FANHUA Inc. (Nasdaq: FANH) (the “Company” or “FANHUA”), a leading
independent financial services provider in China, today announced
its unaudited financial results for the third quarter ended
September 30, 20231.
Financial Highlights for the Third
Quarter of 2023:
|
(In thousands, except per ADS data and percentages) |
2022Q3 (RMB) |
2023Q3 (RMB) |
2023Q3 (US$) |
Change % |
|
Total net revenues |
624,746 |
634,620 |
86,982 |
1.6 |
|
|
Operating income |
32,165 |
33,196 |
4,549 |
3.2 |
|
|
Net income attributable to shareholders |
35,371 |
170,699 |
23,396 |
382.6 |
|
|
Diluted net income per ADS |
0.66 |
3.18 |
0.44 |
381.8 |
|
|
Cash, cash equivalent, short-term investments at end of the
period |
917,901 |
1,498,417 |
205,375 |
63.2 |
|
|
Key operating metrics |
|
|
|
|
|
Total life gross written premiums (“GWP”) |
2,789,859 |
3,437,045 |
471,086 |
23.2 |
|
|
- First year premium (“FYP”) |
529,720 |
584,437 |
80,104 |
10.3 |
|
|
- Renewal premium |
2,260,139 |
2,852,608 |
390,982 |
26.2 |
|
|
Number of life insurance performing agents |
7,598 |
5,117 |
- |
(32.7 |
) |
|
FYP per life insurance performing agent |
59,113 |
81,081 |
- |
37.2 |
|
Mr. Yinan Hu, Co-Chairman and Chief
Executive Officer, commented: “Due to the pricing rate
change in traditional life insurance, China’s life insurance
industry has witnessed substantial fluctuations in premium growth,
with overall growth coming under pressure.”
He added, “In the face of challenges stemming
from policy shifts, we are delighted that our various strategic
initiatives have made commendable progress. The effective
implementation of our established strategies has contributed to the
resilience of our operations.
“We believe that although the changes in pricing
rates and the impending new rule requiring consistency in
commissions reported with the level actually paid may have
short-term impact on the industry, in the long run, they will drive
the industry towards more standardized and sustainable high-quality
development.
“We anticipate that the industry will gradually
transition from being primarily driven by products and fees to
being driven by technology and services in the future. This shift
will enhance the competitiveness of companies with innovative
services and technological capabilities. The industry is likely to
become more concentrated with large insurance intermediary
companies transitioning towards platform-based operations, and
current market challenges will drive more small and medium-sized
intermediary firms to choose collaboration with major platforms to
reduce costs and enhance service capabilities.
“For FANHUA, this trend presents significant
opportunities for our platform-centric development which will
accelerate our transformation from a sales-oriented company to a
platform-centric one, and further foster the growth of our business
scale and market share. We will also continue to strengthen
collaborations with small and medium-sized insurance companies,
creating greater value for them through technology and customer
service, thereby securing more substantial value distribution.”
Ben Lin, co-chairman and chief strategy
officer of FANHUA, commented: “The third quarter was a
very exciting period for FANHUA with many significant developments.
Firstly, together with Tencent Cloud, we hosted our inaugural Open
Platform Day on September 25, 2023 and officially introduced our
sales technology expertise to the broader market. We are pleased to
say that following such event, we have received numerous enquiries
from independent brokers and insurers respectively and have so far
successfully signed up two independent brokers as our digital
tenants.
“The second major development relate to our
overseas expansion. On October 23, 2023, we announced the
establishment of two non-wholly owned subsidiaries with Asia
Insurance Co., Ltd., or Asia Insurance as a noncontrolling
shareholder, which marked our expansion outside of mainland China.
FANHUA will be the majority shareholder of both companies with a
60% equity interest in each. We are confident that by working
closely with Asia Insurance we can extend our strategy of building
quality independent financial distribution and technology-driven
open platform to markets outside of mainland China.
“Thirdly, we have completed most of the IT
integration with Zhongronghuijin ("ZRHJ"), which we acquired 57.73%
equity interests in January 2023. Full completion of the
integration is expected to take place over the fourth quarter and
upon completion, we expect that ZRHJ will realize no less than
RMB5.0 million in annual IT savings in 2024. This acquisition and
its deliverable cost savings serve as strong evidence of the
successful implementation of our acquisition strategy.
“Lastly, while the weak investment market
environment over the quarters has impacted many of our listed
insurance peers, FANHUA was able to report significant increase in
net profit due to an unrealized holding gain on fair value change
over an equity investment as a result of the Nasdaq listing of
Cheche Group Inc., or Cheche, in September 2023. FANHUA currently
holds a 2.8% equity interest in Cheche Group as part of our P&C
disposal transaction with Cheche in 2017. We are very excited to
see Cheche to have completed its going public process.
