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Fanhua Reports Third Quarter 2017 Unaudited Financial Results And Declares Quarterly Dividend
Financial Highlights for the Third Quarter of 2017:
|(In thousands, except per ADS)||2016Q3|
|Total net revenues||1,192,242||1,077,278||161,916||-9.6|
|Net income attributable to the Company's shareholders||32,093||112,268||16,874||249.8|
|Diluted net income per ADS||0.53||1.77||0.27||234.0|
Commenting on the third quarter
2017 financial results, Mr.
"Driven by the accelerated growth of life insurance business, we beat our prior guidance with
"In view of the impact of a new regulation on product design taking effect on
Financial Results for the Third Quarter of 2017
Total net revenues were
- Net revenues for the life
insurance business were
RMB730.5 million( US$109.8 million) for the third quarter of 2017, representing an increase of 177.5% from RMB263.2 millionfor the corresponding period in 2016. The increase was due to the growth in the number of sales agents. Revenues generated from our life insurance business accounted for 67.8% of our total net revenues in the third quarter of 2017.
- Net revenues for the P&C insurance business were
RMB274.1 million( US$41.2 million) for the third quarter of 2017, representing a decrease of 67.5% from RMB844.3 millionfor the corresponding period in 2016. The decrease was primarily due to i) the suspension of business cooperation with PICC Property and Casualty Company Limited ("PICC P&C") starting from March 1, 2017; and ii) our efforts to spin off lower margin channel businesses starting from the second quarter of 2017. Revenues generated from the P&C insurance business accounted for 25.5% of our total net revenues in the third quarter of 2017.
- Net revenues for the claims adjusting business were
RMB72.7 million( US$10.9 million) for the third quarter of 2017, representing a decrease of 14.2% from RMB84.7 millionfor the corresponding period in 2016. Revenues generated from the claims adjusting business accounted for 6.7% of our total net revenues in the third quarter of 2017.
Total operating costs and expenses were
- Commission costs were
RMB791.5 million( US$119.0 million) for the third quarter of 2017, representing a decrease of 13.3% from RMB912.5 millionfor the corresponding period in 2016.
• Costs of the life insurance business were
RMB511.4 million( US$76.9 million) for the third quarter of 2017, representing an increase of 181.2% from RMB181.9 millionfor the corresponding period in 2016. The increase was in line with the growth in sales. Costs incurred by the life insurance business accounted for 64.6% of our total commission costs in the third quarter of 2017.
• Costs of the P&C insurance business were
RMB236.6 million( US$35.6 million) for the third quarter of 2017, representing a decrease of 65.3% from RMB681.7 millionfor the corresponding period in 2016. The decrease was primarily in line with the decline in channel businesses. Costs incurred by the P&C insurance business accounted for 29.9% of our total commission costs in the third quarter of 2017.
• Costs of claims adjusting business were
RMB43.5 million( US$6.5 million) for the third quarter of 2017, representing a decrease of 10.8% from RMB48.8 millionfor the corresponding period in 2016. Costs incurred by the claims adjusting business accounted for 5.5% of our total commission costs in the third quarter of 2017.
- Selling expenses were
RMB54.3million( US$8.2 million) for the third quarter of 2017, representing a decrease of 64.8% from RMB154.1 millionfor the corresponding period in 2016. The decrease was primarily because promotional marketing expenses were paid to sales agents in the third quarter of 2016 while there was no such promotional marketing plan in 2017.
- General and administrative expenses were
RMB148.3million( US$22.3 million) for the third quarter of 2017, representing an increase of 25.5% from RMB118.2 millionfor the corresponding period in 2016. The increase was primarily due to an increase in expenses incurred for setting up new offices and staff recruitment as a result of regional expansion.
As a result of the preceding factors, we had an operating income of
Operating margin was 7.7% for the third quarter of 2017, compared to 0.6% for the corresponding period in 2016.
Investment income was
Interest income was
Income tax expense was
Share of income of affiliates was
Net income attributable to the Company's shareholders was
Net margin was 10.4% for the third quarter of 2017 compared with 2.7% for the corresponding period in 2016.
Basic and diluted net income per ADS were
Key Operational Metrics for Fanhua's Online Initiatives for the Third Quarter of 2017:
- CNpad Mobile Application("CNpad App") - Our proprietary mobile sales support system:
• CNpad App had been downloaded and activated 333,595 times as of
September 30, 2017, representing an increase of 101.4% from 165,638 times as of September 30, 2016;
• The number of active users2 of CNpad App3 was 99,828 in the third quarter of 2017, representing an increase of 91.9% from 52,011 in the third quarter of 2016:
- The number of active users of CNpad Auto Insurance App was 57,974 in the third quarter of 2017, representing an increase of 60.1% from 36,219 in the third quarter of 2016;
- The number of active users of CNpad Life Insurance App was 50,056 in the third quarter of 2017, representing an increase of 160.7% from 19,204 in the third quarter of 2016;
• Insurance premiums generated through CNpad App were
RMB1,356.7 million( US$203.9 million) in the third quarter of 2017, representing an increase of 39.0% from RMB976.1 millionfor the corresponding period of 2016 and accounted for 55.9% of our total insurance premiums in the third quarter of 2017 as compared to 26.6% for the corresponding period of 2016.
