Fanhua Inc., (Nasdaq: FANH), (the “Company” or
“Fanhua”), a leading independent financial services provider in
China, today announced its unaudited financial results for the
fourth quarter and fiscal year ended December 31, 20201.
Financial Highlights for the fourth
quarter of 2020:
(In thousands, except per ADS) |
2019Q4 (RMB) |
2020Q4 (RMB) |
2020Q4(US$) |
Change % |
Total net revenues |
1,012,579 |
851,974 |
130,571 |
(15.9) |
Operating income |
114,130 |
71,874 |
11,015 |
(37.0) |
Net (loss) income attributable to the Company’s shareholders |
(224,677) |
47,826 |
7,330 |
/ |
Non-GAAP net income attributable to the Company’s
shareholders2 |
97,977 |
70,784 |
10,848 |
(27.8) |
Diluted net (loss) income per ADS |
(4.18) |
0.89 |
0.14 |
/ |
Non-GAAP diluted net income per ADS3 |
1.82 |
1.32 |
0.20 |
(27.5) |
Cash, cash equivalents and short- term investments (As of December,
31, 2019 and 2020) |
1,782,004 |
1,553,293 |
238,052 |
(12.8) |
Financial Highlights for Year
2020:
(In thousands, except per ADS) |
2019(RMB) |
2020(RMB) |
2020(US$) |
Change % |
Total net revenues |
3,706,003 |
3,268,145 |
500,865 |
(11.8) |
Operating income |
469,363 |
302,186 |
46,312 |
(35.6) |
Net income attributable to the Company’s shareholders |
188,932 |
268,254 |
41,112 |
42.0 |
Non-GAAP net income attributable to the Company’s
shareholders2 |
511,586 |
291,212 |
44,630 |
(43.1) |
Diluted net income per ADS |
3.46 |
4.99 |
0.77 |
44.2 |
Non-GAAP diluted net income per ADS3 |
9.36 |
5.42 |
0.83 |
(42.1) |
Commenting on the fourth quarter and full year
2020 results, Mr. Chunlin Wang, chairman and chief executive
officer said, “In 2020, despite the impact of COVID-19, through
integrated offline-to-online operations, Fanhua maintained sound
business development and achieved another major milestone in the
Company’s history of development, with its total gross written
premiums (“GWP”) on regular life insurance in 2020 exceeding RMB10
billion, up 16.3% year-over-year, of which GWP on regular life
insurance grew 21.0% year-over-year to RMB2.9 billion in the fourth
quarter of 2020.
“Throughout the fourth quarter of 2020, we’ve
been making steady progress in implementing our
‘Professionalization, Digitalization and Open Platform’ strategy.
As part of our plan to professionalize our sales force, we have
established a Yuntong Business Division and approved the
establishment of three city-level branches. For digitalization,
we’ve established a Digital Business Division and put our digital
marketing center in operation. As for open platform, we’ve
established a Cloud Service Division which has so far formed
partnership with six cooperative channels and started operating on
a trial basis.
“As we embark on the journey of implementing our
new strategic initiatives in 2021, we expect our regular life
insurance GWP to be no less than RMB3.0 billion and operating
income no less than RMB120 million in the first quarter of 2021.
For the full year of 2021, we expect our regular life insurance GWP
to be no less than RMB12 billion. The initial expenditure for the
Company’s strategy upgrade in 2021 is expected to be approximately
RMB100 millions. Taking this short-term cost pressure in
consideration, our operating income is expected to be no less than
RMB300 million in 2021. However, we believe that the new strategy
will start to bear fruits in 2022, driving rapid growth in 2022 and
beyond and generating higher value for our shareholders over the
long run.
“Fanhua is committed to maintaining a regular
cash dividend policy. In view of our earnings expectation and the
amount of investment required for enhancing our professional and
digital capabilities for 2021, annual dividend for 2021 will be no
less than US$0.60 per ADS, payable in four quarterly installments
of US$0.15 per ADS for each quarter.”
Financial Results for the Fourth Quarter
of 2020
Total net revenues were
RMB852.0 million (US$130.6 million) for the fourth quarter of 2020,
representing a decrease of 15.9% from RMB1,012.6 million for the
corresponding period in 2019.
-
Net revenues for the life insurance business were
RMB697.6 million (US$106.9 million) for the fourth quarter of 2020,
representing a decrease of 19.5% from RMB866.9 million for the
corresponding period in 2019. The decrease was consistent with a
year-over-year decrease of 22.6% in first year premiums of our life
insurance business from RMB934.5 million to RMB723.8 million,
primarily reflecting the slow-down of business activities in the
fourth quarter of 2020 as we focused on the preparation for the
jumpstart sales season of the coming year, offset by the
year-over-year growth of 49.1% from RMB1,443.8 million to
RMB2,152.6 million in renewal premiums. Revenues generated from our
life insurance business accounted for 81.9% of our total net
revenues in the fourth quarter of 2020.
-
Net revenues for the P&C insurance business
were RMB29.9 million (US$4.6 million) for the fourth quarter of
2020, representing an increase of 2.0% from RMB29.3 million for the
corresponding period in 2019. Revenues for the P&C insurance
business in the fourth quarter of 2020 primarily consisted of
commissions generated from Baowang (www.baoxian.com). The increase
mainly reflected the growth of higher-commission insurance
businesses such as short-term health insurance products sold via
Baowang, offset by the decline in the sales of accident and travel
insurance products as a result of significant reduction in travel
activities due to the COVID-19 pandemic. Revenues generated from
the P&C insurance business accounted for 3.5% of our total net
revenues in the fourth quarter of 2020.