“Over the coming quarters, taking advantage of
the opportunities presented by the regulatory changes, our
strategic focus will remain on executing on our core strategies
which include driving growth in our Open Platform and Digital
Tenant and exploring value accretive consolidation opportunities
while driving organic growth through enhancing the quality of our
distribution team. In Hong Kong, we will continue to work with Asia
Insurance to map out our business opportunities and build up our
human resources in the two subsidiaries we have established.”
Open Platform and M&A Contributions
over the Third Quarter of 2023
- The number of platform professional
users who used our Open Platform reached 791 as of September 30,
2023, generating RMB165.6 million in first year premiums for the
third quarter of 2023 which accounted for 28.3% of our life
insurance FYP;
- 21.6% of our life insurance FYP and
21.3% of our net revenues for the life insurance business were
generated from entities we acquired within the past 12 months.
Share Repurchase Program
On December 20, 2022, the Company’s board of
directors announced a share repurchase program under which the
Company may repurchase its American depositary shares, or ADSs,
with an aggregate value of US$20 million from time to time. As of
September 30, 2023, the Company had repurchased an aggregate of
495,459ADSs, at an average price of approximately US$7.9 per ADS
for a total amount of approximately US$3.9 million under this share
repurchase program.
Business Outlook and GuidanceWe
expect to deliver 50% year-over-year growth in life insurance first
year premiums and 50% year-over-year growth in adjusted EBITDA2 for
2023.
This forecast is based on the current market
conditions and reflects FANHUA’s preliminary estimate, which is
subject to change caused by various uncertainties.
Analysis of our Financial Results for
the Third Quarter of 2023
Revenues
Total net revenues were
RMB634.6 million (US$86.9 million) for the third quarter of 2023,
representing an increase of 1.6% from RMB624.7 million for the
corresponding period in 2022.
-
Net revenues for agency business were RMB524.1
million (US$71.8 million) for the third quarter of 2023, which
remained relatively stable compared to RMB522.7 million for the
corresponding period in 2022. Total GWP increased by 22.8%
year-over-year to RMB3,525.1 million, of which FYP grew by 10.1%
year-over-year to RMB672.5 million while renewal premiums increased
by 26.2% year-over-year to RMB2,852.6 million.
- Net
revenues for the life insurance business were RMB483.8
million (US$66.3million) for the third quarter of 2023, which
remained relatively stable compared to RMB480.6 million for the
corresponding period in 2022. The slight increase was a net result
mainly due to (i) the business fluctuation caused by the pricing
rate change to life insurance products from 3.5% to 3% effective on
August 1, 2023 which caused a spike in new business sales in July
and then followed by a slow-down in sales in August and September
and (ii) contribution from newly acquired entities, partially
offset by the decrease in renewal commission income as a result of
the decreased portfolio based average renewal commission rate of
renewal premiums collected, and to a lesser extent, due to changes
in product mix.Net revenues generated from our life insurance
business accounted for 76.2% of our total net revenues in the third
quarter of 2023, as compared to 76.9% in the same period of
2022.
- Net
revenues for the non-life insurance business (formerly categorized
as “property and casualty insurance business”) were
RMB40.3 million (US$5.5 million) for the third quarter of 2023,
representing a decrease of 4.3% from RMB42.1 million for the
corresponding period in 2022. Net revenues generated from the
non-life insurance business accounted for 6.4% of our total net
revenues in the third quarter of 2023, as compared to 6.8% in the
same period of 2022.
-
Net revenues for the claims adjusting business
were RMB110.5 million (US$15.1 million) for the third quarter of
2023, representing an increase of 8.3% from RMB102.0 million for
the corresponding period in 2022. The increase was mainly due to
business recovery after the pandemic. Net revenues generated from
the claims adjusting business accounted for 17.4% of our total net
revenues in the third quarter of 2023, as compared to 16.3% in the
same period of 2022.
Gross profit
Total gross profit was RMB235.2
million (US$32.2 million) for the third quarter of 2023,
representing an increase of 1.7% from RMB231.3 for the
corresponding period in 2022. By product line, the results
were:
-
Life insurance business recorded a gross profit of
RMB182.0 million (US$24.9 million), as compared with RMB181.7
million for the third quarter of 2022. Gross margin for the period
was 37.6%, as compared with 37.8% in the same period of 2022.
-
Non-life insurance business recorded a gross
profit of RMB12.8 million (US$1.8 million), representing a decrease
of 23.8% from RMB16.8 million for the third quarter of 2022. Gross
margin for the period was 31.8%, as compared with 40.0% in the same
period of 2022. The decrease in gross margin was mainly due to
changes in product mix.
-
Claims adjusting business recorded a gross profit
of RMB 40.4million (US$5.5 million), representing an increase of
23.2% from RMB32.8 million for the third quarter of 2022. Gross
margin for the period was 36.6%, as compared with 32.1% in the same
period of 2022.