- eHuzhu - Our online non-profit mutual aid platform:
• The number of registered members was 2.2 million as of
September 30, 2017, representing an increase of 110.4% from 1.1 million as of September 30, 2016.
- Baoxian.com - Our online insurance platform:
• The number of registered customer accounts was 1.2 million as of
September 30, 2017, representing an increase of 155.6% from approximately 493,000 as of September 30, 2016.
• The number of active customer accounts4 was 70,765 in the third quarter of 2017, representing an increase of 32.6% from53,386 in the corresponding period of 2016;
• Insurance premiums generated on or through Baoxian.com was
RMB114.9 million( US$17.3 million) in the third quarter of 2017, representing an increase of 492.3% from RMB19.4 millionin the corresponding period of 2016. Fanhua Inc.was ranked No. 17 in the annual ranking of global brokers, according to the July 2017edition of Best's Review published by A. M. Best, based on 2016 total revenue. The ranking moved up three places from No. 20 in the previous year. Fanhua has been ranked among top 20 global insurance brokers for three consecutive years.
- As of
September 30, 2017, Fanhua had 413,946 sales agents and 1,264 professional claims, compared with 190,261 sales agents and 1,347 claims adjustors as of September 30, 2016. As of September 30, 2017, Fanhua's distribution network consisted of 897 sales outlets in 21 provinces and 156 services outlets in 29 provinces, compared with 608 sales outlets in 21 provinces and 153 service outlets in 29 provinces.
September 6, 2017, Fanhua has signed a Headquarter-to-Headquarter Strategic Cooperation Agreement with Pramerica Fosun Life Insurance Limited, pursuant to which both parties will engage in a deep and comprehensive cooperation in a wide range of areas including product sales, technology service and product design.
Fanhua expects its operating income to be no less than
The Company will host a conference call to discuss its third quarter 2017 financial results as per the following details.
|The toll free dial-in numbers:|
|The toll dial-in numbers:|
|Conference ID #:||4795899|
Additionally, a live and archived web cast of this call will be available at: http://ir.cninsure.net/events.cfm
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
more information about
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
|Unaudited Condensed Consolidated Balance Sheets|
|As of ||As of ||As of |
|Cash and cash equivalents||240,242||397,191||59,698|
|Short term investments||2,797,842||2,264,100||340,297|
|Accounts receivable, net||502,975||767,955||115,425|
|Insurance premium receivables||187||1,951||293|
|Amounts due from related parties||32,495||280,472||42,155|
|Other current assets||37,900||53,406||8,027|
|Total current assets|
|Property, plant, and equipment, net||31,414||35,032||5,265|
|Deferred tax assets||8,277||32,511||4,886|
|Investment in affiliates||294,576||348,671||52,406|
|Other non-current assets||28,188||28,189||4,237|
|Total non-current assets||544,004||600,519||90,258|
|Insurance premium payables||5,491||10,558||1,587|
|Other payables and accrued expenses||314,051||223,247||33,554|
|Income tax payable||90,188||152,523||22,924|
|Total current liabilities||747,119||1,050,888||157,950|
|Other tax liabilities||72,778||72,612||10,913|
|Deferred tax liabilities||14,577||22,048||3,313|
|Total non-current liabilities||87,355||94,660||14,226|
|Additional paid-in capital||2,301,655||2,461,774||370,008|
|Accumulated other comprehensive loss||(65,844||)||(84,272||)||(12,666||)|
|Total shareholders' equity||3,286,852||3,785,366||568,946|
|Total liabilities and equity||4,238,568||5,045,765||758,384|
|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|
|Life insurance Business||263,243||730,476||109,792||628,194||1,934,125||290,702|
|P&C insurance Business||844,311||274,119||41,200||2,305,227||1,413,549||212,458|
|Claims adjusting Business||84,688||72,683||10,924||232,739||209,956||31,557|
|Total net revenues||1,192,242||1,077,278||161,916||3,166,160||3,557,630||534,717|
|Operating costs and expenses:|
|Life insurance Business||(181,900||)||(511,412||)||(76,866||)||(428,145||)||(1,321,804||)||(198,669||)|
|P&C insurance Business||(681,740||)||(236,584||)||(35,559||)||(1,870,556||)||(1,294,368||)||(194,545||)|
|Claims adjusting Business||(48,838||)||(43,547||)||(6,545||)||(142,537||)||(136,883||)||(20,574||)|
|Total operating costs||(912,478||)||(791,543||)||(118,970||)||(2,441,238||)||(2,753,055||)||(413,788||)|
|General and administrative expenses||(118,155||)||(148,265||)||(22,284||)||(341,966||)||(426,577||)||(64,115||)|
|Total operating costs and expenses||(1,184,718||)||(994,078||)||(149,411||)||(3,186,816||)||(3,340,020||)||(502,010||)|
|Income (loss) from operations||7,524||83,200||12,505||-20,656||217,610||32,707|