-
Net revenues for the claims adjusting business
were RMB124.5 million (US$19.1 million) for the fourth quarter of
2020, representing an increase of 7.0% from RMB116.4 million for
the corresponding period in 2019. The increase was mainly due to
the strong growth of our medical insurance-related claims adjusting
business. Revenues generated from the claims adjusting business
accounted for 14.6% of our total net revenues in the fourth quarter
of 2020.
Total operating costs and
expenses were RMB780.1 million (US$119.6 million) for the
fourth quarter of 2020, representing a decrease of 13.2% from
RMB898.4 million for the corresponding period in 2020.
- Total
operating costs were RMB581.9 million (US$89.2 million)
for the fourth quarter of 2020, representing a decrease of 16.1%
from RMB693.5 million for the corresponding period in
2019.
-
Costs of the life insurance business were RMB484.3
million (US$74.2 million) for the fourth quarter of 2020,
representing a decrease of 19.5% from RMB601.3 million for the
corresponding period in 2019. Costs incurred by the life insurance
business accounted for 83.2% of our total operating costs in the
fourth quarter of 2020.
-
Costs of the P&C insurance business were
RMB17.3 million (US$2.7 million) for the fourth quarter of 2020,
representing a decrease of 25.4% from RMB23.2 million for the
corresponding period in 2019. Costs incurred by the P&C
insurance business accounted for 3.0% of our total operating costs
in the fourth quarter of 2020.
-
Costs of claims adjusting business were RMB 80.2
million (US$12.3 million) for the fourth quarter of 2020,
representing an increase of 16.2% from RMB69.0 million for the
corresponding period in 2019. Costs incurred by the claims
adjusting business accounted for 13.8% of our total operating costs
in the fourth quarter of 2020.
-
Selling expenses were RMB78.6 million (US$12.0
million) for the fourth quarter of 2020, representing an increase
of 1.9% from RMB77.1 million for the corresponding period in 2019.
The increase in selling expenses was mainly due to increased sales
events in our claim adjusting segment and increased training
activities in our life insurance segment.
-
General and administrative expenses were RMB119.6
million (US$18.3 million) for the fourth quarter of 2020,
representing a decrease of 6.4% from RMB127.8 million for the
corresponding period in 2019.
As a result of the preceding factors, we had an
operating income of RMB71.9 million (US$11.0
million) for the fourth quarter of 2020, representing a decrease of
37.0% from RMB114.1 million for the corresponding period in
2019.
Operating margin was 8.4% for
the fourth quarter of 2020, as compared to 11.3% for the
corresponding period in 2019.
Investment income was RMB7.8
million (US$1.2 million) for the fourth quarter of 2020,
representing a decrease of 17.0% from RMB9.4 million for the
corresponding period in 2019. The investment income in the fourth
quarter of 2019 consisted of yields from short-term investments in
financial products. Our investment income fluctuates from quarter
to quarter because investment income is recognized when
realized.
Interest income was RMB2.3
million (US$0.3 million) for the fourth quarter of 2020,
representing an increase of 1,050.0% from RMB0.2 million for the
corresponding period in 2019.
Income tax expense was RMB13.5
million (US$2.1 million) for the fourth quarter of 2020,
representing a decrease of 60.1% from RMB33.8 million for the
corresponding period in 2019. The effective tax rate for the fourth
quarter of 2020 was 20.7% as compared to 27.6% for the
corresponding period in 2019. The decrease in effective tax rate
was mainly due to exemption from income tax for investment income
derived from certain fund product.
Share of loss of affiliates was
RMB4.2 million (US$0.6 million) for the fourth quarter of 2020,
compared with share of loss of affiliates of RMB311.4 million for
the corresponding period in 2019. The share of loss of affiliates
was mainly due to the provision of an impairment of RMB23.0 million
(US$3.5 million) on investment in CNFinance Holdings Limited
(“CNFinance”) in the fourth quarter of 2020, reflecting a
write-down to the fair value of the investment as measured by its
closing market price on December 31, 2020, compared to the
impairment loss of RMB322.7 million for the corresponding period in
2019. The share of income from CNFinance was RMB19.1 million
(US$2.9 million) in the fourth quarter of 2020, offsetting part of
the impairment loss of the investment.
Net income was RMB47.4 million
(US$7.3 million) for the fourth quarter of 2020, as compared to net
loss of RMB222.7 million for the corresponding period in 2019.
Net income attributable to the Company’s
shareholders was RMB47.8 million (US$7.3 million) for the
fourth quarter of 2020, as compared to net loss attributable to the
Company’s shareholders of RMB224.7 million for the corresponding
period in 2019.
Non-GAAP net income attributable to the
Company’s shareholders3,
which excluded impairment on investment in CNFinance, was RMB70.8
million (US$10.8 million) for the fourth quarter of 2020,
representing a decrease of 27.8% from RMB98.0 million for the
corresponding period in 2019.
Net margin was 5.6% for the
fourth quarter of 2020 as compared to negative 22.2% for the
corresponding period in 2019.
Non-GAAP net margin4 was
8.3% for the fourth quarter of 2020 as compared to 9.7% for the
corresponding period in 2019.
Basic and diluted net income per ADS were
RMB0.89 (US$0.14) and RMB0.89 (US$0.14) for the fourth quarter of
2020, respectively, as compared to basic and diluted net loss per
ADS RMB4.18 and RMB4.18 for the corresponding period in 2019,
respectively.