Operating expenses
Selling expenses were RMB59.2
million (US$8.1 million) for the third quarter of 2023,
representing a decrease of 14.6% from RMB69.3 million for the
corresponding period in 2022. The decrease was due to expenses
savings from personnel optimization and decreased number of sales
outlets, partially offset by the increase in sales training events
and the recognition of RMB5.0 million (US$0.7 million) share-based
compensation expenses related to shares options granted to
Million-Dollar Roundtable Members, or MDRT, under the Company’s
MDRT ("Million-Dollar Roundtable Members") Share Incentive Plan in
the first quarter of 2023.
General and administrative
expenses were RMB142.9 million (US$19.6 million) for the
third quarter of 2023, representing an increase of 10.1% from
RMB129.8 million for the corresponding period in 2022. The increase
was mainly due to the expenses incurred by the acquired business
which was consolidated since the first quarter of 2023 amounting to
approximately RMB19.6 million (US$2.7million), partially offset by
cost savings from personnel optimization and decrease in the number
of branches since 2022.
As a result of the foregoing factors, we
recorded operating income of RMB33.2 million
(US$4.5 million) for the third quarter of 2023, representing an
increase of 3.2% from RMB32.2 million for the corresponding period
in 2022.
Operating margin was 5.2% for
the third quarter of 2023, compared to 5.1% for the corresponding
period in 2022.
Fair value change in an equity
investment represents an unrealized holding gain of
RMB164.3 million (US$22.5 million) in the third quarter of 2023,
which was recognized based on the fair value of Cheche in which the
Company owns 2.8% equity interests, following its listing in
September 2023.
Investment income was RMB1.9
million (US$0.3 million) for the third quarter of 2023, as compared
with RMB2.8 million for the corresponding period in 2022. The
investment income in the third quarter of 2023 consisted of yields
from short-term investments in financial products and is recognized
when the investment matures or is disposed of.
Income tax expense was RMB16.1
million (US$2.2 million) for the third quarter of 2023,
representing an increase of 87.2% from RMB8.6 million for the
corresponding period in 2022. The effective tax rate for the third
quarter of 2023 was 9.1% compared with 20.2% for the corresponding
period in 2022. The decrease of effective tax rate is mainly due to
the recognition of a nontaxable unrealized holding gain of equity
interest amounting to RMB164.3 million (US$22.5 million) in the
third quarter of 2023.
Net income was RMB160.8 million
(US$22.0 million) for the third quarter of 2023, representing an
increase of 384.3% from RMB33.2 million for the corresponding
period in 2022.
Net income attributable to the Company’s
shareholders was RMB170.7million (US$23.4 million) for the
third quarter of 2023, representing an increase of 382.6% from
RMB35.4 million for the corresponding period in 2022.
Net margin was 26.9% for the
third quarter of 2023, as compared to 5.7% for the corresponding
period in 2022.
Adjusted
EBITDA2 was RMB24.9 million (US$3.4
million) for the third quarter of 2023, representing an decrease of
32.0% as compared to RMB36.6 million for the corresponding period
in 2022. The decrease was mainly due to a provision of expected
credit loss on other receivables amounting to RMB18.5 million
(US$2.5 million) for the third quarter of 2023.
Adjusted EBITDA margin3 was
3.9% for the third quarter of 2023, as compared to 5.9% for the
corresponding period in 2022.
Basic and diluted net income per
ADS were RMB3.18 (US$0.44) and RMB3.18 (US$0.44) for the
third quarter of 2023, respectively, representing an increase of
381.8% and 381.8% from RMB0.66 and RMB0.66 for the corresponding
period in 2022, respectively.
Basic4
and diluted5 adjusted
EBITDA per ADS were RMB0.46 (US$0.06) and RMB0.46
(US$0.06) for the third quarter of 2023, representing a decrease of
32.4% and 32.4% from RMB0.68 and RMB0.68 for the corresponding
period in 2022, respectively.
As of September 30, 2023, the Company had
RMB1,498.4 million (US$205.4 million) in cash,
cash equivalents and short-term
investments.
FANHUA’s Insurance Sales and Service
Distribution Network:
- As of
September 30, 2023, excluding newly acquired entities, FANHUA’s
distribution network consisted of 592 sales outlets in 23 provinces
and 81 services outlets in 31 provinces as of September 30, 2023,
compared with 697 sales outlets in 23 provinces and 100 services
outlets in 31 provinces as of September 30, 2022. The decrease in
the number of sales outlets reflected our focus on growing
profitable branches, coupled with the challenging decisions to
close those which were not yielding profits. The number of the
Company's in-house claims adjustors was 2,215 as of September 30,
2023, compared with 2,221 as of September 30, 2022.
Conference Call
The Company will host a conference call to
discuss its third quarter 2023 financial results as per the
following details.
Time: 8:00 p.m. Eastern Standard Time on November 20, 2023
or 9:00 a.m. Beijing/Hong Kong Time on
November 21, 2023
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:
https://register.vevent.com/register/BIf20d116c9e8d48fb981b734c1aae6e2d
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/c9t3fais
About FANHUA Inc.
