |
|
|
19,884 |
|
|
3,005 |
|
Others,
net |
9,190 |
|
|
(188 |
) |
|
(29 |
) |
|
10,801 |
|
|
(1,308 |
) |
|
(198 |
) |
Income before income taxes and income of
affiliates |
181,052 |
|
|
180,477 |
|
|
27,274 |
|
|
248,724 |
|
|
313,406 |
|
|
47,363 |
|
Income tax
expense |
(51,498 |
) |
|
(57,264 |
) |
|
(8,654 |
) |
|
(78,792 |
) |
|
(101,088 |
) |
|
(15,277 |
) |
Share of
income of affiliates |
12,024 |
|
|
49,662 |
|
|
7,505 |
|
|
29,693 |
|
|
90,146 |
|
|
13,623 |
|
Net
income from continuing operations |
141,578 |
|
|
172,875 |
|
|
26,125 |
|
|
199,625 |
|
|
302,464 |
|
|
45,709 |
|
Net income
from discontinued operations, net of tax |
(120 |
) |
|
— |
|
|
— |
|
|
6,645 |
|
|
— |
|
|
— |
|
Net
income |
141,458 |
|
|
172,875 |
|
|
26,125 |
|
|
206,270 |
|
|
302,464 |
|
|
45,709 |
|
less: net
income (loss) attributable to noncontrolling interests |
1,111 |
|
|
1,033 |
|
|
156 |
|
|
(3,817 |
) |
|
404 |
|
|
61 |
|
Net
income attributable to the Company’s shareholders |
140,347 |
|
|
171,842 |
|
|
25,969 |
|
|
210,087 |
|
|
302,060 |
|
|
45,648 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
from continuing operations |
0.11 |
|
|
0.13 |
|
|
0.02 |
|
|
0.17 |
|
|
0.23 |
|
|
0.04 |
|
Net income
from discontinued operation |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
— |
|
Net
income |
0.11 |
|
|
0.13 |
|
|
0.02 |
|
|
0.18 |
|
|
0.23 |
|
|
0.04 |
|
Diluted |
|
Net income
from continuing operations |
0.11 |
|
|
0.13 |
|
|
0.02 |
|
|
0.16 |
|
|
0.23 |
|
|
0.04 |
|
Net income
from discontinued operation |
— |
|
|
— |
|
|
— |
|
|
0.01 |
|
|
— |
|
|
— |
|
Net
income |
0.11 |
|
|
0.13 |
|
|
0.02 |
|
|
0.17 |
|
|
0.23 |
|
|
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per ADS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
from continuing operations |
2.28 |
|
|
2.64 |
|
|
0.40 |
|
|
3.39 |
|
|
4.65 |
|
|
0.70 |
|
Net income
from discontinued operation |
— |
|
|
— |
|
|
— |
|
|
0.11 |
|
|
— |
|
|
— |
|
Net
income |
2.28 |
|
|
2.64 |
|
|
0.40 |
|
|
3.50 |
|
|
4.65 |
|
|
0.70 |
|
Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
from continuing operations |
2.20 |
|
|
2.64 |
|
|
0.40 |
|
|
3.26 |
|
|
4.64 |
|
|
0.70 |
|
Net income
from discontinued operation |
— |
|
|
— |
|
|
— |
|
|
0.11 |
|
|
— |
|
|
— |
|
Net
income |
2.20 |
|
|
2.64 |
|
|
0.40 |
|
|
3.37 |
|
|
4.64 |
|
|
0.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in calculating net income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
1,231,971,654 |
|
|
1,300,304,491 |
|
|
1,300,304,491 |
|
|
1,198,884,443 |
|
|
1,300,248,101 |
|
|
1,300,248,101 |
|
Diluted |
1,276,541,316 |
|
|
1,301,503,664 |
|
|
1,301,503,664 |
|
|
1,245,046,426 |
|
|
1,302,246,701 |
|
|
1,302,246,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
141,458 |
|
|
172,875 |
|
|
26,125 |
|
|
206,270 |
|
|
302,464 |
|
|
45,709 |
|
Other
comprehensive income (loss), net of tax: Foreign currency
translation adjustments |
(2,820 |
) |
|
5,068 |
|
|
766 |
|
|
(2,979 |
) |
|
(2,254 |
) |
|
(341 |
) |
Fair
value changes |
(896 |
) |
|
— |
|
|
— |
|
|
(632 |
) |
|
— |
|
|
— |
|
Share of
other comprehensive gain (loss) of affiliates |
911 |
|
|
101 |
|
|
15 |
|
|
(546 |
) |
|
(1,726 |
) |
|
(261 |
) |
Comprehensive income |
138,653 |
|
|
178,044 |
|
|
26,906 |
|
|
202,113 |
|
|
298,484 |
|
|
45,107 |
|
Less:
Comprehensive income (loss) attributable to the noncontrolling
interests |