Non-GAAP
basic5 and diluted net
income per ADS3 were RMB1.32 (US$0.20)
and RMB1.32 (US$0.20) for the fourth quarter of 2020, respectively,
representing decreases of 27.5% and 27.5% from RMB1.82 and RMB1.82
for the corresponding period in 2019, respectively.
Financial Results for Year 2020
Total net revenues were
RMB3,268.1 million (US$500.9 million) for 2020, representing a
decrease of 11.8% from RMB3,706.0 million for 2019.
-
Net revenues for the life insurance business were
RMB2,703.6 million (US$414.3 million) for 2020, representing a
decrease of 15.3% from RMB3,193.6 million in 2019. The decrease was
mainly caused by a 22.9% year-over-year decline in first year
premiums from RMB3,136.6 to RMB2,417.6 million primarily due to the
adverse impact of COVID-19 pandemic, partially offset by the
year-over-year growth of renewal commissions as a result of a 38.7%
year-over-year growth in renewal premiums from RMB5,473.6 million
to RMB7,594.3 million. Revenues generated from our life insurance
business accounted for 82.7% of our total net revenues in
2020.
-
Net revenues for the P&C insurance business
were RMB131.4 million (US$20.1 million) for 2020, representing a
decrease of 7.3% from RMB141.8 million in 2019. The decrease was
primarily driven by the decline of commissions generated on Baowang
(www.baoxian.com) due to the decline in accident and travel
insurance products as a result of significant reduction in travel
activities due to the COVID-19 pandemic, despite solid growth in
the sales of short-term health insurance through Baowang. Revenue
generated from our P&C insurance business accounted for 4.0% of
our total net revenue in 2020.
-
Net revenues for the claims adjusting business
were RMB433.1 million (US$66.4 million) for 2020, representing an
increase of 16.9% from RMB370.6 million in 2019. The increase was
mainly due to growth in our medical insurance-related claims
adjusting business. Revenues generated from the claims adjusting
business accounted for 13.3% of our total net revenues in
2020.
Total operating costs and
expenses were RMB2,966.0 million (US$454.6 million) for
2020, representing a decrease of 8.4% from RMB3,236.6 million in
2019.
- Total
operating costs were RMB2,213.9 million (US$339.3 million)
for 2020, representing a decrease of 10.9% from RMB2,483.4 million
in 2019.
-
Costs of the life insurance business were
RMB1,866.2 million (US$286.0 million) for 2020, representing a
decrease of 13.8% from RMB2,166.1 million in 2019. Costs incurred
by the life insurance business accounted for 84.3% of our total
operating costs in 2020.
-
Costs of the P&C insurance business were
RMB87.5 million (US$13.4 million) for 2020, representing a decrease
of 10.5% from RMB97.8 million in 2019. Costs incurred by the
P&C insurance business accounted for 4.0% of our total
operating costs in 2020.
-
Costs of claims adjusting business were RMB260.1
million (US$39.9 million) for 2020, representing an increase of
18.5% from RMB219.5 million in 2019. Costs incurred by the claims
adjusting business accounted for 11.7% of our total operating costs
in 2020.
-
Selling expenses were RMB288.5 million (US$44.2
million) for 2020, representing an increase of 3.7% from RMB278.1
million in 2019. The increase was primarily due to increased sales
events in our claim adjusting segment.
-
General and administrative expenses were RMB463.6
million (US$71.1 million) for 2020, representing a decrease of 2.4%
from RMB475.1 million in 2019.
As a result of the preceding factors, we had an
operating income of RMB302.2 million (US$46.3
million) for 2020, representing a decrease of 35.6% from RMB469.4
million in 2019.
Operating margin was 9.2% for
2020, as compared to 12.7% in 2019.
Investment income was RMB34.8
million (US$5.3 million) for 2020, representing a decrease of 56.0%
from RMB79.1 million in 2019. Our investment income in 2020
primarily consisted of yields from short-term investments in
financial products. Our investment income fluctuates from year to
year because investment income is recognized when realized.
Interest income was RMB13.4
million (US$2.1 million) for 2020, representing an increase of
378.6% from RMB2.8 million in 2019.
Income tax expense was RMB83.4
million (US$12.8 million) for 2020, representing a decrease of
42.0% from RMB143.8 million in 2019. The effective tax rate for
2020 was 23.0% compared with 25.6% in 2019. The decrease in
effective tax rate was mainly due to exemption from income tax for
investment income derived from certain fund product.
Share of loss of affiliates was
RMB2.7 million (US$0.4 million) for 2020, as compared to share of
loss of affiliates of RMB224.6 million in 2019. The share of loss
of affiliates was mainly due to the provision of an impairment of
RMB23.0 million (US$3.5 million) on investment in CNFinance,
reflecting a write-down to the fair value of the investment as
measured by its closing market price on December 31, 2020, compared
to the impairment loss of RMB322.7 million for the corresponding
period in 2019. The share of income from CNFinance was RMB21.2
million (US$3.2 million), offsetting part of the impairment loss of
the investment.
Net income was RMB276.2 million
(US$42.3 million) for 2020, representing an increase of 43.4% from
RMB192.6 million in 2019.
Net income attributable to the Company’s
shareholders was RMB268.3 million (US$41.1 million) for
2020, representing an increase of 42.0% from RMB188.9 million in
2019.
Non-GAAP net income attributable to the
Company’s shareholders, which excluded impairment on
investment in CNFinance, was RMB291.2 million (US$44.6 million) for
2020, representing a decrease of 43.1% from RMB511.6 million in
2019.