Driven by its digital technologies and
professional expertise in the insurance industry, FANHUA Inc. is
the leading independent financial service provider in China,
focusing on providing insurance-oriented family asset allocation
services that covers customers’ full lifecycle and a one-stop
service platform for individual sales agents and independent
insurance intermediaries.
With strategic focus on long-term life insurance
products, we offer a broad range of insurance products, claims
adjusting services and various value-added services to meet
customers’ diverse needs, through an extensive network of digitally
empowered sales agents and professional claims adjustors. We also
operate Baowang (www.baoxian.com), an online insurance platform
that provides customers with a one-stop insurance shopping
experience.
For more information about FANHUA Inc., please visit
https://ir.fanhgroup.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 including
macroeconomic conditions in China. Except as otherwise indicated,
all information provided in this press release speaks 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 generally accepted accounting principles in
the United States (“GAAP”), the Company also provides adjusted
EBITDA, adjusted EBITDA margin and basic and diluted adjusted
EBITDA per ADS, all of which are non-GAAP financial measures, as
supplemental measures to review and assess operating performance.
Adjusted EBITDA is defined as net income before income tax expense,
share of income of affiliates, net of impairment, investment
income, interest income, financial cost, depreciation, amortization
of intangible assets, share-based compensation expenses and fair
value change in an equity investment. Adjusted EBITDA margin is
defined as adjusted EBITDA as a percentage of net revenues. Basic
adjusted EBITDA per ADS is defined as adjusted EBITDA divided by
total weighted average number of ADSs of the Company outstanding
during the period. Diluted adjusted EBITDA per ADS is defined as
adjusted EBITDA 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. The
Company’s non-GAAP financial measures do not reflect all items of
income and expenses that affect the Company’s operations.
Specifically, the Company’s non-GAAP measures exclude interest
income, investment income, financial cost, income tax expense,
depreciation, amortization of intangible assets, share of income of
affiliates, net of impairment, share-based compensation expenses
and fair value change in an equity investment. Further, these
non-GAAP financial measures may not be comparable to similarly
titled measures presented by other companies, including peer
companies. The presentation of these non-GAAP financial measures
has limitations as analytical tools, and investors should not
consider them in isolation from, or as a substitute for analysis
of, 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 Net
Income to Adjusted EBITDA and Adjusted EBITDA Margin” set forth at
the end of this press release.
|
|
|
FANHUA INC. |
|
Unaudited Condensed Consolidated Balance
Sheets |
|
(In thousands) |
|
|
|
|
As of December 31, |
|
As of September 30, |
|
As of September 30, |
|
|
2022 |
|
2023 |
|
2023 |
|
|
RMB |
|
RMB |
|
US$ |
|
ASSETS: |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash
equivalents |
567,525 |
|
554,897 |
|
76,055 |
|
Restricted
cash |
59,957 |
|
55,941 |
|
7,667 |
|
Short term
investments |
347,754 |
|
943,520 |
|
129,320 |
|
Accounts receivable,
net |
667,554 |
|
588,317 |
|
80,636 |
|
Other
receivables |
231,049 |
|
113,756 |
|
15,594 |
|
Other current
assets |
419,735 |
|
190,497 |
|
26,110 |
|
Total current
assets |
2,293,574 |
|