1,111 |
|
|
1,033 |
|
|
156 |
|
|
(3,817 |
) |
|
404 |
|
|
61 |
|
Comprehensive income attributable to the Company’s
shareholders |
137,542 |
|
|
177,011 |
|
|
26,750 |
|
|
205,930 |
|
|
298,080 |
|
|
45,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FANHUA INC. |
Unaudited Condensed
Consolidated Statements of Cash Flow |
(In thousands) |
|
|
|
|
|
For The Three Months Ended |
|
For The Six
Months Ended |
|
June
30, |
|
June
30, |
|
2017 |
|
2018 |
|
2018 |
|
2017 |
|
2018 |
|
2018 |
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
|
Net
cash generated from (used in) operating activities |
108,858 |
|
(4,339) |
|
(656) |
|
117,953 |
|
26,215 |
|
3,962 |
Net
cash generated from (used in) investing activities |
4,701 |
|
298,905 |
|
45,172 |
|
122,420 |
|
87,301 |
|
13,193 |
Net cash generated from
(used in) financing activities |
194,019 |
|
(182,496) |
|
(27,580) |
|
197,855 |
|
(163,410) |
|
(24,695) |
Net
increase (decrease) in
cash, cash equivalents
and restricted cash |
307,578 |
|
112,070 |
|
16,936 |
|
438,228 |
|
(49,894) |
|
(7,540) |
Cash, cash
equivalents and restricted cash
at beginning of period |
404,435 |
|
269,747 |
|
40,765 |
|
273,979 |
|
439,033 |
|
66,348 |
Effect of exchange rate
changes on cash and cash equivalents |
(2,880) |
|
(2,511) |
|
(379) |
|
(3,074) |
|
(9,833) |
|
(1,486) |
Cash, cash
equivalents and restricted cash
at end of period |
709,133 |
|
379,306 |
|
57,322 |
|
709,133 |
|
379,306 |
|
57,322 |
|
|
|
|
|
|
|
|
|
|
|
|
1 This announcement contains currency conversions of
certain Renminbi (RMB) amounts into U.S. dollars (US$) at specified
rates solely for the convenience of the reader. Unless otherwise
noted, all translations from RMB to U.S. dollars are made at a rate
of RMB 6.6171 to US$ 1.00, the effective noon buying rate as of
June 29, 2018 in The City of New York for cable transfers of RMB as
set forth in the H.10 weekly statistical release of the Federal
Reserve Board.
2 Performing sales agents for life insurance are defined as
sales agents who have sold at least one life insurance policy
during the reporting period.
3 Due to the disposal of Fanhua Bocheng Insurance Brokerage Co.,
Ltd. (“Bocheng”) in November 2017, the Company is required to
present its financial results on a continuing and discontinued
basis. The company's results of operations related to discontinued
operations have been restated as discontinued operations on a
retrospective basis for all periods presented accordingly. Profits
and losses related to Bocheng are presented as discontinued
operations while profits and losses for the remaining business are
presented as continuing operations.
4 Active users are defined as users who made at least one
purchase through CNpad App during the specified period.
5 Active users of Lan Zhanggui included users who made at
least one purchase of life insurance policy through CNpad Life
Insurance App in 2017 and Lan Zhanggui (including both its mobile
application or WeChat public account) during the specific
period.
6 Active customer accounts are defined as
customer accounts that made at least one purchase directly through
www.baoxian.com or its mobile application during the specified
period.
For more information, please contact:
Oasis Qiu
Investor Relations Manager
Tel: +86 (20) 8388-3191
Email: qiusr@fanhuaholdings.com
Source: Fanhua Inc.
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