Net margin was 8.2% for 2020 as
compared to 5.1% in 2019.
Non-GAAP net margin was 8.9%
for 2020 as compared to 13.8% in 2019.
Basic and diluted net income per
ADS were RMB5.00 (US$0.77) and RMB4.99 (US$0.77) for 2020,
respectively, representing increases of 44.5% and 44.2% from
RMB3.46 and RMB3.46 in 2019, respectively.
Non-GAAP basic and diluted net income
per ADS were RMB5.42 (US$0.83) and RMB5.42 (US$0.83) for
2020, respectively, representing decreases of 42.1% and 42.1% from
RMB9.36 and RMB9.36 in 2019, respectively.
As of December 31, 2020, the Company had
RMB1,553.3 million (US$238.1 million) in cash,
cash equivalents and short-term
investments.
Key Operational Metrics for Fanhua's
Online Initiatives in 2020:
-
Lan Zhanggui - Our one-stop insurance service platform that
integrates the key functions of both the CNpad Auto Insurance and
CNpad Life Insurance Apps.
- The
number of active users of Lan
Zhanggui6 was
172,847 in 2020, as compared to 152,029 in 2019. The number of
active users of Lan Zhanggui who have sold at least one life
insurance policy was 79,012 in 2020, as compared to 131,326 in
2019, primarily because the sales activities of our sales agents
were significantly hindered due to the impact of COVID-19;
-
Insurance premiums generated through Lan Zhanggui
were RMB2,738.5 million (US$419.7 million) in 2020, consisting of
life insurance premiums of RMB2,186.7 million (US$335.1 million),
auto insurance premiums of RMB293.3 million (US$45.0 million) and
accidental & health (“A&H”) insurance premiums of RMB258.5
million (US$39.6 million). Insurance premiums generated through Lan
Zhanggui were RMB3,205.5 million in 2019, consisting of life
insurance premiums of RMB3,110.7 million, auto insurance premiums
of RMB89.4 million and A&H insurance premiums of RMB5.4
million.
-
eHuzhu - Our online non-profit mutual aid
platform:
- The number of paying
members was 3.0 million as of December 31, 2020, as
compared to 3.4 million as of December 31, 2019.
-
Baowang (www.baoxian.com) - Our online
insurance platform:
- The
number of active customer
accounts7 was
294,389 in 2020, representing a decrease of 13.8% from 341,657 in
2019, primarily due to fewer travel activities during COVID-19
which resulted in lower demand for travel and accident insurance
products;
-
Insurance premiums generated through Baowang
(www.baoxian.com) was RMB314.5 million (US$48.2 million)
in 2020, representing a decrease of 8.5% from RMB343.9 million in
2019.
Distribution and Service
Network
- As of December 31, 2020, Fanhua had
362,580 sales agents and 1,736 professional claims adjustors, as
compared to 670,104 sales agents and 1,627 professional claims
adjustors as of December 31, 2019. The number of performing
agents8 was 222,203 in 2020, among which approximately 80,768
were performing agents who have sold life insurance products as
compared to 394,327 performing agents and 131,326 performing agents
for life insurance products in 2019. The decrease in the number of
performing agents was primarily because the sales activities of our
sales agents have been significantly hindered due to the difficulty
to interact with prospective customers face-to-face as result of
the restrictive measures to contain the spread of COVID-19 in the
first half of 2020. As of December 31, 2020, Fanhua's distribution
network consisted of 763 sales outlets in 23 provinces and 118
services outlets in 31 provinces, as compared to 758 sales outlets
in 22 provinces and 159 services outlets in 31 provinces as of
December 31, 2019.
Business Outlook
Fanhua expects its operating income to be no
less than RMB120 million for the first quarter of 2021. This
forecast reflects Fanhua’s current view, which is subject to
change.
Conference Call
The Company will host a conference call to
discuss its fourth quarter and fiscal year 2020 financial results
as per the following details.
Time: 9:00 p.m. Eastern Daylight Time on March 16, 2021 or 9:00
a.m. Beijing/Hong Kong Time on March 17, 2021
Due to the outbreak of COVID-19,
operator-assisted conference calls are not available at the moment.
Please pre-register online in advance to join the conference call
by navigating to the link provided below and dial-in 10 minutes
before the call is scheduled to begin. Conference call details will
be provided upon registration.
Conference Call
Preregistration: http://apac.directeventreg.com/registration/event/6290486
Additionally, a live and archived webcast of the conference call
will be available at Fanhua’s investor relations website
https://edge.media-server.com/mmc/p/mkc7o8nk
About Fanhua Inc.
Fanhua Inc. is a leading independent 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, including life and property and
casualty insurance products. We also provide insurance claims
adjusting services, such as damage assessments, surveys,
authentications and loss estimations, as well as value-added
services, such as emergency vehicle roadside assistance.
Our online platforms include: (1) Lan Zhanggui,
an all-in-one platform which allows our agents to access and
purchase a wide variety of insurance products, including life
insurance, auto insurance, accident insurance, travel insurance and
standard health insurance products from multiple insurance
companies on their mobile devices; (2) Baowang (www.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 December 31, 2020, our distribution and
service network consisted of 763 sales outlets covering 22
provinces and 118 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, macroeconomic
conditions in China and future development of COVID-19 epidemic 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.