2,446,928 |
|
335,382 |
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
Restricted bank deposit –
non-current |
20,729 |
|
22,168 |
|
3,038 |
|
Contract assets, net -
non-current |
385,834 |
|
643,571 |
|
88,209 |
|
Property, plant, and equipment,
net |
98,459 |
|
91,968 |
|
12,605 |
|
Goodwill and intangible assets,
net |
109,997 |
|
476,672 |
|
65,333 |
|
Deferred tax
assets |
20,402 |
|
33,223 |
|
4,554 |
|
Investment in
affiliates |
4,035 |
|
3,271 |
|
448 |
|
Other non-current
assets |
11,400 |
|
176,972 |
|
24,256 |
|
Right of use
assets |
145,086 |
|
110,682 |
|
15,170 |
|
Total non-current
assets |
795,942 |
|
1,558,527 |
|
213,613 |
|
Total
assets |
3,089,516 |
|
4,005,455 |
|
548,995 |
|
Current liabilities: |
|
|
|
|
|
|
Short-term
loan |
35,679 |
|
199,980 |
|
27,410 |
|
Accounts payable
|
436,784 |
|
320,027 |
|
43,863 |
|
Insurance premium payables
|
16,580 |
|
24,755 |
|
3,393 |
|
Other payables and accrued
expenses |
174,326 |
|
210,745 |
|
28,885 |
|
Accrued payroll
|
96,279 |
|
88,596 |
|
12,143 |
|
Income tax
payable |
130,024 |
|
108,423 |
|
14,861 |
|
Current operating lease
liability |
62,304 |
|
48,363 |
|
6,629 |
|
Total current
liabilities |
951,976 |
|
1,000,889 |
|
137,184 |
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
Accounts payable – non-current
|
192,917 |
|
356,565 |
|
48,871 |
|
Other tax
liabilities |
36,647 |
|
33,656 |
|
4,613 |
|
Deferred tax
liabilities |
102,455 |
|
150,201 |
|
20,587 |
|
Non-current operating lease
liability |
74,190 |
|
55,800 |
|
7,648 |
|
Total non-current
liabilities |
406,209 |
|
596,222 |
|
81,719 |
|
Total
liabilities |
1,358,185 |
|
1,597,111 |
|
218,903 |
|
|
|
|
|
|
Ordinary
shares |
8,091 |
|
8,675 |
|
1,189 |
|
Treasury stock |
(10) |
|
(96) |
|
(13) |
|
Additional Paid-in
capital |
461 |
|
192,177 |
|
26,340 |
|
Statutory
reserves |
559,520 |
|
559,520 |
|
76,689 |
|
Retained
earnings |
1,087,984 |
|
1,395,650 |
|
191,290 |
|
Accumulated other comprehensive
loss |
(32,643) |
|
(15,958) |
|
(2,187) |
|
Total shareholders’
equity |
1,623,403 |
|
2,139,968 |
|
293,308 |
|
Non-controlling
interests |
107,928 |
|
268,376 |
|
36,784 |
|
Total
equity |
1,731,331 |
|
2,408,344 |
|
330,092 |
|
Total liabilities and
equity |
3,089,516 |
|
4,005,455 |
|
548,995 |
|
|
| 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 Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
| |
RMB |
|
RMB |
|
|
US$ |
|
|
RMB |
|
|
RMB |
|
|
US$ |
|
|
Net revenues: |
|
|
|
|
|
|
|
Agency |
522,702 |
|
|
524,154 |
|
|
71,841 |
|
|
1,714,096 |
|
|
2,276,896 |
|
|
312,075 |
|
|
Life insurance
business |
480,605 |
|
|
483,830 |
|
|
66,314 |
|
|
1,609,833 |
|
|
2,147,293 |
|
|
294,311 |
|
|
Non-life insurance
business |
42,097 |
|
|
40,324 |
|
|
5,527 |
|
|
104,263 |
|
|
129,603 |
|
|
17,764 |
|
|
Claims
adjusting |
102,044 |
|
|
110,466 |
|
|
15,141 |
|
|
300,153 |
|
|
318,101 |
|
|
43,599 |
|
|
Total net
revenues |
624,746 |
|
|
634,620 |
|
|
86,982 |
|
|
2,014,249 |
|
|
2,594,997 |
|
|
355,674 |
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
Agency |
(324,164 |
) |
|
(329,300 |
) |
|
(45,135 |
) |
|
(1,098,865 |
) |
|
(1,558,472 |
) |
|
(213,606 |
) |
|
Life insurance
business |
(298,915 |
) |
|
(301,812 |
) |
|
(41,367 |
) |
|
(1,030,418 |
) |
|
(1,465,314 |
) |
|
(200,838 |
) |
|
Non-life insurance
business |
(25,249 |
) |
|
(27,488 |
) |
|
(3,768 |
) |
|
(68,447 |
) |
|
(93,158 |
) |
|
(12,768 |
) |
|
Claims
adjusting |
(69,253 |
) |
|
(70,055 |
) |
|
(9,602 |
) |
|
(202,329 |
) |
|
(203,534 |
) |
|
(27,897 |
) |
|
Total operating costs |
(393,417 |
) |
|
(399,355 |
) |
|
(54,737 |
) |
|
(1,301,194 |
) |
|
(1,762,006 |
) |
|
(241,503 |
) |
|
Selling