|Other income, net:|
|Income before income taxes and income of affiliates||28,473||139,975||21,038||59,214||395,888||59,502|
|Income tax expense||(5,765||)||(50,340||)||(7,566||)||(7,842||)||(129,676||)||(19,490||)|
|Share of income of affiliates||13,059||24,059||3,616||34,398||53,752||8,079|
|less: net income (loss) attributable to noncontrolling interests||3,674||1,426||214||3,318||(2,391||)||(359||)|
|Net income attributable to the Company's shareholders||32,093||112,268||16,874||82,452||322,355||48,450|
|Net income per share:|
|Net income per ADS:|
|Shares used in calculating net income per share:|
|Other comprehensive income (loss), net of tax: Foreign currency translation adjustments||4,431||(8,367||)||(1,258||)||9,328||(11,346||)||(1,705||)|
|Fair value changes||—||—||—||—||(632||)||(95||)|
|Share of other comprehensive gain (loss) of affiliates||(10,505||)||889||134||(38,866||)||343||52|
|Less: Comprehensive income (loss) attributable to the noncontrolling interests||3,674||1,426||214||3,318||(2,391||)||(359||)|
|Comprehensive income attributable to the Company's shareholders||26,019||104,790||15,750||52,914||310,720||46,702|
|Unaudited Condensed Consolidated Statements of Cash Flow|
|For The Three Months Ended||For The Nine Months Ended|
|Adjustments to reconcile net income to net cash generated from (used in) operating activities:|
|Amortization of intangible assets||8,806||8,417||1,265||11,432||25,433||3,823|
|Allowance for doubtful receivables||1,577||2,822||424||542||11,728||1,763|
|Compensation expenses associated with stock option||—||—||—||4,937||—||—|
|Gain on disposal of subsidiaries||—||(193||)||(29||)||(3,082||)||(1,495||)||(225||)|
|Loss (gain) on disposal of property, plant and equipment||99||(38||)||(6||)||101||(40||)||(6||)|
|Share of income of affiliates||(13,059||)||(24,059||)||(3,616||)||(34,398||)||(53,752||)||(8,079||)|
|Changes in operating assets and liabilities||6,784||(89,383||)||(13,431||)||(66,332||)||(80,440||)||(12,090||)|
|Net cash generated from (used in) operating activities||29,596||(25,677||)||(3,858||)||(25,670||)||92,276||13,869|
|Cash flows (used in) generated from investing activities:|
|Purchase of property, plant and equipment||(3,523||)||(7,729||)||(1,162||)||(7,540||)||(15,934||)||(2,395||)|
|Proceeds from disposal of property and equipment||—||35||5||48||91||14|
|Purchase of short term investments||(1,689,500||)||(3,509,600||)||(527,498||)||(6,541,800||)||(7,787,794||)||(1,170,516||)|
|Proceeds from disposal of short term investments||1,703,007||3,667,482||551,228||5,946,400||8,461,895||1,271,834|
|Acquisition of subsidiaries ,net of cash||(4,185||)||—||—||(4,185||)||—||—|
|Disposal of subsidiaries, net of cash...........................||50||—||—||29,376||14,350||2,157|
|Purchase of intangible assets||(40,000||)||—||—||(60,000||)||—||—|
|Increase in loan to the third party||—||(500,000||)||(75,151||)||—||(500,000||)||(75,151||)|
|Decrease (Increase) in amounts due from related parties||—||160,000||24,048||—||(240,000||)||(36,072||)|
|Net cash used in investing activities||(34,151||)||(189,812||)||(28,530||)||(637,701||)||(67,392||)||(10,129||)|
|Cash flows (used in) generated from financing activities:|
|Acquisition of additional interest in subsidiaries||(138,774||)||—||—||(213,534||)||—||—|
|Proceeds on exercise of stock options||743||154||23||745||10,856||1,631|
|Proceeds of employee subscriptions||—||—||—||—||22,187||3,335|
|Proceeds of issuance of ordinary shares upon private placement||—||—||—||—||201,087||30,224|
|Dividends paid res||—||—||—||—||(36,121||)||(5,429||)|
|Net cash (used in)generated from financing activities||(138,031||)||154||23||(212,789||)||198,009||29,761|
|Net (decrease) increase in cash, cash equivalents and restricted cash||(142,586||)||(215,335||)||(32,365||)||(876,160||)||222,893||33,501|
|Cash, cash equivalents and restricted cash at beginning of period||397,313||709,133||106,583||1,132,851||273,979||41,179|
|Effect of exchange rate changes on cash and cash equivalents||3,506||(3,903||)||(587||)||1,542||(6,977||)||(1,049||)|
|Cash, cash equivalents and restricted cash at end of period||258,233||489,895||73,631||258,233||489,895||73,631|
|Income taxes paid||216||25,198||3,787||3,544||80,360||12,078|
1 This announcement contains currency conversions of certain Renminbi (RMB) amounts into
2 Active users are defined as users who made at least one purchase through CNpad App during the specified period.
3 Active users of CNpad App included users who made at least one purchase of life insurance policy and/or P&C insurance policy during the specific period.
4 Active customer accounts 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.
For more information, please contact:
Investor Relations Manager
Tel: +86 (20) 8388-3191
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