About Non-GAAP Financial
Measures
In addition to the Company’s consolidated
financial results under GAAP, the Company also provides non-GAAP
net income attributable to the Company’s shareholders, non-GAAP net
margin and non-GAAP basic and diluted net income per ADS, all of
which are non-GAAP financial measures. Non-GAAP net income
attributable to the Company’s shareholders is defined as net income
attributable to the Company’s shareholders before impairment on
investment in CNFinance. Non-GAAP net margin is defined as non-GAAP
net income attributable to the Company's shareholders3 as a
percentage of net revenues. Non-GAAP basic net income per ADS is
defined as non-GAAP net income attributable to the Company’s
shareholders divided by total weighted average number of ADSs of
the Company outstanding during the period. Non-GAAP diluted net
income per ADS is defined as non-GAAP net income attributable to
the Company’s shareholders divided by total weighted average number
of diluted ADSs of the Company outstanding during the period. The
Company believes that both management and investors benefit from
referring to these non-GAAP financial measures in assessing the
Company’s performance and when planning and forecasting future
periods. One limitation of using these non-GAAP financial measures
is that such measures exclude items that were significant in the
fourth quarter and full year of 2020.
In light of these limitations, the presentation
of these non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP. We
encourage investors and other interested persons to review our
financial information in its entirety and not rely on a single
financial measure. For more information on these non-GAAP financial
measures, please see the tables captioned “Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures” set forth at the
end of this release.
FANHUA INC. Unaudited
Condensed Consolidated Balance Sheets (In
thousands)
|
As of December 31, |
|
As of December 31, |
|
As of December 31, |
|
20199 |
|
2020 |
|
2020 |
|
RMB |
|
RMB |
|
US$ |
ASSETS: |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash
equivalents |
169,653 |
|
245,428 |
|
37,613 |
Restricted
cash |
95,952 |
|
83,981 |
|
12,871 |
Short term
investments |
1,612,351 |
|
1,307,865 |
|
200,439 |
Accounts receivable,
net |
682,171 |
|
583,116 |
|
89,367 |
Insurance premium
receivables |
5,067 |
|
— |
|
— |
Other
receivables |
61,570 |
|
50,242 |
|
7,700 |
Other current
assets |
54,987 |
|
41,148 |
|
6,306 |
Total current
assets |
2,681,751 |
|
2,311,780 |
|
354,296 |
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
Restricted bank deposit - non
current |
— |
|
20,689 |
|
3,171 |
Property, plant, and equipment,
net |
40,806 |
|
36,778 |
|
5,637 |
Goodwill and intangible assets,
net |
110,191 |
|
109,913 |
|
16,845 |
Deferred tax
assets |
7,327 |
|
10,032 |
|
1,537 |
Investment in
affiliates |
363,414 |
|
357,661 |
|
54,814 |
Other non-current
assets |
46,917 |
|
33,743 |
|
5,171 |
Right of use assets4 |
190,437 |
|
200,403 |
|
30,713 |
Total non-current
assets |
759,092 |
|
769,219 |
|
117,888 |
Total
assets |
3,440,843 |
|
3,080,999 |
|
472,184 |
Current liabilities: |
|
|
|
Accounts payable
|
382,882 |
|
377,386 |
|
57,837 |
Insurance premium payables
|
7,901 |
|
25,421 |
|
3,896 |
Other payables and accrued
expenses |
220,290 |
|
188,448 |
|
28,881 |
Accrued payroll
|
101,664 |
|
105,739 |
|
16,205 |
Income tax
payable |
155,251 |
|
145,983 |
|
22,373 |
Current operating lease
liability |
79,986 |
|
86,233 |
|
13,216 |
Total current
liabilities |
947,974 |
|
929,210 |
|
142,408 |
|
|
|
|
Non-current liabilities: |
|
|
|
Refundable share rights
deposits |
266,901 |
|
— |
|
— |
Other tax
liabilities |
70,350 |
|
67,219 |
|
10,302 |
Deferred tax
liabilities |
7,898 |
|
26,380 |
|
4,042 |
Non-current operating lease liability |
103,252 |
|
103,526 |
|
15,866 |
Total non-current
liabilities |
448,401 |
|
197,125 |
|
30,210 |
Total
liabilities |
1,396,375 |
|
1,126,335 |
|
172,618 |
|
|
|
|
|
|
|
|
|
|
Ordinary
shares |
9,235 |
|
8,088 |
|
1,240 |
Treasury stock |
(1,146) |
|
— |
|
— |
Additional paid-in
capital |
393 |
|
— |
|
— |
Statutory
reserves |
508,739 |
|
553,911 |
|
84,891 |
Retained
earnings |
1,479,494 |
|
1,306,554 |
|
200,238 |