expenses |
(69,323 |
) |
|
(59,176 |
) |
|
(8,111 |
) |
|
(210,952 |
) |
|
(189,978 |
) |
|
(26,039 |
) |
|
General and administrative
expenses |
(129,841 |
) |
|
(142,893 |
) |
|
(19,585 |
) |
|
(418,321 |
) |
|
(463,430 |
) |
|
(63,518 |
) |
|
Total operating costs and
expenses |
(592,581 |
) |
|
(601,424 |
) |
|
(82,433 |
) |
|
(1,930,467 |
) |
|
(2,415,414 |
) |
|
(331,060 |
) |
|
Income from
operations |
32,165 |
|
|
33,196 |
|
|
4,549 |
|
|
83,782 |
|
|
179,583 |
|
|
24,614 |
|
| Other income, net: |
|
|
|
|
|
|
|
Investment
income |
2,770 |
|
|
1,925 |
|
|
264 |
|
|
9,044 |
|
|
26,882 |
|
|
3,685 |
|
|
Fair value change in an equity investment |
— |
|
|
164,326 |
|
|
22,523 |
|
|
— |
|
|
164,326 |
|
|
22,523 |
|
|
Interest
income |
7,938 |
|
|
3,374 |
|
|
462 |
|
|
9,775 |
|
|
12,471 |
|
|
1,709 |
|
|
Financial cost |
— |
|
|
(2,666 |
) |
|
(365 |
) |
|
— |
|
|
(7,348 |
) |
|
(1,007 |
) |
|
Others, net |
(488 |
) |
|
(23,048 |
) |
|
(3,159 |
) |
|
8,920 |
|
|
(16,566 |
) |
|
(2,271 |
) |
|
Income from operations before income taxes and
share income of affiliates |
42,385 |
|
|
177,107 |
|
|
24,274 |
|
|
111,521 |
|
|
359,348 |
|
|
49,253 |
|
|
Income tax
expense |
(8,562 |
) |
|
(16,113 |
) |
|
(2,208 |
) |
|
(22,551 |
) |
|
(54,402 |
) |
|
(7,456 |
) |
|
Share of income of affiliates, net of impairment |
(621 |
) |
|
(223 |
) |
|
(31 |
) |
|
(68,755 |
) |
|
(763 |
) |
|
(105 |
) |
|
Net income
|
33,202 |
|
|
160,771 |
|
|
22,035 |
|
|
20,215 |
|
|
304,183 |
|
|
41,692 |
|
|
Less: net loss attributable to non controlling
interests |
(2,169 |
) |
|
(9,928 |
) |
|
(1,361 |
) |
|
(9,441 |
) |
|
(3,483 |
) |
|
(477 |
) |
|
Net income attributable to the Company’s
shareholders |
35,371 |
|
|
170,699 |
|
|
23,396 |
|
|
29,656 |
|
|
307,666 |
|
|
42,169 |
|
| |
|
FANHUA INC. |
|
Unaudited Condensed Consolidated Statements of Income and
Comprehensive Income-(Continued) |
|
(In thousands, except for shares and per
share data) |
| |
| |
For The Three Months Ended |
|
For The Nine Months Ended |
| |
September 30, |
|
September 30, |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
| Net income
per share: |
|
|
|
|
|
|
Basic |
0.03 |
|
|
0.16 |
|
|
0.02 |
|
|
0.03 |
|
|
0.29 |
|
|
0.04 |
|
|
Diluted |
0.03 |
|
|
0.16 |
|
|
0.02 |
|
|
0.03 |
|
|
0.29 |
|
|
0.04 |
|
| Net income per
ADS: |
|
|
|
|
|
|
|
|
Basic |
0.66 |
|
|
3.18 |
|
|
0.44 |
|
|
0.55 |
|
|
5.72 |
|
|
0.78 |
|
|
Diluted |
0.66 |
|
|
3.18 |
|
|
0.44 |
|
|
0.55 |
|
|
5.72 |
|
|
0.78 |
|
|
Shares used in calculating net income
per share: |
|
|
|
|
|
|
|
|
Basic |
1,074,291,784 |
|
|
1,072,848,471 |
|
|
1,072,848,471 |
|
|
1,074,193,616 |
|
|
1,075,669,859 |
|
|
1,075,669,859 |
|
|
Diluted |
1,074,500,364 |
|
|
1,073,480,335 |
|
|
1,073,480,335 |
|
|
1,074,262,500 |
|
|
1,076,119,487 |
|
|
1,076,119,487 |
|
| Net
income |
33,202 |
|
|
160,771 |
|
|
22,035 |
|
|
20,215 |
|
|
304,183 |
|
|
41,692 |
|
|
Other comprehensive income, net of tax: Foreign
currency translation
adjustments |
3,950 |
|
|
(277 |
) |
|
(38 |
) |
|
4,746 |
|
|
8,603 |
|
|
1,179 |
|
|
Share of other comprehensive income of
affiliates |
— |
|
|
— |
|
|
— |
|
|
4,688 |
|
|
— |
|
|
— |
|
|
Unrealized net gains on available-for-sale
investments |
1,848 |
|
|
5,388 |
|
|
738 |
|
|
1,238 |
|
|
8,083 |
|
|
1,108 |
|
|
Comprehensive
income |
39,000 |
|
|
165,882 |
|
|
22,735 |
|
|
30,887 |
|
|
320,869 |
|
|
43,979 |
|
|
Less: Comprehensive loss attributable to the non-controlling
interests |
(2,169 |
) |
|
(9,928 |
) |
|
(1,361 |
) |
|
(9,441 |
) |
|
(3,483 |
) |
|
(477 |
) |
|
Comprehensive income attributable to the Company’s
shareholders |
41,169 |
|
|
175,810 |
|
|
24,096 |
|
|
40,328 |
|
|