Accumulated other comprehensive
loss |
(65,429) |
|
(34,994) |
|
(5,363) |
Total shareholders’
equity |
1,931,286 |
|
1,833,559 |
|
281,006 |
Non-controlling
interests |
113,182 |
|
121,105 |
|
18,560 |
Total
equity |
2,044,468 |
|
1,954,664 |
|
299,566 |
Total liabilities and
equity |
3,440,843 |
|
3,080,999 |
|
472,184 |
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 Twelve Months Ended |
|
December 31, |
|
December 31, |
|
2019 |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2020 |
|
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
|
Net
revenues: |
|
|
|
|
|
|
Agency |
896,209 |
|
727,486 |
|
111,492 |
|
3,335,397 |
|
2,834,997 |
|
434,482 |
|
Life insurance
business |
866,879 |
|
697,554 |
|
106,905 |
|
3,193,625 |
|
2,703,584 |
|
414,342 |
|
P&C insurance
business |
29,330 |
|
29,932 |
|
4,587 |
|
141,772 |
|
131,413 |
|
20,140 |
|
Claims
adjusting |
116,370 |
|
124,488 |
|
19,079 |
|
370,606 |
|
433,148 |
|
66,383 |
|
Total net
revenues |
1,012,579 |
|
851,974 |
|
130,571 |
|
3,706,003 |
|
3,268,145 |
|
500,865 |
|
Operating costs and
expenses: |
|
|
|
|
|
|
Agency |
(624,496) |
|
(501,667) |
|
(76,884) |
|
(2,263,952) |
|
(1,953,744) |
|
(299,425) |
|
Life insurance
business |
(601,311) |
|
(484,329) |
|
(74,227) |
|
(2,166,126) |
|
(1,866,227) |
|
(286,012) |
|
P&C insurance
business |
(23,185) |
|
(17,338) |
|
(2,657) |
|
(97,826) |
|
(87,517) |
|
(13,413) |
|
Claims
adjusting |
(69,035) |
|
(80,204) |
|
(12,292) |
|
(219,496) |
|
(260,121) |
|
(39,865) |
|
Total operating
costs |
(693,531) |
|
(581,871) |
|
(89,176) |
|
(2,483,448) |
|
(2,213,865) |
|
(339,290) |
|
Selling
expenses |
(77,097) |
|
(78,601) |
|
(12,046) |
|
(278,085) |
|
(288,460) |
|
(44,208) |
|
General and administrative
expenses |
(127,821) |
|
(119,628) |
|
(18,334) |
|
(475,107) |
|
(463,634) |
|
(71,055) |
|
Total operating costs
and
expenses |
(898,449) |
|
(780,100) |
|
(119,556) |
|
(3,236,640) |
|
(2,965,959) |
|
(454,553) |
|
Income from
operations |
114,130 |
|
71,874 |
|
11,015 |
|
469,363 |
|
302,186 |
|
46,312 |
|
Other income,
net: |
|
|
|
|
|
|
Investment
income |
9,386 |
|
7,750 |
|
1,188 |
|
79,070 |
|
34,789 |
|
5,332 |
|
Interest
income |
238 |
|
2,280 |
|
349 |
|
2,828 |
|
13,420 |
|
2,057 |
|
Others, net |
(1,202) |
|
(16,840) |
|
(2,581) |
|
9,664 |
|
11,907 |
|
1,825 |
|
Income before income
taxes and income of
affiliates |
122,552 |
|
65,064 |
|
9,971 |
|
560,925 |
|
362,302 |
|
55,526 |
|
Income tax
expense |
(33,847) |
|
(13,477) |
|
(2,065) |
|
(143,816) |
|
(83,387) |
|
(12,780) |
|
Share of income and impairment
of affiliates, net
|
(311,394) |
|
(4,165) |
|
(638) |
|
(224,555) |
|
(2,738) |
|
(420) |
|
Net (loss)
income |
(222,689) |
|
47,422 |
|
7,268 |
|
192,554 |
|
276,177 |
|
42,326 |
|
less: net (loss) income
attributable to noncontrolling
interests |
1,988 |
|
(404) |
|
(62) |
|
3,622 |
|
7,923 |
|
1,214 |
|
Net (loss) income
attributable to the Company’s
shareholders |
(224,677) |
|
47,826 |
|
7,330 |
|
188,932 |
|
268,254 |
|
41,112 |
|
Net income (loss) per share: |
|
|
|
|
|
|
|
Basic |
(0.21) |
|
0.04 |
|
0.01 |
|
0.17 |
|
0.25 |
|
0.04 |
|
Diluted |
(0.21) |
|
0.04 |
|
0.01 |
|
0.17 |
|
0.25 |
|
0.04 |
|
Net income (loss) per ADS: |
|
|
|
|
|
|
|
Basic |
(4.18) |
|
0.89 |
|
0.14 |
|
3.46 |
|
5.00 |
|
0.77 |
|
Diluted |
(4.18) |
|
0.89 |
|
0.14 |
|
3.46 |
|
4.99 |
|
0.77 |
|
|
|
|
|
|
|
|
|
Shares used in calculating net income per
share: |
|
|
|
|
|
|
|
Basic |
1,073,891,784 |
|
1,073,891,784 |
|
1,073,891,784 |
|
1,092,601,338 |
|
1,073,891,784 |
|
1,073,891,784 |
|
Diluted |
1,074,291,474 |
|
1,074,291,242 |
|
1,074,291,242 |
|
1,093,229,436 |
|
1,074,291,360 |
|
1,074,291,360 |
|
Net income
(loss) |
(222,689) |
|
47,422 |
|
7,268 |
|
192,554 |
|
276,177 |
|
42,326 |
|
Other comprehensive income (loss), net of tax: Foreign currency
translation
adjustments |
4,157 |
|
(520) |
|
(80) |
|
10,178 |
|
9,639 |
|
1,477 |
|
Share of other comprehensive gain (loss) of
affiliates |
(819) |
|
(2,322) |
|
(356) |
|
451 |
|
(3,016) |
|
(462) |
|
Unrealized net gains on available-for-sale
investments |
13,267 |
|
8,109 |
|
1,243 |
|
17,231 |
|
23,811 |
|
3,649 |
|
Comprehensive income
(loss) |
(206,084) |
|
52,689 |
|
8,075 |
|
220,414 |
|
306,611 |
|
46,990 |
|
Less: Comprehensive income (loss) attributable to the
noncontrolling
interests |
1,988 |
|
(404) |
|
(62) |
|
3,622 |
|
7,923 |
|
1,214 |
|
Comprehensive income
(loss) attributable to the Company’s
shareholders |
(208,072) |
|
53,093 |
|
8,137 |
|
216,792 |
|
298,688 |
|
45,776 |
|
FANHUA INC.Unaudited
Condensed Consolidated Statements of Cash
Flow(In
thousands)
|
For The Three Months Ended |
|
For The Twelve Months Ended |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2020 |
|
2020 |
|
2019 |
|
2020 |
|
2020 |
|
|
RMB |
|
RMB |
|
US$ |
|
RMB |
|
RMB |
|
US$ |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
Net income
(loss) |
(222,689) |
|
47,422 |
|
7,268 |
|
192,554 |
|
276,177 |
|
42,326 |
|
Adjustments to reconcile net income to net cash generated
from operating activities: |
|
|
|
|
|
|
Investment
income |
(8,961) |
|
(1,188) |
|
(180) |
|
(65,616) |
|
(14,321) |
|
(2,195) |
|
Share of income and impairment
of affiliates,
net |
311,394 |
|
4,165 |
|
638 |
|
224,555 |
|
2,738 |
|
420 |
|
Other non-cash
adjustments |
8,383 |
|
46,788 |
|
7,171 |
|
106,328 |
|
148,878 |
|
22,816 |
|
Changes in operating assets
and liabilities: |
36,587 |
|
3,292 |
|
504 |
|
(279,497) |
|
(11,172) |
|
(1,713) |
|
Net cash generated from operating
activities |
124,714 |
|
100,479 |
|
15,401 |
|
178,324 |
|
402,300 |
|
61,654 |
|
Purchase of short term
investments |
(1,549,800) |
|
(1,012,700) |
|
(155,203) |
|
(7,498,701) |
|
(7,947,662) |
|
(1,218,032) |
|
Proceeds from disposal of
short term
investments |
1,560,651 |
|
1,209,294 |
|
185,332 |
|
7,523,257 |
|
8,287,924 |
|
1,270,180 |
|
Cash paid for loan receivables
to a third
party |
— |
|
— |
|
— |
|
— |
|
(90,000) |
|
(13,793) |
|
Cash received for loan
receivables to a third
party |
— |
|
90,000 |
|
13,793 |
|
— |
|
90,000 |
|
13,793 |
|
Others |
(5,548) |
|
(5,351) |
|
(821) |
|
(12,597) |
|
(14,926) |
|
(2,287) |
|
Net cash generated from investing
activities |
5,303 |
|
281,243 |
|
43,101 |
|
11,959 |
|
325,336 |
|
49,861 |
|
Dividends
paid |
(113,252) |
|
(87,804) |
|
(13,457) |
|
(435,072) |
|
(388,499) |
|
(59,540) |
|
Repayment of refundable share
rights
deposits |
— |
|
(250,312) |
|
(38,362) |
|
— |
|
(250,312) |
|
(38,362) |
|
Others |
— |
|
— |
|
— |
|
(357,034) |
|
— |
|
— |
|
Net cash used in
financing
activities |
(113,252) |
|
(338,116) |
|
(51,819) |
|
(792,106) |
|
(638,811) |
|
(97,902) |
|
Net increase
(decrease) in cash, cash equivalents and restricted
cash |
16,765 |
|
43,606 |
|
6,683 |
|
(601,823) |
|
88,825 |
|
13,613 |
|
Cash, cash equivalents
and restricted cash at beginning of
period |
252,033 |
|
318,160 |
|
48,760 |
|
848,166 |
|
265,605 |
|
40,706 |
|
Effect of exchange rate
changes on cash and cash
equivalents |
(3,193) |
|
(11,668) |
|
(1,788) |
|
19,262 |
|
(4,332) |
|
(664) |
|
Cash, cash equivalents
and restricted cash at end of
period |
265,605 |
|
350,098 |
|
53,655 |
|
265,605 |
|
350,098 |
|
53,655 |
|
FANHUA
INC.Reconciliations of GAAP Financial Measures to
Non-GAAP Financial Measures (In RMB in thousands,
except shares and per share data)
|
For The Three Months Ended December 31 |
|
2019 |
|
2020 |
|
|
|
GAAP |
|
Impairmentoninvestmentin affiliates |
|
Non-GAAP |
|
GAAP |
|
Impairmentoninvestmentin
affiliates |
|
Non-GAAP |
|
Change% |
Net revenues
|
1,012,579 |
|
— |
|
1,012,579 |
|
851,974 |
|
— |
|
851,974 |
|
(15.9) |
|
Income from operations
|
114,130 |
|
— |
|
114,130 |
|
71,874 |
|
— |
|
71,874 |
|
(37.0) |
|
Operating margin
|
11.3% |
|
— |
|
11.3% |
|
8.4% |
|
— |
|
8.4% |
|
(25.7) |
|
Share of income and impairment
of affiliates, net
|
(311,394) |
|
(322,654) |
|
11,260 |
|
(4,165) |
|
(22,958) |
|
18,793 |
|
66.9 |
|
Net (loss) income attributable
to the Company’s
shareholders |
(224,677) |
|
(322,654) |
|
97,977 |
|
47,826 |
|
(22,958) |
|
70,784 |
|
(27.8) |
|
Net margin
|
(22.2%) |
|
— |
|
9.7% |
|
5.6% |
|
|
8.3% |
|
(14.4) |
|
Net (loss) income per
share |
|
|
|
|
|
|
|
Basic
|
(0.21) |
|
— |
|
0.09 |
|
0.04 |
|
— |
|
0.07 |
|
(22.2) |
|
Diluted
|
(0.21) |
|
— |
|
0.09 |
|
0.04 |
|
— |
|
0.07 |
|
(22.2) |
|
Net (loss) income per
ADS : |
|
|
|
|
|
|
|
Basic
|
(4.18) |
|
— |
|
1.82 |
|
0.89 |
|
— |
|
1.32 |
|
(27.5) |
|
Diluted
|
(4.18) |
|
— |
|
1.82 |
|
0.89 |
|
— |
|
1.32 |
|
(27.5) |
|
Shares used in calculating net income per