324,352 |
|
|
44,456 |
|
|
|
|
FANHUA INC. |
|
Unaudited Condensed Consolidated Statements of Cash
Flow |
|
(In thousands, except for shares and per
share data) |
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
|
RMB |
RMB |
US$ |
RMB |
RMB |
US$ |
|
OPERATING ACTIVITIES |
|
|
|
|
|
|
|
Net
income |
33,202 |
|
|
160,771 |
|
|
22,035 |
|
|
20,215 |
|
|
304,183 |
|
|
41,692 |
|
|
Adjustments to reconcile net income to net cash generated from
operating activities: |
|
|
|
|
|
|
|
Investment income
|
(1,133 |
) |
|
(1,579 |
) |
|
(216 |
) |
|
(2,931 |
) |
|
(8,568 |
) |
|
(1,174 |
) |
|
Share of income of affiliates, net of
impairment |
621 |
|
|
223 |
|
|
31 |
|
|
68,755 |
|
|
763 |
|
|
105 |
|
|
Other non-cash
adjustments |
35,027 |
|
|
(98,249 |
) |
|
(13,467 |
) |
|
115,076 |
|
|
(23,389 |
) |
|
(3,207 |
) |
|
Changes in operating assets and
liabilities |
(47,929 |
) |
|
(48,340 |
) |
|
(6,626 |
) |
|
(218,280 |
) |
|
(226,514 |
) |
|
(31,046 |
) |
|
Net cash generated from (used in) operating
activities |
19,788 |
|
|
12,826 |
|
|
1,757 |
|
|
(17,165 |
) |
|
46,475 |
|
|
6,370 |
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchase of short-term
investments |
(452,760 |
) |
|
(815,300 |
) |
|
(111,746 |
) |
|
(1,993,760 |
) |
|
(2,918,310 |
) |
|
(399,988 |
) |
|
Proceeds from disposal of short-term
investments |
503,531 |
|
|
909,241 |
|
|
124,622 |
|
|
2,337,862 |
|
|
2,732,390 |
|
|
374,505 |
|
|
Prepayment for acquisition of short-term investments |
(240,000 |
) |
|
- |
|
|
- |
|
|
(340,000 |
) |
|
- |
|
|
- |
|
|
Cash rendered for loan receivables from a third party |
(105,800 |
) |
|
(30,000 |
) |
|
(4,112 |
) |
|
(205,800 |
) |
|
(110,000 |
) |
|
(15,077 |
) |
|
Cash received for loan receivables from a third party |
20,000 |
|
|
40,000 |
|
|
5,482 |
|
|
20,000 |
|
|
220,000 |
|
|
30,154 |
|
|
Net cash inflow (outflow) for business
acquisitions |
— |
|
|
(11,512 |
) |
|
(1,578 |
) |
|
— |
|
|
9,696 |
|
|
1,329 |
|
|
Purchase of a long-term
investment |
— |
|
|
(125,000 |
) |
|
(17,133 |
) |
|
— |
|
|
(125,000 |
) |
|
(17,133 |
) |
|
Others |
123,909 |
|
|
(1,420 |
) |
|
(194 |
) |
|
55,753 |
|
|
(7,605 |
) |
|
(1,043 |
) |
|
Net cash used in investing
activities |
(151,120 |
) |
|
(33,991 |
) |
|
(4,659 |
) |
|
(125,945 |
) |
|
(198,829 |
) |
|
(27,253 |
) |
|
Cash flows from financing activities： |
|
|
|
|
|
|
|
Dividends paid |
— |
|
|
— |
|
|
— |
|
|
(52,069 |
) |
|
— |
|
|
— |
|
|
Proceeds from bank and other
borrowings |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
182,268 |
|
|
24,982 |
|
|
Repayment of bank and other
borrowings |
— |
|
|
(2,889 |
) |
|
(396 |
) |
|
— |
|
|
(20,915 |
) |
|
(2,867 |
) |
|
Interests paid |
— |
|
|
(2,300 |
) |
|
(315 |
) |
|
— |
|
|
(6,428 |
) |
|
(881 |
) |
|
Acquisition of additional equity interests in non-wholly owned
subsidiaries |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(110 |
) |
|
(15 |
) |
|
Repurchase of ordinary shares from open
market |
— |
|
|
(1,925 |
) |
|
(264 |
) |
|
— |
|
|
(24,032 |
) |
|
(3,294 |
) |
|
Others |
— |
|
|
— |
|
|
— |
|
|
3 |
|
|
— |
|
|
— |
|
|
Net cash (used in) generated from financing
activities
|
— |
|
|
(7,114 |
) |
|
(975 |
) |
|
(52,066 |
) |
|
130,783 |
|
|
17,925 |
|
|
Net decrease in cash, cash equivalents and restricted
cash |
(131,332 |
) |
|
(28,279 |
) |
|
(3,877 |
) |
|
(195,176 |
) |
|
(21,571 |
) |
|
(2,958 |
) |
|
Cash, cash equivalents and restricted cash at beginning of
period |
592,425 |
|
|
661,587 |
|
|
90,678 |
|
|
656,522 |
|
|
648,211 |
|
|
88,845 |
|
|
Effect of exchange rate changes on cash and cash equivalents |
1,744 |
|
|
(302 |
) |
|
(41 |
) |
|
1,491 |
|
|
6,366 |
|
|
873 |
|
|
Cash, cash equivalents and restricted cash at end of
period |
462,837 |
|
|
633,006 |
|
|
86,760 |
|
|
462,837 |
|
|
633,006 |
|
|
86,760 |
|
| |
|
FANHUA INC. |
|
Reconciliations of Net Income to Adjusted EBITDA and
Adjusted EBITDA Margin |
|
(In thousands, except for shares and per share
data) |
| |
| |
For The Three Months Ended |
For The Nine Months Ended |
| |
September 30 |
September 30 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2023 |
|
| |
RMB |
|
RMB |
|
|
USD |
|
|
RMB |
|
|
RMB |
|
|
USD |
|
| Net
income |
33,202 |
|
|
160,771 |
|
|
22,035 |
|
|
20,215 |
|
|
304,183 |
|
|
41,692 |
|
| Income tax expense |
8,562 |
|
|
16,113 |
|
|
2,208 |
|
|
22,551 |
|
|
54,402 |
|
|
7,456 |
|
| Share of income of affiliates,
net of impairment |
621 |
|
|
223 |
|
|
31 |
|
|
68,755 |
|
|
763 |
|
|
105 |
|
| Investment income |
(2,770 |
) |
|
(1,925 |
) |
|
(264 |
) |
|
(9,044 |
) |
|
(26,882 |
) |
|
(3,685 |
) |
| Interest income |
(7,938 |
) |
|
(3,374 |
) |
|
(462 |
) |
|
(9,775 |
) |
|
(12,471 |
) |
|
(1,709 |
) |
| Financial cost |
— |
|
|
2,666 |
|
|
365 |
|
|
— |
|
|
7,348 |
|
|
1,007 |
|
| Depreciation |
4,796 |
|
|
3,912 |
|
|
536 |
|
|
14,819 |
|
|
12,283 |
|
|
1,684 |
|
| Amortization of intangible
assets |
— |
|
|
4,864 |
|
|
667 |
|
|
— |
|
|
13,661 |
|
|
1,872 |
|
| Share-based compensation
expenses |
162 |
|
|
6,006 |
|
|
823 |
|
|
162 |
|
|
14,190 |
|
|
1,945 |
|
| Fair value change in an equity
investment |
— |
|
|
(164,326 |
) |
|
(22,523 |
) |
|
— |
|
|
(164,326 |
) |
|
(22,523 |
) |
| Adjusted
EBITDA |
36,635 |
|
|
24,930 |
|
|
3,416 |
|
|
107,683 |
|
|
203,151 |
|
|
27,844 |
|
| Total net revenues |
624,746 |
|
|
634,620 |
|
|
86,982 |
|
|
2,014,249 |
|
|
2,594,997 |
|
|
355,674 |
|
| Adjusted EBITDA Margin |
5.9 |
% |
|
3.9 |
% |
|
3.9 |
% |
|
5.3 |
% |
|
7.8 |
% |
|
7.8 |
% |
| Adjusted
EBITDA per ADS ： |
|
|
|
|
|
|
Basic |
0.68 |
|
|
0.46 |
|
|
0.06 |
|
|
2.00 |
|
|
3.78 |
|
|
0.52 |
|
|
Diluted |
0.68 |
|
|
0.46 |
|
|
0.06 |
|
|
2.00 |
|
|
3.78 |
|
|
0.52 |
|
| Shares
used in calculating adjusted EBITDA per share: |
|
|
|
|
|
|
Basic |
1,074,291,784 |
|
|
1,072,848,471 |
|
|
1,072,848,471 |
|
|
1,074,193,616 |
|
|
1,075,669,859 |
|
|
1,075,669,859 |
|
|
Diluted |
1,074,500,364 |
|
|
1,073,480,335 |
|
|
1,073,480,335 |
|
|
1,074,262,500 |
|
|
1,076,119,487 |
|
|
1,076,119,487 |
|
For more information, please contact:
Investor Relations
Tel: +86 (20) 8388-3191
Email: qiusr@fanhgroup.com
Source: FANHUA Inc.
______________________
|
1 |
This announcement contains currency conversions of certain Renminbi
(“RMB”) amounts into U.S. dollars (US$) at specified rate solely
for the convenience of the reader. Unless otherwise noted, all
translations from RMB to U.S. dollars are made at a rate of
RMB7.296 to US$1.00, the effective noon buying rate as of September
29, 2023 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 |
Adjusted EBITDA is defined as net income before income tax expense,
share of income of affiliates, net of impairment, investment
income, interest income, financial cost, depreciation, amortization
of intangible assets, share-based compensation expenses and fair
value change in an equity investment. |
| 3 |
Adjusted EBITDA margin is defined as adjusted EBITDA as a
percentage of net revenues. |
| 4 |
Basic adjusted EBITDA per ADS is defined as adjusted EBITDA divided
by total weighted average number of ADSs of the Company outstanding
during the period. |
| 5 |
Diluted adjusted EBITDA per ADS is defined as adjusted EBITDA
divided by total weighted average number of diluted ADSs of the
Company outstanding during the period. |
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