share : |
|
|
|
|
|
|
|
Basic
|
1,073,891,784 |
|
— |
|
1,073,891,784 |
|
1,073,891,784 |
|
— |
|
1,073,891,784 |
|
|
Diluted
|
1,074,291,474 |
|
— |
|
1,074,291,474 |
|
1,074,291,242 |
|
— |
|
1,074,291,242 |
|
|
|
For The Twelve Months Ended December 31 |
|
2019 |
|
2020 |
|
|
|
GAAP |
|
Impairmentoninvestmentin
affiliates |
|
Non-GAAP |
|
GAAP |
|
Impairmentoninvestmentin
affiliates |
|
Non-GAAP |
|
Change% |
Net revenues |
3,706,003 |
|
— |
|
3,706,003 |
|
3,268,145 |
|
— |
|
3,268,145 |
|
(11.8) |
|
Income from operations
|
469,363 |
|
— |
|
469,363 |
|
302,186 |
|
— |
|
302,186 |
|
(35.6) |
|
Operating margin
|
12.7% |
|
— |
|
12.7% |
|
9.2% |
|
— |
|
9.2% |
|
(27.6) |
|
Share of income and impairment
of affiliates, net
|
(224,555) |
|
(322,654) |
|
98,099 |
|
(2,738) |
|
(22,958) |
|
20,220 |
|
(79.4) |
|
Net (loss) income attributable
to the Company’s
shareholders |
188,932 |
|
(322,654) |
|
511,586 |
|
268,254 |
|
(22,958) |
|
291,212 |
|
(43.1) |
|
Net margin
|
5.1% |
|
— |
|
13.8% |
|
8.2% |
|
— |
|
8.9% |
|
(35.5) |
|
Net income per share |
|
|
|
|
|
|
|
Basic
|
0.17 |
|
— |
|
0.47 |
|
0.25 |
|
— |
|
0.27 |
|
(42.6) |
|
Diluted
|
0.17 |
|
— |
|
0.47 |
|
0.25 |
|
— |
|
0.27 |
|
(42.6) |
|
Net income per ADS
: |
|
— |
|
|
|
|
|
|
Basic
|
3.46 |
|
— |
|
9.36 |
|
5.00 |
|
— |
|
5.42 |
|
(42.1) |
|
Diluted
|
3.46 |
|
— |
|
9.36 |
|
4.99 |
|
— |
|
5.42 |
|
(42.1) |
|
Shares used in calculating net income per share
: |
|
|
|
|
|
|
|
Basic
|
1,092,601,338 |
|
— |
|
1,092,601,338 |
|
1,073,891,784 |
|
— |
|
1,073,891,784 |
|
|
Diluted
|
1,093,229,436 |
|
— |
|
1,093,229,436 |
|
1,074,291,360 |
|
— |
|
1,074,291,360 |
|
|
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
RMB6.5250 to US$1.00, the effective noon buying rate as of December
31, 2020 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 |
Non-GAAP net income attributable to the Company’s shareholders
is defined as net income attributable to the Company’s shareholders
before impairment on investment in an affiliate. |
3 |
Non-GAAP diluted net income per ADS is defined as non-GAAP net
income attributable to the Company’s shareholders divided by total
weighted average number of diluted ADSs of the Company outstanding
during the period. |
4 |
Non-GAAP net margin is defined as non-GAAP net income
attributable to the Company's shareholders as a percentage of net
revenues. |
5 |
Non-GAAP basic net income per ADS is defined as non-GAAP net
income attributable to the Company’s shareholders divided by total
weighted average number of ADSs of the Company outstanding during
the period. |
6 |
Active users of Lan Zhanggui included users who sold at least
one insurance policy through Lan Zhanggui (through either its
mobile application or WeChat public account) during the specified
period. |
7 |
Active customer accounts of Baowang are defined as customer
accounts that made at least one purchase directly through
www.baoxian.com, its mobile application, or WeChat public account
during the specified period. |
8 |
Performing agents are defined as agents who have sold at least
one insurance policy during the specified period. |
9 |
In June 2016, FASB issued ASU No. 2016-13, “Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments”. This standard requires entities to
measure all expected credit losses of financial assets held at a
reporting date based on historical experience, current conditions,
and reasonable and supportable forecasts in order to record credit
losses in a timelier manner. ASU 2016-13 also amends the accounting
for credit losses on available-for-sale debt securities and
purchased financial assets with credit deterioration. ASU 2016-13
adds to U.S. GAAP an impairment model (known as the current
expected credit loss (CECL) model) that is based on expected losses
rather than incurred losses. The Company adopted the ASU No.
2016-13 on a modified-retrospective basis, the cumulative-effect
adjustment reduce opening retained earnings balance by
approximately RMB7.5 million in the statement of financial position
as of January 1, 2020. |
Source: Fanhua Inc.
For more information, please contact:
Oasis Qiu
Investor Relations Manager
Tel: +86 (20) 8388-3191
Email: qiusr@fanhuaholdings.com
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